The big McMansion picture in my last post reminded me that I had to finish watching Maxed Out, a film about the credit card industry. You can watch it for free (albeit in low quality) on Google Video [90 minutes long]. The very first scene includes a real estate agent selling homes with crazy stuff like elevators, two dishwashers, and wine caves.
My Twisted Review
The purpose of the film was to “raise awareness of how credit and lending issues are affecting society.” I think this is a admirable purpose. However, as someone who is familiar with credit card companies and all their practices, my primary thought on this film was “duh”. Please watch out for large amounts of sarcasm and cynicism ahead.
Gasp! Credit card companies target the stupid, the poor, the rich, and everyone in between. They charge huge fees and enormous interest rates if you pay late. They will even offer credit to those who just filed bankruptcy recently, because they know (1) they can’t file bankruptcy again for several years and (2) they are already shown an inability to handle their spending. You could be dead or fictional and still be receiving card applications in the mail.
However, too often in the movie I heard phrases like “Yeah, I did sign it without reading…” or “I figured if they offered me money, it meant I could handle it” or “I never talked my kids about credit cards before sending them off to college” or “I know, I know, I should have read the fine print”. Don’t make it so easy for them, please…
Gasp! Credit card companies target college students. We’ve already seen that at Stanford, nearly 70% of the students have parents earning over $100,000 per year. Of course students are targeted! Mom and Dad will pay up. It’s the same reason Abercrombie and Fitch makes so much money. If the US government has recruiters on campus to convince an 18 year-old to join the Army, why can’t Visa try to sell a credit card? It would seem as adults, they have the right to decide for themselves.
Gasp! Debt collectors are not nice people, and will use mean tactics to get you to pay up. My mistake, I had envisioned fuzzy bunnies leaving scented pink notes asking me to pay back money where I was already six months late…
Real Underlying Issues Are Ignored
I fully agree that credit card companies can be heartless, mindless, unethical, profit-driven companies. But Visa and Mastercard are only two of 100,000 companies who would gladly take my money no matter how broke I was. Credit card companies sell money. Apple sells iPods. Walgreens sells drugs. If Apple convinces a broke college student to buy an iPod, are they to blame? Is it wrong for a drugstore to sell a $70 prescription (of which $20 is profit) to a person on Medicare? These two questions reveal the true issues that need to be addressed:
First, why are people buying stuff they don’t need? Why do people feel entitled to things that they haven’t earned the money to pay for? Cars, iPods, jewelry, clothes. There is something fundamentally wrong here. It’s easy to blame others, but take some responsibility, people! Perhaps Dave Ramsey is right in that some people need to stick to using cash-only.
Second, why are people using credit cards for things they do need? The rest of people are using credit cards to make ends meet. Groceries, medicine, gasoline. Again, this is a greater problem than limiting $40 late fees.
Some Interesting Facts
– The university in the film (forget the name) received $13 million from MBNA for the right to use the official school logo on their credit card. Hmm…
– Many people despise payday lenders. Did you know that Wells Fargo is a major funding partner with Cash Advance, a big payday loan chain? Wells Fargo also bankrolls CashAmerica, a huge pawn shop chain. Many other major banks have similar arrangements loaning money to such “predatory” businesses. So save some of your anger towards them as well.
– The US Government is a huge debtor. We pay more in our in interest payments on debt (our own version of the “minimum payments” from credit cards) than we spend on education, homeland security, and healthcare combined. Each citizen’s share of the national debt is now over $30,000 each.
Why I Still Like This Film
Although I don’t fully agree with the one-sided presentation, Maxed Out hopefully will accomplish it’s goal of promoting awareness. Credit cards are not your friends, they exist to make money. If the truth outrages people enough, then hopefully they shred all their credit cards. Or they could place enough pressure on their elected representatives to make some changes. Or if they think they are up to it, they could turn the tables by taking advantage of loss leaders like credit card rewards and 0% interest loans and grab some of that money back. It’s not personal, it’s just business. I’m here to make money too.