Debt for Sale: A Social History of the Credit Trap
by Brett Williams
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Book Summary Information
Author: Brett WilliamsEdition: Paperback
Audio: English (Unknown); English (Original Language); English (Published)
Published: 2005-05-25
ISBN: 0812218868
Number of pages: 160
Publisher: University of Pennsylvania Press
Book Reviews of Debt for Sale: A Social History of the Credit Trap
Book Review: Debt for Sale
Summary: 4 Stars
"Your account is now delinquent in the amount of $40.00. Until your account is current and below your established credit line, we must insist that you do not use your card. We must inform you that failure to make at least the minimum monthly payment will leave us no other alternative but to turn your account over to our Collection Attorneys. Please be advised your account is also being reported as delinquent to a local credit bureau. Key Federal Savings Bank." (107) All this heckling is the name of $40. Imagine you are in the shoes of Will Harrison suffering from diabetes with two amputated legs that opened his own small flower shop years ago and owed $1,000 a month in interest payments alone. Imagine you are Megan of whom half of her earnings go to pay the minimum of each of credit card bills who has a girlfriend screen her calls as she is terrified of the collection agencies and is depressed as a result of her debt. What a depressing, demoralizing, and humiliating toll the credit industry is taking on the poor of our country.
These are the stories of exploitation that Brett Williams recounts in her newest book Debt for Sale: A Social History of the Credit Trap. Williams is clear from the very onset that she is making no attempts at neutrality and objectivity; she is simply telling it like it is, or at least the way she thinks it is. She herself suffers from massive credit debt. And yes, the language of suffering and victimization saturate this expose. The institutions, the government, even the consumer culture are to blame in this book for the downfall of the American poor and lower middle class. She uses the tragic tales of the few to stand in for the exploitation and suppression of the masses at the benefit of these ambiguous, all encompassing, and greedy financial entities, who ironically are the major source for employment in the US's new service sector economy. Despite this irony, the book is well put together in its explanations about how creditors, whether credit card companies, cash checking facilities, pawn shops, or mortgage brokers, exploit notions of American entitlement to freedom, choice, flexibility, and materialism in order to pedal their products.
Our story begins in the 1970s when credit and debt became "the engine of the US economy." Through acquisitions, mergers, improvements in technology and communication, the financial services and credit industry has boomed and enabled the wealthy to become wealthier while feeding on the misfortune and inability of repayment of the poor debtors. Attempts have been made in constraining these financial giants such as Senator D'Amato's push for a 14% cap on usury, but have mostly been defeated through the rhetoric of credit as the new welfare, enabling the poor to get by when even their own government was not there to support them. Williams demonstrates the cyclical damage that the credit industry has laid upon the less fortunate through treating those who pay their bills and do not carry a balance as "deadbeats", and therefore encouraging people to pay the bare minimum and get caught up on exponentially high interest rates.
The industry paints a picture of comfort, freedom, and security for those in tight financial situations and not only could care less, but thrive on the automatic cycle of debt. She tackles the idea of convenience users verses revolvers; convenience users being those who basically use credit as short-term, low-interest loans, and revolvers being those who get stuck in an endless succession of barely paying the minimum and rolling over their balance and interest into future periods. The institutions seek out those who are desperate and/or ignorant and turn their bad year into a horrific one. If you thought that credit cards and banks were the only people profiting off of ridiculously high interest rates, Williams offers up some additional institutions for examination. Student loans have become a large portion of current financial aid packages, putting terror in the eyes of those who intend to use their education for the betterment of the world instead of their own purses. Rent-A-Centers charge outrageous monthly fees for usage of furniture, appliances and more that amount to interest rates of up to 150 percent. At pawn shops, customers often pay $0.25 for every dollar of an items value while it is being held. Payday Loan Corporation reckons that its customers pay a whooping 1288.5 percent interest on five day loans. (98)
The point of Williams book, however, is not entirely wrapped up in the banking and credit world of fancy terminology and high interest rates, but perhaps more importantly attempts to expose how credit is linked to American society. She states, "Credit and debt only make sense in the context of other social relations and obligations." (5) This theme of the book is expressed well in the chapter entitled Seducing Students in which credit almost becomes a rite of passage for teenagers, ushering them into the mature, responsible adult world. Materialism and the need to put up a front of lavishness and style are cited as additional reasons that people are seduced into the world of credit. The book is not at all intended, however, to focus on why people make certain purchases, or how they get into debt, but the institutions that take advantage of their bad luck and keep people there at their own profit.
Williams does, unfortunately, leave the reader wanting for more. The book is challenging for those with little economics background or credit training. It spends virtually no time discussing what a credit score is and how that influences ones ability to purchase and pay, and the extent to which it can sway interest rates. Williams offers a myriad of solutions in her short conclusion including usury caps, reenact New-Deal-type programs for employment, and the government liquidating debt burdens. The distressing part though, is that the suggestions for the most part are barely explained and not feasible solutions for the problem of debt inequalities in America. What is realistic in a capitalist country based on a consumer culture in which the ability to buy is the ultimate test of citizenship?
Summary of Debt for Sale: A Social History of the Credit Trap
Credit and debt appear to be natural, permanent facets of Americans' lives, but a debt-based economy and debt-financed lifestyles are actually recent inventions. In 1951 Diners Club issued a plastic card that enabled patrons to pay for their meals at select New York City restaurants at the end of each month. Soon other "charge cards" (as they were then known) offered the convenience for travelers throughout the United States to pay for hotels, food, and entertainment on credit. In the 1970s the advent of computers and the deregulation of banking created an explosion in credit card use?and consumer debt. With gigantic national banks and computer systems that allowed variable interest rates, consumer screening, mass mailings, and methods to discipline slow payers with penalties and fees, middle-class Americans experienced a sea change in their lives.
Given the enormous profits from issuing credit, banks and chain stores used aggressive marketing to reach Americans experiencing such crises as divorce or unemployment, to help them make ends meet or to persuade them that they could live beyond their means. After banks exhausted the profits from this group of people, they moved into the market for college credit cards and student loans and then into predatory lending (through check-cashing stores and pawnshops) to the poor. In 2003, Americans owed nearly $8 trillion in consumer debt, amounting to 130 percent of their average disposable income. The role of credit and debt in people's lives is one of the most important social and economic issues of our age.
Brett Williams provides a sobering and frank investigation of the credit industry and how it came to dominate the lives of most Americans by propelling the social changes that are enacted when an economy is based on debt. Williams argues that credit and debt act to obscure, reproduce, and exacerbate other inequalities. It is in the best interest of the banks, corporations, and their shareholders to keep consumer debt at high levels. By targeting low-income and young people who would not be eligible for credit in other businesses, these companies are able quickly to gain a stranglehold on the finances of millions. Throughout, Williams provides firsthand accounts of how Americans from all socioeconomic levels use credit. These vignettes complement the history and technical issues of the credit industry, including strategies people use to manage debt, how credit functions in their lives, how they understand their own indebtedness, and the sometimes tragic impact of massive debt on people's lives.
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