Credit cards could be considered a type of addiction like drugs, the House Subcommittee on Commercial and Administrative Law heard today, when discussing “Are Credit Cards Bankrupting Americans?”
While the answer did not resound with a deafening yes, it seems that credit cards and the confusion surrounding the rules and regulations that go with credit cards definitely do not help with the growing number of bankruptcy cases.
Adam Levitin from Georgetown University Law Center said, “It’s possible to drastically simplify credit cards. Most of the of the complexity of credit cards is not to serve any particular consumer desire or need...instead credit cards are complicated for complications sake.”
Levitin added, “There is nothing particularly surprising about high credit card debt correlating with bankruptcy. People who are in bankruptcy have debt. What is important to note is that debt, dollar for dollar, credit card debt has a much higher correlation with bankruptcy than any other type of debt.”
Noting that he was not a psychological expert, Levitin stated that there was a connection between consumer addiction and consumer credit. He said, “It is like drug use in this sense. There is definitely an addictive quality to credit...there definitely are parallels between the way consumers use credit and what we see with addictive products.”
Angered at the current actions taken by credit card companies, who grant loans to people already in high debt, Congressman Bill Delahunt (D-Mass.) said, “Not only does it enhance if you will, the pain for the bankrupt, but it disadvantages other unsecured creditors and hurts the retailer, because they are receiving a diminished pro-rata share. If your interested about the retailer in America, if you’re interested in commerce in America, you’ve got to take and put this issue into this equation. It isn’t just about the credit card industry. It’s about business in America.”
Credit card spending linked to addiction
Credit cards could be considered a type of addiction like drugs, the House Subcommittee on Commercial and Administrative Law heard today, when discussing “Are Credit Cards Bankrupting Americans?”
While the answer did not resound with a deafening yes, it seems that credit cards and the confusion surrounding the rules and regulations that go with credit cards definitely do not help with the growing number of bankruptcy cases.
Adam Levitin from Georgetown University Law Center said, “It’s possible to drastically simplify credit cards. Most of the of the complexity of credit cards is not to serve any particular consumer desire or need...instead credit cards are complicated for complications sake.”
Levitin added, “There is nothing particularly surprising about high credit card debt correlating with bankruptcy. People who are in bankruptcy have debt. What is important to note is that debt, dollar for dollar, credit card debt has a much higher correlation with bankruptcy than any other type of debt.”
Noting that he was not a psychological expert, Levitin stated that there was a connection between consumer addiction and consumer credit. He said, “It is like drug use in this sense. There is definitely an addictive quality to credit...there definitely are parallels between the way consumers use credit and what we see with addictive products.”
Angered at the current actions taken by credit card companies, who grant loans to people already in high debt, Congressman Bill Delahunt (D-Mass.) said, “Not only does it enhance if you will, the pain for the bankrupt, but it disadvantages other unsecured creditors and hurts the retailer, because they are receiving a diminished pro-rata share. If your interested about the retailer in America, if you’re interested in commerce in America, you’ve got to take and put this issue into this equation. It isn’t just about the credit card industry. It’s about business in America.”