The Credit Card Conundrum

It’s perplexing how a tiny piece of plastic can drive young, educated people to suicide.

In his highly acclaimed documentary Maxed Out, director James Scurlock interviewed two mothers who lost their children to credit cards. Faced with insurmountable bills that compounded by the day, their two teenage kids chose to end their lives instead of facing up to the daily harassments of the issuing banks.

The same went with Sean O’Donnell from the University of Oklahoma. Despite earning just $5.15 an hour, the college student had 12 credit cards on him when he was found dead with self-inflicted injuries. How he got his hands on credit cards despite the paltry wages in anyone’s guess. But the banks carried on calling his home a year after his death to demand payments on the money he owed.

But westerners are not the only ones who fall victim to predatory lending practices. The Credit Card Conundrum is slowly tightening its noose around the necks of young Asians who are increasingly finding the need to live up to the expectations of a middle class lifestyle.

Today, counsellors in South Korea are reporting an increase in the number of youth who commit suicide over debt. This is hardly surprising coming from a nation where the average working adult carries about 4 credit cards. Last year, the nation again set a new record in credit card spending – US$272 billion, about 15% of the country’s GDP. Last month a nurse at the Chang Gung Memorial Hospital in Taiwan died by draining her own blood. She too turned to death as the ultimate solution for her ballooning credit card bill. The island she lives on is estimated to have another 700,000 credit card “slaves” – users who pay the minimum on their bills every month.

Financial delinquency is spreading like cancer in every society. Georgetown University Sociologist Robert Manning estimates that credit cards have now taken over alcohol and sexually transmitted diseases as the most major threat to the lives of young people around the world. If you live in a developed nation, chances are you will know at least one family torn apart by the malice of credit cards or unbridled debt. By all indications, the morass is slated to become a bigger problem in the future judging from the way our youngsters are handling their money today.

At this point, one may be tempted to attribute the popular culture for needlessly promoting extravagant lifestyles and hedonistic spending habits. Or perhaps the real culprit could be the banks who openly prostitute their credit cards and facilities to youngsters, students and a whole bevy of individuals who can seldom handle credit responsibly.

But playing the blame game yields no result. Materialism has taken over as the world’s major religion and banks are happily profiting from this anomalous phenomenon.

Somehow our youth no longer see the honour in remaining debt free. It is more important to have that shiny new car or to hold that fancy wedding than to remain financially solvent.

It is something that we cannot change. Once someone decides on making that big ticket purchase despite not having earned the money, it is usually very hard to change their minds. Visions of grandeur can permanently cloud the mind.

We can’t change the laws either. Lobbying the Government for stricter credit controls may produce glimpses of results every now and then. But giving credit is largely a business decision by the banks and lending institutions. Governments should not be expected to interfere in legitimate business practices, especially so if they bear bountiful opportunities for tax revenue.

What we can do however is lies in education and discourse.

I feel that it’s important for a select group in every community to continuously discuss and raise awareness in financial issues. This is especially so when our society has decided to abandon the noble money practices of our forefathers for opulence and mindless extravagance. Look around you today and you will see our youngsters spending with little regards for the future. Someday their bills will come and ultimately society will have to pay for it.

That is my reason for starting our small circle on the JustJihad.com Community Forum. It is a small collection of articles that I have written personally for my circle of friends who are concerned about their financial well being and their investments. There are only a couple of articles there right now and more will be added in progressively. Feedback from all is very much welcomed and I am also continually looking to learn more from everyone as I add on more writings and discussions.

As an opening to the section on debt, I have written the 10 Credit Card Commandments, a guide which I believe will help you beat the banks at their own game at let you come out the winner regardless of how many credit cards you own. Do check it out.