In an impending credit card debacle, who will be blamed?

My personal maxim has always been, if you’ve spent the money, pay for it… pay it all, before you’re even billed (or reminded)! It doesn’t matter whether I have a revolving credit line, or whether I’m using a charge card, or whether I borrowed 10 bucks from my mother with whom I lived for a long, long time. I don’t think credit card issuers profit from the likes of “transactors” such as myself.

Hence, when someone explained to me what many people often do with a wallet full of credit cards, I was taken aback. Buy, buy, buy is the law of this land (unwritten). Sometimes the government even sends us a stimulus package ($300 a head) to go spend, spend, spend… when you should be saving, saving, saving! (Even then they cannot decide whether the country is in a recession, they wait another 6 months to tell us so, but that’s my previous posting).

Well, that was not my point. People owning a gazillion credit cards will pay the minimum balance on each of their cards. When they receive a lucrative offer (Oh well, the offers are all lucrative on the face of it) to apply for a new card, they go roll over the balance from one card to another. So they still have the previous card X, with say e.g. $500 limit; but now they have an additional card Y with another $500 limit. Because they rolled over their balance to the new card Y, they can still spend $500 on X and $500 on Y. So while they were hard up when it came to paying the full balance of $500 on X, they now can spend $500 and another $500 minus the minimum to be paid on Y. This goes on… from one card to the next to the next to the next… holey-moley-Golly! Now why did I not think of this before… dumb me! Live it up, live life, make your dreams come true, fulfill your dreams in the land of plenty, in a city where people flock to live their dreams… it could all have happened to me!  Banks would love me then… or better still, the likes of all “revolvers“!

But heck, wait a second… what about that talk of “bad credit risks“, “good credit risks” credit history, 750+ ratings (good, otherwise not-so-good), and the credit bureaus? Are the banks that mail out these credit card applications to prospects not checking their payment history,  the future ability of these prospective applicants to pay back the hundreds and thousand of dollars, when their salary, wages, or income is less than $500 per week? Did anyone care to check whether these folks hold a  temporary job or permanent one or have any job at all? Household income… yes, I recall from several pre-qualified applications I receive. I must state ‘household income’. Oh cool, so it does not matter whether or not I have any income of consequence… as long as my entire household income meets the credit card issuer’s eligibility criteria, largely, I’m set. Largely, meaning notwithstanding the fine print where they state that it’s not a given that I will be issued a card (despite having sent me a pre-qualified card with code # etc without my requesting for it).

Oh, surely there are people who work for the bank who are paid to do these credit checks, before some higher authority approves the issue of their card to an “applicant”! What are these paid employees doing? Obviously everything else but their job! Before you know it, thanks to a poorly done job at the bank-end, you and I, and millions of others in this country receive a spanking new credit card (with a design of your choice) and a neat little pre-approved spending limit. Now, isn’t that something! Where’s the mall, here I come!

So… for a moment, I revert to my original concern… in this entire drama, is it you or me, or any of the million other new credit card holders to be blamed? Or is it that lazy bank employee who did a poor job of his assigned task? Or worse still… the policy makers within the bank and higher authorities who decide who and how much should be doled out by way of new card issuance to spur the economy? Where in all this are the regulatory bodies, in charge of overseeing banks?

It’s ironic, how banks are so good at overseeing late payments by credit card holders to enable them charge late fees and collect finance charges. But when it comes to being vigilant before issuing the credit card, they look the other way.


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