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PBS Frontline Secret History of the Credit Card
In “Secret History of the Credit Card,” FRONTLINE® and The New York Times join forces to investigate an industry few Americans fully understand. In this one-hour report, correspondent Lowell Bergman uncovers the techniques used by the industry to earn record profits and get consumers to take on more debt.
“The almost magical convenience of plastic money is critical to our famously compulsive consumer economy,” Bergman says. “With more than 641 million credit cards in circulation and accounting for an estimated $1.5 trillion of consumer spending, the U.S. economy has clearly gone plastic.”
Millions of American families use their personal, general-purpose credit cards such as Visa, Mastercard, American Express and Discover to make ends meet; credit cards have been a discreet lifeline for families in financial straits.
But other consumers, like actor and author Ben Stein, use plastic purely for convenience. While it would appear that Stein — who says he charges a small fortune every month on his credit cards — is the ideal customer, in reality, he is what some in the industry call a “deadbeat.” That’s because he pays his balance in full every month.
The industry’s most profitable customers, the ones being sought by creative marketing tactics, are the “revolvers:” the estimated 115 million Americans who carry monthly credit card debt.
Ed Yingling, incoming president of the American Bankers Association, tells FRONTLINE that revolvers are “the sweet spot” of the banking industry. This “sweet spot” continues to grow as the average credit card debt among American households has more than doubled over the past decade. Today, the average family owes roughly $8,000 on their credit cards. This debt has helped generate record profits for the credit card industry — last year, more than $30 billion before taxes.
Some experts say the profitability of credit cards really began twenty-five years ago, when the banking industry successfully eliminated a critical restriction: the limit on the interest rate a lender can charge a borrower. Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But for some, the cost of credit is often far greater than it appears.
According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. “These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print,” Warren tells FRONTLINE.
Warren and other critics say that a growing share of the industry’s revenues come from what they call deceptive tactics, such as “default” terms spelled out in the fine print of cardholder agreements — the terms and conditions of which can be changed at any time for any reason with 15 days’ notice.
Penalty fees and rates are sometimes triggered by just a single lapse — a payment that arrives a couple of days or even hours late, a charge that exceeds the credit line by a few dollars, or a loan from another creditor which renders the cardholder “overextended” as defined by the nation’s three all-powerful credit bureaus. This flurry of unexpected fees and rate hikes come just when consumers can least afford them.
“[Banks are] raising interest rates, adding new fees, making the due date for your payment a holiday or a Sunday on the hopes that maybe you’ll trip up and get a payment in late,” says Robert McKinley, founder and chairman of Cardweb.com and Ram Research, a payment card research firm. “It’s become a very anti-consumer marketplace.”
Banking Association spokesman Yingling defends industry practices. Because the credit card business is basically unsecured lending, he says, the risks associated with the business must be offset.
But that’s of little consolation to consumers who may be in trouble. According to the Better Business Bureau, credit card and banking companies are the subject of a record numbers of complaints. “It’s not an accident that the banking and credit card business generates more complaints nationally, across the country, than any other industry…Out of one thousand industries that we track, they are number one,” says Pat Wallace, head of the San Francisco Bay Area Better Business Bureau. “There are irritated, unhappy, dissatisfied customers in this industry.”
As Professor Warren sees it, the industry is operating without fear of penalty. “There’s no regulator, and there’s no customer who can bring this industry to heel,” Warren says.
Duration : 0:56:9
Michael Tennenbaum Says U.S. Faces `Wall of Debt’
Feb. 16 (Bloomberg) — Michael Tennenbaum, founder of Tennenbaum Capital Partners LLC, discusses Federal Reserve policy and the outlook for the U.S. economy and the distressed debt market.
Tennenbaum speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)
Duration : 0:6:35
School House Rocks – Tyrannosaurus Debt
You will find your self singing this tune on your way to work, in the elevator, etc Like the Original School House Rocks it is a catchy song that helps you learn history. Abreviated and maybe not 100% accurate but at least you remember something right.
To help you out, here are the lyrics to help you sing along.
TOUR GUIDE: To your left, folks, is the Washington Monument, to your right, the White House. And over there, just beyond the Capitol, is the National Debt!
TOURISTS: Oooo! Wow!
There’s something huge
Red, white, and blue
That’s grazing in D.C.
It’s gobbling up the taxes
That are paid by you and me
It doesn’t seem to notice
We really can’t afford
The billions that it’s costing us
To pay its room and board
It doesn’t roam
But seems content
To dwell on Capitol Hill
As long as trucks keep pulling up
With tons of green-back bills
We’ve got to feed the big guy
We really can’t forget
It has an awesome appetite
Tyrannosaurus Debt
TOUR GUIDE: The debt was born in 1790 when our new government took over 75 million the colonies spent in the Revolutionary War.
We’ve got to feed the monster
So it doesn’t get upset
It’s got an awesome appetite
Tyrannosaurus Debt
TOUR GUIDE: Alexander Hamilton, our first Secretary of the Treasury (he’s on the 10, you know), wanted a federal debt to provide a reason to establish taxes to support our new nation.
The debt was young, they kept it small
They didn’t know back then
In 1812 another war would make it grow again
By ’66 the Civil War had cost the nation millions
The government in Washington now had a debt of billions
TOUR GUIDE: The Civil War ran up a debt of almost three billion dollars that still wasn’t paid off by World War One.
We’re spending money we don’t have
Or so it would appear
The deficit is that amount we overspend each year
Though congressmen and senators
Make vows to cut its size
Despite their honest efforts
The debt just seems to rise
TOUR GUIDE: Now the debt’s over 4 trillion dollars and still growing…
A balanced budget would be great
To spend within our means
To stop the monster in its tracks
Before we bust our seams
It feeds on just the interest
Its appetite is whet
It never, ever stops to rest
Tyrannosaurus Debt
TOUR GUIDE: And this is the U.S. Treasury. It sells Treasury Bonds, bills, and notes, and savings bonds to finance the debt. The U.S. government promises to pay the owner interest plus the value of each bond at a future date.
We’ve got to try to tame the debt
And bring it down to size
To let it grow unchecked like this
Is certainly unwise
The debt‘s a monster problem
That we really can’t ignore
I guess we should be grateful
That it’s not a carnivore
We’ve got to keep on servicing
Our trillion dollar pet
It’s got a monster appetite
Tyrannosaurus Debt
A fiscal misadventure
With trillion dollar dentures
Tyrannosaurus Debt
TOUR GUIDE: Feeding time is ALL the time.
Duration : 0:3:2
Walker Says `No Question’ U.S. Needs to Raise Debt Limit
Jan. 7 (Bloomberg) — David Walker, chief executive officer of Comeback America Initiative, discusses the U.S. economy.
Walker, a former U.S. comptroller general, speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)
Duration : 0:5:44
credit cards generator
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Duration : 0:4:6
Peters Says Europe Debt Crisis Needs `Holistic’ Solution
Dec. 21 (Bloomberg) — Gregory Peters, global head of fixed-income research at Morgan Stanley, talks about the European debt crisis and the outlook for the fixed-income market.
Peters speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)
Duration : 0:4:30
Peter Schiff explains how the new college loan plan will back fire
Peter breaks down the economic inanity of Obama’s new college tuition program passed in March of 2010. Once again the government cure is worse than the disease. Please donate to Peter’s Senate campaign at www.Schiff4Senate.com
Duration : 0:7:21
Curnutt Says Europe Debt Crisis to Repeat, May Be Worse
Dec. 13 (Bloomberg) — Dean Curnutt, president of Macro Risk Advisors LLC, talks about the outlook for the European debt crisis.
Curnutt, speaking with Erik Schatzker on Bloomberg Television’s “InsideTrack,” also discusses the impact of the Federal Reserve’s quantitative easing on investor sentiment. (Source: Bloomberg)
Duration : 0:4:36
Perpetual Debt: Bank of Canada & why we should use it instead of wall st.
This is how we could improve Canada’s financial situation. We have our own publicly owned central bank and laws in place allowing us to borrow money from it interest free! loans for infrastructure, public works and the general betterment of our country. The money printed as a result of the use of this central bank would represent real value! currently 95% of our money represents debt…….how is debt something of value? isnt money supposed to represent tangible assets? This is so simple yet they complicate the system so that we blindly accept their debt enslavement.
Check out my website for more info on the Canadian money system: http://www.criticalthoughts.info
Duration : 0:6:37
Federal Reserve Debt Monetization Explained.
Http://www.Inflation.us
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Super PUMP
http://www.bloomberg.com/news/2010-08-10/fed-to-reinvest-principal-on-mortgage-proceeds-into-long-term-treasuries.html
Bankrupt
http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html
http://www.cnbc.com/id/38654017
July Deficit grows 165 Billion
http://online.wsj.com/article/SB10001424052748704901104575423601722830706.html
Duration : 0:2:57
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