Evaluating The Need For Credit Cards

As I watch the news each day, with everything happening in the markets, I can't help but glean a certain amount of happiness with each bank that falls. I am praying with every fiber of my being that without the backing of the banks, credit card companies will be next. Quite frankly, I think that the business of credit card companies is no different from that of a loan shark or scam artist. I did not always feel this way. As a matter of fact, I was proud to own 8-10 credit cards at one time that is, until they killed my mother. They slowly, methodically and very deliberately, took every bit of life from her, and here is how they did it.

First a little background. My parents were simple people, by simple I mean they quite frankly, were hillbillies. My mother was born in 1928 and was four years older than my father. She was from Virginia and he, from Kentucky. The fact that he entered the Air Force took them away from their simple lives, landing them in Albuquerque, New Mexico where he retired. My parents did not go to college, and really for the most part, they had retained their innocence regarding the world outside their own lives. As the eldest child in my family, in some ways, I was their main connection to the outside world. It was a frustration for me for me to answer questions posed to me by my parents especially when I considered the subject matter simple, too simple for people their age to not know and perhaps that frustration showed at times.

After more than 45 years of marriage, my father died in 1994. In providing for my mother that had never worked, his insurance paid off the mortgage on their house and she received a pension from the Air Force, along with social security. Her income was approximately $1400 per month, which didn't make her rich, but certainly kept her safe. Although we lived a few hours away, I spoke with my mother every day and sometimes several times a day after my father's death, but since I knew she had the means to provide for herself, we did not discuss finances. When I was a child, my mother and I used to go out to play Bingo at the local halls. We played for prizes like coffee pots, dishes etcetera. Playing Bingo was not something I had time for while raising my own children, but I just didn't think much about it when my mother said that she had begun playing Bingo.

It was just a couple of years later and one busy day at work when I received a frantic call from my mother. Her request was that I co-sign for a loan on her house. My immediate reaction was "well, maybe we could just loan you what you need, how much of a loan are we talking about?" I was horrified when she said she needed $60,000 to pay off credit cards because they were threatening to file a bankruptcy claim.

Over the course of trying to figure out how my mother could be $60,000 in debt, here is what I discovered. Without ever applying for them, credit cards began appearing in my mother's mail. The credit limits on the cards, in most cases, were approximately $5,000 with a cash advance limits of up to half that. Apparently, credit card companies routinely monitor personal information such as the fact that your house was just paid off, in order to determine whether to send you a credit card without requiring any further information, such as monthly income.

Admittedly, when I thought of her playing Bingo, it was through the eyes of my childhood memories. I did not imagine something on the scale of a full scale casino. What had happened was when my mother ran out of cash from her monthly income she used the cash advances available on the credit cards and then also had to use the cards for her monthly expenses. Of course, I co-signed for the mortgage, but that act just brought on another round credit cards. Now she had paid off loans, she had the ability to refinance without a co-signer. Now, there was a loan on file that stated that the value of the house was double what was owed on the mortgage and all her credit cards had been paid off and believe me those sharks wanted that money. In addition to increasing her credit limits for cash advances, they began sending her all kinds of offers by mail that you could try out and then if you didn't like the service, you were supposed to call and cancel the monthly charges. By monitoring and reviewing her previous charges, many of the offers were geared toward her interests.

What had astounded me was the fact that if she had applied for a loan through a bank for $5,000, even when her house was paid off, with an income of only $1400 per month, she might not have been approved. Even if she was approved, the application process itself would have given her time to think about whether she really needed the money. What was really disturbing is to discover that these credit card companies are not looking for people with the monthly income to pay the bills. They are specifically targeting those people who either have little or no monthly income, but do have assets. When an obituary or death certificate is discovered, it sets into motion an investigation by the credit card company to research the assets of the widower. If you file for unemployment and you have assets, you are preapproved. Birth records are researched to provide information on all individuals that turn 17 and the assets of their parents. If the child goes to college, they are preapproved because it is assumed that either the child or the parents can be forced to pay for the credit card bills using the money set aside for college.

When my mother stacked up another $20,000 in credit card charges and had refinanced the house a couple more times, I begged her to just let them file their bankruptcy claims, pointing out that they could not take the house, but she believed in paying her bills even though she now had little money to live on. She was paying her credit card bills, but we had to supplement her income so that could eat and have heat. Her worry over these things affected her health. Most people remember the first time they qualified for a credit card. Qualifying for a credit card meant that you are a responsible person, that you can be trusted and that you are an adult. Her disappointment in herself and the whole situation took its toll. Even though cancer did not run in her family, my mother died within months of her diagnosis and no one will ever convince me that the cancer was not a direct result from the worry.

I have little sympathy for the banks or the credit card companies and I urge everyone I talk to not to borrow money from any bank for any reason. Houses can be purchased from private individuals without going through a bank or even a realtor for that matter. You can even buy a car by making payments to a private individual.

At the time all this happened, we owned two homes and had about $20,000 in credit card debt. We no longer have any credit cards. I negotiated pay offs. At least one of the cards did not appreciate what I forced them to settle for and made a notation on my credit file that they had accepted the payoff with prejudice. The attorney for the credit card company also complained to a judge about the tone in my correspondence during our negotiations. I don't know what my FICO score is and could care less. We put both our houses on the market, selling one and I resent every payment I make on the house I am currently living in. Half the time, I don't even know who owns the darn mortgage because the note was held by Washington Mutual. The "service" provider is Wells Fargo and they are the fourth service provider in just a few years. After this house sells, I will find some land that I can buy outright with the proceeds. If the land costs more than what we have, I will negotiate payments with the seller. I will never again borrow another dollar from a bank. I'd rather deal with Guido, the loan shark...at least I won't have to suffer through an "automated" 1-800 number and some operator that doesn't speak English.

I laugh with amusement at this latest news regarding the Bernie Madoff "Ponzi scheme" scandal. The man is charged with taking money from new investors and paying out to older ones. The banks have been taking your deposits and buying stocks. Those who withdraw their deposits first are paid first. The only difference is that banks are federally insured in case everyone cares to withdraw all at once.

If we need a loan, we will ask family and if they can't help, we will simply do without. I encourage everyone else to do the same. Take the time to reconnect with family. Discuss the current financial markets and resolve to help each other through it by not borrowing in the future. Perhaps these times should be our wake up call to end the stranglehold that these companies have on our families.

For more about my views on Washington Mutual follow this link:

http://www.helium.com/items/1196703-washington-mutuals-part-in-the-home-loan-crisis

and here is my experiences with Wells Fargo:

http://www.helium.com/items/863341-testimonies-my-mortgage-experience-with-wells-fargo