The current economic situation
The current economic situation is a testament to the pitfalls of people carrying too much debt. Even as lenders are receiving millions from the economic bailout plan to save their companies, they still continue to offer credit to risky people. Why? Because they know that they if someone defaults on a loan, they can not only use that amount as a tax write off, but can cite these losses as a reason for increasing interest rates, penalties and hidden fees for their current customers. Aggressively marketing credit to those who are least able to afford it may be financially savvy, but is highly unconscionable.
College students, who are more than likely cash strapped and unemployed, are lured by offers of credit cards as an easy fix. It is easy to pull out the card and spend “pretend money” to satisfy instant urges. Many students end up starting their post-graduate lives deeply in debt. I read one study that claimed that 1/5 of students a 4-year universities carry debt of $10,000. 00 or more. Marketing to retirees and those on fixed-incomes is just as ruthless. A responsible person might be able to use their credit for necessary things, but most people are
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With ever increasing fees and hidden costs, retirees see their savings dwindle, and those on fixed incomes—once they reach their spending limits—will find themselves spending just to lower their debt, unable to buy necessities. People who have declared bankruptcy have declared bankruptcy for one thing: they are unable to pay their bills, whether by circumstance out of their control, or a lifetime of bad money management. Offering more credit to them doesn’t help change their habits; it only makes it worse. So while the banks may become richer despite risky lending practices, the people they choose to market to become poorer in so many ways…