The Secret History of the Credit Card
By Drew Johnson on Thursday, July 12th, 2007 :: 2:16 pmCategory: Videos
PBS aired a FRONTLINE documentary back in 2004 called “The Secret History of the Credit Card” which, in conjunction with the New York Times and helmed by correspondent Lowell Bergman, strives to uncover the ways the credit card industry makes money and gets consumers to take on more debt.
What’s Good
The show begins with an informative bang, as Bergman goes to South Dakota to uncover the genesis of modern credit card lending practices. These practices, which were previously outlawed in many states under old usury laws, have since been allowed by South Dakota and other states to attract the very lucrative business of credit card giants like MBNA.
Usury is a strong word- biblical in its power- and by tying the start of modern lending practices with old usury laws Bergman lets us know right away how we’re supposed to feel about credit card lenders. Popular news commentator and actor Ben Stein then explains how credit lenders divide borrowers between “deadbeats”-those who pay their cards off every month and who thus don’t contribute much to lenders’ bottom line; and “revolvers” who just pay their minimum balance and thus accrue more debt than they can handle.
The rest of the the documentary portrays credit card lenders as big bad bogeymen who jack up borrower’s rates at the drop of a hat and basically make people’s lives a living nightmare. We meet the math wizard who ran Providian and discovered that lowering minimum monthly balances and introductory interest rates encouraged consumers to spend more. This is powerful stuff, and we can’t help bet get upset at the sight of big fat banks getting fatter while they let us spend our hearts out.
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