Credit is a double-edged sword
Credit cards seem to be the scourge of the consumer these days. But LA Times columnist Meghan Daum insists that plastic isn't all bad. In fact, it's helped her through some pretty rough times.
Meghan Daum (meghandaum.com)
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Tess Vigeland: We wish Sabrina lots of luck with her personal deleverageing. She's definitely not alone in that effort. But, that doesn't mean everyone is down on plastic. In fact, as a country, our revolving debt totales $995 billion in February. Commentator Meghan Daum says maybe that isn't such a bad thing.
MEGHAN DAUM: Debt, my father used to say, is the American way of life. He wasn't condoning this, merely pointing it out with the same austere detachment you heard in that famous line from "The Graduate" -- "one word: plastics." Still, I took my dad literally. By the time I was 25 I'd acquired no less than seven credit cards.
And, granted, in my 20s, I did have some credit-card balances that outlasted even my longest relationships.
But if you'll forgive my honesty, I'd like to offer up a defense of credit cards. Sure, they can ruin lives, but occasionally they can save them, too. Or at least help out. Don't try this at home, kids, but in my salad days I used credit cards not just for actual salad at the supermarket but for grad school tuition fees, doctor bills, tax payments, household utilities and -- keeping it classy -- cash advances for the rent.
OK, not great. But still, thanks to those cards I was able pay my professional dues in ways that would have been impossible otherwise. In other words, even though I did plenty of paid work, I could sometimes take on unpaid work that would lead to bigger things. It wasn't an ideal strategy, but in lieu of underwriting from my family or the NEA it was the only one I had.
Of course, credit was easier to come by in the 1990s. Good luck to the artist who tries to finance his book research or documentary film with a stack of Visa cards today. As President Obama said last week "excess is out of fashion." And though he was talking to bank executives, he might as well have been talking to all of us.
But what goes out of style eventually becomes trendy again. And despite the hard lessons we're now learning about the perils of credit, my guess is that when this crisis is over, be it in five years or around the time of the next ice age, we'll go back to our debting ways. Why? For one thing, we have short memories in this country. For another, we're tireless believers in the American way of life -- and the plastic that makes it possible.
Ryssdal: Meghan Daum writes a weekly column for the Los Angeles Times.
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From Lambertville, NJ, 06/02/2009
It was an incredibly irresponsible decision for Marketplace to air this essay, a piece espousing the virtues of credit card debt when no other source of loan is available, in a recession and at a time when the predatory lending practices of the credit card industry are under examination! Really? You want to encourage Americans to take on unsecured debt, to see the bright side of a loan industry that randomly jacks interest rates, tacks on hidden fees and with no mercy, at a time when Americans are vulnerable and need real financial solutions! Credit card debt is not a strategy. Its a real risk for most Americans but a serious temptation and that wont change as the author says, "when the (financial) crisis is over." Using credit cards as a short term solution that will only will lead to bigger long term problems in an unstable economy like ours, maybe not for the wealthy few, but definitely for the average American. And for what its worth: credit card debt is part of the perfect storm that caused this financial crisis. Please, go there, examine that on air. If you do, you will help listeners understand the big picture, instead of encouraging them to lie down in the poppy field and use plastic to leverage their dreams. Thank you!
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