While it's fun to blame banks, the time is right to look inward

05.14.09
By John Ulzheimer

Credit card reform is on the way. By July 2010, we'll all enjoy more consumer-friendly protections from the evil empire known as "enter your least favorite bank's name here" Credit Card Company. And while the momentum de jour is clearly against the lender and for the consumer, it's important that we don't overlook an inconvenient and politically incorrect truth, which is that we're as much to blame as anyone else in this meltdown.

I’ve had the privilege in my time as a credit professional to speak with countless consumers. What I enjoy above almost all else is looking at a seemingly impossible situation and offering my opinions as to what you did right, what you did wrong, and what you can do about it now. It’s a position I liken to being a family physician. But instead of seeing you in your birthday suit and poking and prodding to offer a diagnosis, my role is to see you from an even more personal perspective: financially exposed, as I take a look into your money management practices as seen through your credit reports.  

The advantage I have is that I am not emotionally attached to your debt. And while I'll certainly attempt all appropriate protocol and politeness in communicating, in many cases your credit card issuer, your mortgage lender, and your auto lender aren’t to blame...you are! This position almost always makes me the least popular guy in the room, but at the end of the day I’m the guy who will tell you the cold, hard truth that you have a piece of salad in your teeth, that you have toilet paper on your shoe...and that you don’t know how to manage credit.

Someone making $45,000 as a county fireman can’t blame gas prices for not being able to afford a $78,000 BMW. A couple with a household income of $92,000 can’t blame a mortgage lender for not being able to afford their $3,800/month mortgage payment, which is only that low because it’s an interest only loan that has been amortized over 50 years. And, my favorite, the guy next door shouldn’t even think about blaming the credit card companies because of his $67,000 in credit card debt that he can’t afford because of his $127,000 Mercedes loan.

Yes, I know that many of us are in a bad position because some lenders were deceptive in their description of loans and how they would adjust over a given period of time. I consider that to be quasi-fraud and an exception rather than the norm. But when all is said and done, we all have to be aware that lenders are in business for one purpose and one purpose only: To make money. They don’t care about your excuses; they care about getting paid. And if they can charge you 7.9 percent interest rather than 5.9 percent interest, that’s good for everyone on their side of the ledger and bad for everyone on your side.

So as we come out of this recession/depression/contraction/whatever it is that we’re in the middle of, I’ll hope that the silver lining is that we consumers will be better prepared to make better decisions the next time we’re asked to sign on the dotted line. After all, signing on that line, as well as our overall money management decision-making, is always a reflection of our own personal choice and judgment.

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Our overall money management decision-making, is always a reflection of our own personal choice and judgment.