Salocin

US Debt

The United States of America is the great consumer society. Nowhere else in the world are so many people willing to buy so many things with so much debt and so little of their own cash. Commenting on this with some of my american friends, I am told that I should be grateful, because it is thanks to this rampant consumerism that the world economy keeps on crawling ever skyward, and while I would stop short of labeling the US as the saviour of all economies, I'll grant that there's some truth to that. There's something wrong, however, with the implication that the US consumer does this for the good of all.

The US consumer spends far more than he earns. An obscure website quotes the following statistics.

...the buying power of U.S. households (self-employed, hourly workers and retirees) comes in growing part from borrowed money. U.S. household borrowing increased $539 billion versus the $96 billion increase in personal income during January-March 2001, according to Jane D’Arista of the Financial Markets Center. For every dollar of personal income earned by U.S. households in this year’s first-quarter, they accumulated five dollars of debt.

One wonders where all of this borrowed money comes from, and why Americans feel so able and willing to spend so much money and dig so deep a hole for themselves. This is especially curious given the amount of people suffering from debt-related problems and needing financial counselling as a consequence. Do these people have no restraint?

Well, I'm not particularly well placed to criticise, having borrowed so much for an education myself, but I have a general aversion to certain types of consumer credit that doesn't seem to be shared by the majority of the US population. For example, it makes me feel nauseous to carry a balance over on my credit card from month to month. It also makes me feel queasy to use borrowed money to pay for consumables: I can understand the purchase of a car, or a washing machine, or a home, or an education; the purchase of a weekend in Atlantic City on a credit card, however, is something that I feel it is both irresponsible to do, and irresponsible to allow if you are the establishment fleecing the custom... I mean providing the paid-for service. Ok - I know - I'll tell my inner socialist to shut up now.

But a clue to the mystery of the great American willingness to borrow arrived in the mail today. I was astounded when the previous record of 4 was broken, but this very morning, I received five, pre-approved, exclusive (boy was I proud), limited-time-only, benefit-laced credit card applications. At first, I thought there were six, but the sixth envelope was my current American Express statement. I also received a bill, an advertisement for Comcast digital cable and two mail-order catalogs. This is great, I thought. I can buy the cable and the contents of the catalog and pay with the credit cards.

1) Providian Visa Platinum
Everything seems to be platinum these days. They've so cheapened the brand that I would be offended were I to be offered anything Gold or Silver ever again. In fact, to differentiate yourself, you're going to have to come up with an even more exotic (and preferably not radioactive) metal to lace my credit cards with.

So at the top of the letter, there are a few things. The first is a name that has a passing resemblance to mine, but the letter only made it to my home because they know more about my zip code and my address than I do. Then there are two "value statements". The first is, Exclusive Pre-Approved* Offer For: followed by the aformentioned random collection of letters. The second is 0% FIXED APR on Purchases until June 2005*.

Being a real cynic (as opposed to those fake ones who are just trying to be cool), my attention is immediately drawn to the little star in both of those statements. I unfold the paper to check what they buried at the bottom of the page and discover that I can only have the 0% if I transfer at least $100 now, but that the 0% (as implied by the statement above) only applies to purchases, so the company will make 13.99% on at least $100. Not such an amazing deal after all, but they write an entire paragraph to tell me how lucky I am that they're not charging me for the privilege of transferring a balance. Somehow that's not quite enough to rekindle the warm glow from all those positive statements about how credit-worthy I am - they now have the allure of one of those mosquito electrocuters they hang in butcher shops to zap dumb insects. I get a flashback from A Bug's Life : "Stay away from the light..."

Another worrying thing is a comment in 2-point type, in a tiny box on the back of the letter, that states...

You received this offer because a credit report obtained from a consumer reporting agency showed that you met our credit requirements for a Visa Platinum account. You have the right to notify the consumer reporting agencies not to use your credit report in connection with a credit transaction you did not initiate.

Hang on. So someone gave this company my credit report, which they then used to send me an unsolicited application, and that's the status quo. Were I to object to complete strangers reading my credit history without my knowledge, I would have to inform the credit reporting agency? I find it hard to dignify that with a reaction, it turns my stomach to think that somewhere, someone has come up with a justification for this blatant breach of privacy, and that they're capable of delivering it to me with a straight face.

2) First Premier Bank Gold Mastercard

Well clearly they're off on the wrong foot - the last offer was a Platinum Card and that one was designed for zappable insects, so how can the First Premier Bank possibly hope to keep my attention for long? Well they've done that neat trick with the fake card made from thick waxy paper that's glued to the letter. That gets me every time, I always think it's real until I notice that my (misspelt) name isn't even on it, and it's not plastic. I pull the card away from the letter to look at the back of it, but they saved on ink, and all I can see are the black block letters : THIS IS NOT A CREDIT CARD. No shit.

Apart from the interesting fact that they've misspelt my name in exactly the same way as the previous application (which is quite an achievement, because it was one hell of a misspelling, but then it occurs to me they probably obtained the same credit report that I've never seen and didn't know existed until now, which I never gave my approval for), there's not much to this application, although there are couple of quaint touches.

First of all, I've got my own confirmation number. It's 281 421, but don't tell anyone because it's bound to be extremely unique and private. Then next to that is a box with an approval signature by the "officer" in it. The signature looks authentic because it crosses the box boundary as though it were written after the box had been printed, but closer inspection indicates that this is not the case. Cunning, how can the American populace possibly resist such incredible marketing?

The rate is 9.9% on all purchases, which clearly doesn't compare to the 0% of the previous card, apart from the fact that they don't want an initial transfer. I figure these are bottom-trawlers looking for the customers who can't get credit from other card providers, and so charge a higher rate to compensate them for the risks they take. Next.

3) Blue Cash from American Express

I'm already a customer of American Express, so it really is quite remarkable that they've managed to get my name even more wrong than the previous two imbeciles. My surname is 17 characters long, in their letter they've generously afforded me all of 3 letters. My middle initial is also wrong, but at least they got the Mr. right.

So I can get cash back from American Express - up to 5% of everything I spend. Let's see how that breaks down.

You annual cash reward is based on how much you spend, where you spend and wheter or not you revolve your purchases. Your annual cash reward for everyday purchases at stand-alone U.S. supermarkets, gas stations ... is up to 3% (emphasis added). [These] do no include the departments of superstores or warehouse clubs where the standard rebate of up to 1.5% applies. Your annual reward for all other cash purchases is 1.5%. You will receive an additional rebate of up to 2% (emphasis added) in months in which your account carries a balance. Your annual cash rewards are limited to $50000 of eligible spending. Balance transfers [don't count].

Well damn. The "up to" in the cash reward thing clearly indicates that if I carry $1 over each month, which would already be a break with tradition for me, that won't get me the extra 2% cash back. Clearly they're out to train people who don't like to borrow and pay interest to get used to it so that they can grow their revenues. Smart business but it stinks if you're me. At least the rate 8.99% is competitive, with 0% for the first 6 months, but further reading indicates that they're going to review my credit and application afterwards, and the rate could jump to 10.99% or 13.99%, based on criteria they don't feel like sharing at this point. Doesn't really matter, they lost my attention when they butchered my name.

4) Shell Credit Card

This was a new one for me - a gas station offering me a "gasoline" credit card. To give you some context : I don't own a car, do not hold a US drivers license, and we call it "petrol" where I'm from, gas is an antisocial thing that happens when someone in the car overeats.

On the upside, it's the "only gasoline card I'll ever need", and we're back to the comparatively less offensive mauling of my name. The annual percentage rate, however, is 18.99%. But if you fail to make a payment to any creditor (not just Shell), then the rate goes to 23.99%. That's $24 per year for every $100 I have on my balance. I can get a better deal from Tony Soprano.

Another advantage is that I can pay at the pump with this card. We've been able to do that with any domestic bank card back in Belgium for the last 10 years. I feel like I've regressed to the stone age and have to pay to be brought back into the present.

Moving on.

5) United Mileage Plus Visa

The marketing here was slick, and I wouldn't have seen it coming if this hadn't been the third time they've sent me the application. First, it looks just like my United Plus mileage statement, except for a cool official-looking sticker that is artistically askew on the front of the envelope (at exactly the same angle as the previous two), which reads, "Dated Materials Enclosed, return before 6/14/04, tracking code : 000 000".

That tracking code really gave the game away don't you think? But the bar code was a nice touch. Once again, this is an organization that has my name on file, which I typed into their system over the internet, so one would assume they knew how to spell it. One would be assuming far too much. The first part of my surname has migrated into middle initial position, interspersed with periods, and the last couple of letters of my surname have been truncated for the sake of brevity.

But they're offering me 15,000 miles if I get the card and make a single purchase. Ooh the temptation. I can either not answer this letter, or I could pay a $60 annual fee, 3% on every balance transfer, 19.99% on cash advances, 13.99% on purchases, a 25% default rate (even worse than the Shell card) and receive 15000 miles in the frequent flyer programme of a bankrupt airline. Remember : "Keep away from the light..."

The cool thing is that their letter paper is square, which is really good for making paper aeroplanes, but the United jinx is still there, and it takes me longer to fold than I thought (technical difficulties). It then misses the wastepaper basket and lands somewhere else (diversion due to unforseen atmospheric conditions). I can't be bothered to throw it away (Chapter 11).

Posted by nlvp at May 4, 2004 01:41 PM