Friday, May 16, 2008
May 4, 2001 | Read the story.
The headline in Salon reads: "Generation bankrupt: They got hooked on credit cards when the good times seemed forever. Now the bills are due."
Great. My generation gets yet another lamentable label: generation bankrupt, generation in debt, hangover generation.
Gen X just doesn't cut it anymore; we who began our era as slackers, then morphed into workaholic entrepreneurs believing naively that we could create a brand new economy. We were wrong. If you believe the rumors, we single-handedly brought the economic market to a screeching halt.
Now we find ourselves in an abyss of debt. We're slackers, once again, through no fault of our own. We're addicts: Like alcoholics, we need credit to live the good life. We are the victims of circumstance.
It's downright appalling how we have been victimized by the huckster credit card companies. They figured out, right around the time my generation was hitting puberty, that giving away easy credit would, in the long run, make them a hell of a lot of money. If you give a 19-year-old kid a credit card with a $1,000 limit, he will max the card on CDs and pizza within four months, and pay the bare minimum back at 18 percent, in perpetuity. That's a pretty good return on investment. And the more outstanding credit he has, the higher his credit rating will be, and the more credit he'll get. It's brilliant.
Being obediently ravenous consumers, we bought clothes and CDs and lattes and dinners at nice restaurants, and we charged it all. Everyone I know did this. By our mid-20s, many of my friends owed $20,000 or more. (I consider myself lucky: I completely destroyed my credit by age 24, and haven't had a credit card since. I have been one of the very few living within my means; which means I lived pretty much in abject poverty.)
Most of my friends have been playing the transfer game for years. They get a preapproved gold card in the mail with a low, low, 0 percent rate (for the first two months), and continually transfer their balances to these new cards. Those in the best circles of the credit card world receive an astounding deluge of offers for new credit cards, all preapproved, with a check made out to them for their first cash advance.
One of my friends has come to the apparent end of the road on that game; one late payment and the finance charge skyrockets to 25 percent. A phone call to customer service reveals that she is no longer a "preferred customer" and they don't really give a damn if she cancels her card and tells her friends never to bank there. She still owes them a couple thou at 25 percent interest.
Then I hear the stories that make me believe we are, in fact, a generation of idiots: those of people day-trading on their credit cards. They take out that cash advance to open their E-Trade account. They transfer their balances to new 0 percent credit cards in an elaborate game of precise timing, where upwards of six credit cards might be in use at a time. They borrow even more through the brokerage (margins, calls, whatever they're called). It's all very thrilling until the market completely crashes and they're left holding the bag. Portfolios in the half-million-dollar range suddenly dropped to zero, margins were called, and credit card balances suddenly stood in the six figures. I'm no expert, but it sounds an awful lot like gambling to me.
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