“Maxed Out” is the name of a new documentary by James Scurlock that takes a hard look at our credit card culture. I haven’t yet viewed the film, and will post a review after I’ve had a chance to see it. For the moment, I’m basing this post on the recent Newsweek interview with Scurlock.
(Note: This article is so old it no longer appears on Newsweek’s website or archives.)
From the interview, it sounds like Scurlock pulls no punches in targeting the credit card industry for some of its more insidious tactics. In my own debt negotiation coaching practice, I talk to struggling debtors on a daily basis. I hear the same things over and over again — how people keep getting credit card offers long after they were already in deep trouble, how the banks trap people with lures of low-interest rates only to jack up the rates later. The names change and everyone has a different background story, but the theme is the same. I talk to people with $100,000, $150,000, $200,000 of credit card debt on a regular basis. How does someone get so much credit in the first place? Simple: A credit card industry that is completely out of control.
I think Scurlock has it right with respect to an industry that has grown unchecked with very little regulatory oversight. In fact, the only significant credit industry legislation passed recently was the new bankruptcy law, which was totally anti-consumer and pro-creditor. The most telling point in the interview, in my opinion, is where the filmmaker notes that the banks have discovered that the most profitable business lies with the least responsible consumers. I would modify that a little and state that the most profitable customers are the ones who are struggling, period, not necessarily due to financial irresponsibility. And much of that profit comes not just from excessive interest rates (as noted in my prior posting), but also from $35 late fees. As much as one-third of credit card bank profits come from late fees and penalties. Something is clearly wrong when a business bases the bottom line on its customers’ financial misfortune.
I’m looking forward to seeing this documentary and hope that it gets a wide audience across indebted America.