Welcome to the AP Economics Blog for Students of Boston College High School. It is in this forum that students will discuss issues in AP Economics class.
Sunday, September 4, 2011
Maxed Out
A documentary about credit cards and what predatory banking practices do to average Americans.
Large credit-card companies seem to prey on the weak and innocent in the same way that the drilling companies prey on people who own homes on "their" potential land. These credit-card companies attack recent college graduates, people who have gone through bankruptcy, and other easy victims. Where are their morals? From the sounds of things, Gordon Gekko would get along well with these companies, because apparently they share the same belief that greed is good. When reading my classmates' posts, it interested me that the credit-card companies were so up front about sharing the fact that 50% of their credit profit comes from the weakest of the weak (the aforementioned groups). The rising interest also interests me because the agreements are so encrypted to some people that if anyone was able to understand them, they would be offered a job. For those who are lost in the agreements (about 99% of us); they are cheated through "credit."
Credit card companies are, simply put, legal loan sharks. Primarily attacking college students and recent graduates, credit companies ensure themselves of people overspending what resides in their bank account and then continues to add interest on money that these people already do not possess. It is puzzling as to how these companies feel no remorse in taking advantage of these young adults and acting as the conduit in which they will become trapped in debt for the rest of their life. As charismatic as the credit card companies may be, people need to take responsibility while spending and saving their money.
In the Documentary Maxed Out, the action of credit card companies trying to give college students credit cards I find to be very controversial. A normal college student, during the school year, probably does not have a job and has no true source of income. In addition, if they are paying for their own education they have either little or no disposable income at all. In saying this, there is no way a college student can meet a minimum spending requirement, and then worry about paying for the bill when there is added interest. Also, the fees from missed payment and increased debt make it nearly impossible for the student to dig their way out without their parents basically bailing them out (if the parents even can). Not only is that devious, but making it seem so nice and simple at the credit card tables. There is so much fine print on those boards, and knowing the average 17-18 year old…nobody really wants to read fine print. This grants these companies the ability to scam and maneuver in so many different ways. One thing however that I do feel is NOT the credit card companies fault is the stupidy of several consumers. Throughout the film, different people complained saying the credit car companies were always out to get them, and they were targeted for being unlikely to pay the minimum. Now, in some instances this may be true but maybe, just maybe they didn’t make the smartest decisions. The consumer is the controlling factor in the grand scheme by choosing appropriate purchases. In saying this, there should be equal blame placed on the consumer for any massive debt or any unacceptable credit report.
One of our countries greatest economic issues, along with the rest of the world economy, is debt. Though the national debt takes all the headlines in the media, personal debt plagues millions of citizens. Unfortunately for us, credit card and finance companies, such as Providian, feast on ordinary citizen's accumulation of credit. As a person's credit rises, they owe the finance company more money due to cumulative interest rates. Because of this system, credit card companies encourage customers to spend more money, only to build up their credit, resulting in more economic gain for them while it nearly ruins the life of the people they are preying upon. In Maxed Out, the story of Mark Mumma shows just how companies like Providian plan to make their money, which I find to be disturbing. Providian, a finance company and credit card provider, target customers who have a history of credit issues, such as Mark Mumma. By targeting these customers, Providian has a higher chance of landing a customer that will accumulate more credit by not paying all of his credit card bills in a responsible manner. In turn, the higher accumulation of credit, the more money the customer will owe the credit card provider. These companies make more money from people who have bad credit and are not as responsible as those with good credit. Though this benefits the credit card companies, the owners of bad credit, most of trying scratching to just get by, suffer as their debt rises and rises, while the finance companies make more and more money off of them. The rich get richer while the poor get poorer. In the end, Providian owed $400 million for defrauding those customers with sub-prime credit.
This documentary specifically hits home with many American family as it discusses debt mostly with credit. Almost every American family is now using credit and this film exposes the consequences to using credit when the industry is so corrupt. Liz Warren seems to be the most cautious of all the experts in the film as she warns multiple times against the creditors and banks because she knows just how profitable of an industry it is for them. It is clear that they will do anything to give you a credit card or a loan because they will make money off of them. Mark Mumma’s story was fascinating because it showed his downfall with the fraudulent credit card company Providian. He then used a website that he created to alarm other consumers about this credit card so that they do not suffer the same way that he did. I find Mark’s method honorable because he did not stay quiet about his story, but tried to be helpful towards others. There are multiple ways in which the banking industry derailed the life of John Ballew. Not only did it have an impact on John, but saw first hand the ways the banks were manipulating with American lives. His local bank in which he tried to have a job at continued merging over and over finally stabilizing at JP Morgan Chase (another merger bank). The type of people these banks were looking to hire were not people that had background in banking however, a background in sales. They wanted employees to sell everything from credit cards, banking loans, all the way to car loans. The modern bank was all about selling credit to consumers. This credit is what has some Americans into debt up to the hundred thousands. People such as Dave Ramsey who was successful but indulged into too much credit and ended up losing luxuries such as his Jaguar car. Credit has consumed so many lives and will continue to do so. I agree with many of this films points because it provides awareness for all the people using credit and loans. It shows that the consumers can have their lives consumed by loans, interest and credit. People should be more aware about the financial decisions that they are dealing with and should check more closely into the banks they are dealing with. Therefore, in my opinion the documentary “Maxed Out” does an exemplary job exposing corruption and raising awareness for the everyday American.
Although I do agree that people should be responsible in their spending habits, I do not agree that all the blame should be put on them. It appears as if the credit card companies deliberately play upon the dreams of the poor, to make their money. They seem to present a dream to the poor, the ability to make life easier and pay gradually for what they buy, but they take advantage of their dreams and make it so that their customers cannot brake out of their debt. There is a reason that companies pour millions into advertising, it works. People should not be punished for trying to achieve their dreams.
It seems to me that the movie Maxed Out illustrates a point known for years, companies target the poor and uneducated because they are the most likely to take advantage of short term gain financial offers and worry about the long term affects later. This has been a pattern in this country for decades and one the federal government is still unwilling to step in and fix. The concept of the poor getting poorer while the rick get richer is seen in all aspects of society, from dollar stores selling unhealthy and inexpensive crap, to convenience stores and fast food restaurants strategically placed in poor neighborhoods, to Rent a Centers luring in uneducated customers with rent to own gimmicks that end up costing consumers far more than an outright purchase. It is the role of the federal government to educate consumers as to the risks involved with credit cards and other gimmicks and to punish companies that take advantage of legal gray areas to exploit consumers.
Starting off with an antiquated cinematic sample ripped straight from the grayscales of yesteryear and continuing with a barrage of US economic news throughout televised history synched with the familiar artistic brainchild of Queen and David Bowie (as well as the only song worth listening to from Hot Space), Under Pressure, Maxed Out is quite possibly the most informative indie documentary not to be featured on Pitchfork. Highlighting the effects of lending and credit, this film provides some startling figures that will leave an impression in even the most unaware of viewers, such as the fact that banks give out $3 trillion in credit a year and that the average American household has more than $9,000 in credit card debt. In addition to highlighting the business practices of the major credit card companies, Maxed Out introduces another dimension to debt which, despite being able to control lives to a comparable degree, is lesser known the big names such as Chase or Mastercard: debt buyers.
Debt buying is, exactly as its name implies, the act of purchasing one’s debt after the payments are charged off and are then sold off. This field has been gaining unprecedented growth on Wall Street, to the point where investors purchased $75 billion of bad debt in 2005 alone. Perhaps the most interesting aspect of these so-called debt buyers is the duality of humanity that they exhibit in their line of work. On one hand, debt buyers research their clients to not only find out why they fell behind on their payments, but also what kind of person they are. This creates a more personal relationship between debt buyers and their clients, the kind of relationship that puts a more sociable and human face on the industry of purchasing debt. On the other hand, these very same debt buyers also gamble away the debt that they purchase from debtors, with no guarantee of a profit. For the debtors, it is not simply a game in which debt is thrown into the uncertain winds of chance, but their very livelihoods at stake. The whimsical nature of these debt buyers essentially means gambling lives, one of the least humane and unsettling acts someone can perform.
Maxed Out Credit card companies seem to be finding many different ways to seduce people into having significant amount of credit card debt. Credit card companies do this by advertising easy ways to acquire if they get a credit card. Before somebody knows it they have multiple credit cards with unrealistically high interest rates and can’t pay their bills. Then, they fall into an endless cycle of debt where they go month to month barely paying off each bill and not progressing forward. In my opinion, there is absolutely no likable principle that credit card companies use to benefit anyone. Everything they do seems as if it’s a scam that leads nowhere except to more debt. The worst aspect of the credit card companies is the fact that they advertise their cards to college students who are just learning to live on their own and are completely vulnerable. Companies bribe the students with free products and that almost seem irresistible to turn down because all you have to do is sign their name. College students who are already living with barely any money and minimum wage suffer the most because they don’t yet have the knowledge to make proper financial decisions. As said in the movie, the credit card companies are basically mimicking the days of sharecropping and slavery where slaves were forced to work for very little money but could never completely pay off there debt. Therefore, the slaves were legally forced to work and never quit because they were perpetually in debt to their owners. Credit Card Companies are basically repeating this process by sending people into a never ending debt cycle. However, in reality it’s not the credit card companies that are causing people’s debt problems. People’s lack of responsibility for their financial stability is the real cause. People shouldn’t blame the credit card companies for their own poor financial decisions.
Maxed Out: I do not feel it is very respectable for credit card companies to give college students credit cards. For one, there is barely a way that can afford to meet the minimum requirements needed for that card, especially if they are working to specifically pay off college and nothing else. It is just a scheme to put college kids, and eventually their families in insurmountable debt. On the other hand however, those college kids should be smart enough to realize that they do not need a credit card at that time, and they should read the contracts' fine print before signing off basically the money they have saved for college.
Again i agree with the statements about how credit card companies are not to be the one to be blamed. People should have control of their spending and they should control how they spend it. Meaning people should know that they need to be able to pay their bills and function and not have credit card debt change their lives because they didnt read the fine print or because they were simply not paying close enough attention.
RESPONSE: From what I've just read, I think that the business practices of Credit Card Companies are shameful. Luring college students, ridiculously high interest rates, and placing people in a vicious cycle of debt, interest and “repayment”. But, who is really to blame for that cycle? Is it the companies, the people themselves, or a consumerist culture. I say its a mix of the three. The goal of companies is to make money, and the credit companies do a very good job of this, even if they are like vultures. They make offers that, as mentioned by others, are too good to refuse. Individuals are to blame for making poor decisions, and not understanding their situations, perhaps they just never learned how to be responsible. I think that the major cause of credit problems today is society and today's culture. I worked at a daycare this summer, and all I could hear on some days was, “When I grow up I want to be a millionaire” I doubt whether or not some of those kids understood what a million was. I think that this deire for property leads to potentially reckless fiscal behavior such as irresponsible credit decisions.
Student Response: I had only heard about the strategy of the credit card companies "giving" credit to college students a few months ago, and after watching this video it has given me even more reason to be wary of credit cards while in college. The way the credit card companies manipulate an already at risk group of people is unforgivable. The credit companies say, "It's necessary to have some credit history...so here take this credit card and spend "x" amount." The problem with this is that "x" is way too big. If they companies wanted their customers to have a good credit history then they wouldn't tempt them with such large credit sums. They would start out with small portions and work up from there. Instead the credit card companies seem to want their customers to default so they can make more money off of them.
The deplorable tactics that are discussed in this documentary are not surprising to me at all quite frankly. The picture that they paint for the credit card companies is exactly how I would have pictured them as well. They are strictly concerned with greed and making money, and they do not care what procedures or tactics that they have to use to take advantage of the hardworking ordinary American. This just goes to show how easily said American can be manipulated into using credit cards so carelessly, and then in the end the debit they are put in always goes in favor of the credit card companies themselves. I was very shocked at how low these companies can go as to taking advantage of mentally challenged people, which really pisses me off because I worked every day this summer with mentally challenged people, and to take advantage of someone who has lesser brain capability or who will not know any better is just simply disgusting. Taking advantage of low-income families or even students is one thing, but to do such a heartless act against someone who society considers "mentally retarded" is just unacceptable. I am really surprised that credit companies are able to get away with doing such things. Then again that is just the way society works. People and companies will literally do anything to make money and get ahead in life. But to go as far as charging some people such high debt it causes them to kill themselves, it really just goes to show how society has evolved today into a monster that will crush anything and anyone in its way on its road to success.
“They know what their problems are, they just don’t want to fix them...Not because they’re too expensive, but because they’re contrary to their objective.”
This quote, from the movie Maxed Out epitomizes the credit card industry and how credit is allocated. Essentially, credit card companies want people who are risky to have as customers. Rather than people who pay punctually, these companies want the people who are most likely to be late: the people who have lower credit scores. This, ironically enough, is because credit card companies make the majority of their prophet on these very same people. Since they have low credit scores, they are likely to be late and are thus subjected to paying huge late fees and interest fees. For example, in the movie a certain piece of abdominal workout equipment is illustrated as four payments of $29. However, since there were late fees and high interest rates on the product, over time the equipment ended up costing some $712. Therefore, these card companies want their customers to be late so that they can make extreme amounts of prophet like in this instance.
I do not like this business practice, but I can somewhat understand the rationale behind it. If the credit card companies are taking huge risks on people who are unlikely to pay, they should have some sort of reward. This is a simple risk versus reward concept. However, the extent to which these banks and credit card companies exploit their customers is unfathomable. Once a person is late for their bill, credit card companies basically hold them captive. Interest on credit is so large that each U.S. household has $9,205 in credit card debt and pay $1,300 a year in interest. People feel like they get into a hole that they can not get out of. Such huge debts lead many of these people to suicide. But these companies do not care about the wellbeing of their customers, but the money that these people can earn them.
But which problem is less difficult to solve: get companies to change their policies or get everybody to pay their bills on time? I believe that both need drastic change, but I think that although it would be extremely difficult, late fees and interest rates of credit card companies need reform. I do not agree with the policies that are currently in use. In addition, I believe that not only should these fees be reduced, but also, there should be more incentive to paying your bills on time. In many instances, these people miss the bill once, and therefore think, “what’s done is done”. They don’t realize that they are entering credit hell. In short, it is not in one’s best interest to be subject to the will of these credit card companies. Like the quote at the top of the page from the movie Maxed Out says, these huge fees are problems that should be changed, but because they make so much money for the credit card companies, they are not going to be changed any time soon.
The documentary Maxed Out illustrates credit card companies taking advantage of those who will not be able to pay their credit by giving them credit cards. The companies did this in order to make more money off the consumer through high interest rates that the consumer would take forever to pay back (or as it turned out the consumer would need to file for bankruptcy). Many practices that the credit card companies participated in were despicable, but there were some positives.
I disliked many of the credit card companies’ practices. For example, a credit card company gave $13 million dollars to The University of Oklahoma to be able to give out Oklahoma Credit Cards on campus. Furthermore, they would entice students with no credit history to sign for a credit card by giving them a free Oklahoma Sooners t-shirt. In my opinion, credit card companies should not be bribing students to sign up for a credit card, nor should they give out credit cards to college students that have no credit history. That the companies are giving credit cards to 18 year old unemployed students along with minimum wage earning students and those already months behind in other card payments illustrates that the credit card companies are trying to take advantage of people.
While many of the credit card companies’ practices were appalling as they took advantage of people, I did like one practice that the companies made. Even though it is hypocritical to give minimum wage college students credit cards, but to deny the cards for other young men and women who are making a higher salary, I liked this for a different reason than why the companies denied the cards. If you think about it, these people who did not receive a credit card will now become much more financially responsible as they will probably not spend more money than they take in, so they will probably not be one of the many Americans declaring for bankruptcy. While the credit card companies are definitely greedy for denying these young people who could pay the bill without months of interest cards, it does teach these men and women to be more financially responsible, which I like.
In my opinion, the credit card companies made many poor decisions in bad taste, but some of their decisions can turn out to be good for the consumers as they will not become addicted to credit.
Your analysis of Maxed Out seemed to be in great detail and provided a great summary of the "credit crisis" of our generation. The film also seemed worthy of your time and, time permitting, I might check it out. One point of inquiry I have for you is your thoughts on government regulation. There is certainly merit in this situation, and correct me if I am wrong, that government regulation would offer a solution. The "hidden fees" you speak of require a strenuous read of the agreement and would not be understood without the proper education. Would you favor regulation by the government in this instance then?
“Maxed Out” “Maxed Out” is the frighteningly true and accurate story of credit and creditors. The film takes the viewer through the world of the creditors, the credit card companies who issue credit cards to everybody, then violently hunt people down to pay their bills. I would like to explore the minds of people who incur debt as a result of overspending, or falling for the traps of these credit card companies. On many occasions, people take out second or third credit cards to attempt to pay off debt in the short term for a first card, however, fail to see the future repercussions and massive debt they incur down the road. Unfortunately these people fall into the traps of credit companies, misunderstanding the interest agreements, and overspending. These people have no help once they are in debt because credit companies will stop at nothing to make back the money loaned plus interest. Credit companies have become deceitful in their advertisement in order to appeal to people who cannot understand what they are getting themselves into. This deception can lead consumers into a downward spiral into debt which rapidly can suck up everything that individual’s own, and destroy their lives.
The documentary Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lending shows the dangers and evils of credit cards and lending. Throughout, we are given an array of examples on how simple it is for some to get into debt and how relentless the companies who are owed money are, even in the most unfair of situations. Companies will lend to those who they know cannot pay them back, such as low-income poor and college students, essentially tricking them into a lifetime of debt with the possibility of easy money.
A particular practice shown that I disliked was that of the money collectors. Their job is to coerce people in debt to pay what they owe. In theory, that seems like a relatively fair enough idea, if done fairly, however many of the techniques they used in attempt to get the money were cruel and thuggish. They would try to scare or even embarrass people into paying bills that they cannot necessarily pay. Pushing a person who are already in a poor enough position to be in debt is simply cruel and immoral.
Most debt is caused by the lack of knowledge of the consumer when they are getting loans or using credit cards, so hopefully with more awareness will come less debt and less likelihood for people to be held at the hands of lending companies.
Maxed Out documents credit card companies profiting off the interest of loans to lower income families that can not afford to fully repay their debt. Throughout the film, investigative reporter Mike Hudson travels directly to those affected to learn their stories.
From the Brown family in Aberdeen, Mississippi to Queens, New York, and Pennsylvania, every family tells the same story: they were having difficulty making ends meet for the basics and resorted to credit. As the credit bills piled up, the interest rate increased. The cycle increased with each passing day, and the calls became more numerous. The credit companies threatened foreclosure, public humiliation, etc. All the while secret hidden fees were becoming realities for the families struggling to pay off their debt. “They raped us” one disgruntled credit debtor said.
Hudson compares the system to slavery, stating that after slavery sharecropping became the law of the land. Former slaves were in debt to their landowners, who continuously worked to appease them. Yet this was to no avail. In modern times, lower income families are continuously working to pay off their debt to the credit card companies, which is as fruitless as the sharecropper's task.
Hudson's reporting, in my opinion, deserves both accolades and scrutiny. He is a great investigative reporter for finding the truth behind the rhetoric. Traveling across the country to personally hear the tales of those directly affected by the credit companies absurd interest rates provides a personal narrative behind the numbers presented throughout the film. I disagree that the current system represents a modern—day slavery. I understand Hudson's point, that families are working to survive their debt. The fact remains, however, that those in debt did receive substantial financial aid to help them meet their daily needs. Slave owners did not provide anything of worth to the slaves. Hudson here may simply be hyperbolizing the situation to make his point more evident.
Maxed Out would treat the families affected by the credit system as facts and figures if Mike Hudson's investigative reporting were cut out. He helps put a face to the injustice through superb first-hand reporting, despite slightly hyperbolizing the situation.
I thought that this documentary about credit debt was very interesting, but at the same time, I thought that it was rather sickening. I think that it is absolutely unbearable to hear about people committing suicide over credit debt, as the movie talks about. I just cannot imagine how people can get themselves into that much debt, that they would commit suicide. I really thought that this documentary showed how unethical the business of credit cards is. I mean, it seems a little wrong for credit card companies to target college students, knowing that they will not be able to balance the cost of tuition with their credit card payments. What is more, is that the companies are able to charge college kids with rather steep interest rates, when the college kids are late with their credit card payments. This seems really unethical, but at the same time, it is really smart. This is the best possible way for credit card companies to make money, even though it seems wrong. At the same time, it may not be wrong at all, because the college kids are not forced into purchasing credit cards. To me, it is wrong that company representatives trick kids into thinking that they can afford credit cards when they cannot, but at the same time, the companies can’t make the kids buy the credit cards against their own will.
To me, the best thing about this documentary is that it sends out a warning message to students. I do not think that it is bad to get a credit card as a students, but I definitely think that if one has any doubt whether or not he can afford it, then he should not get it. Credit cards are simply a convenience, and if one can’t afford having one, he should just stick to paying with cash, so that he doesn’t end up in debt.
This documentary makes me pretty angry when it talks about how some of the big banks have made a lot of their money recently by targeting low-income families with higher interest rates. What is even worse, is that the documentary talks about how the bigger banks have taken advantage a mentally challenged people, raising interest rates on them, so that they can maximize their profits. I really think that this is just horrible, and I could not even imagine how greedy someone would have to be to do something like this. Overall, this was not my favorite of the documentaries, but i definitely appreciated the warning signal that it sends out to young people, with regard to credit debt.
In response to Dylan, You gave a very well written review of "Maxed Out" and it seems that your perspective on the credit companies practice is logical. If the credit companies allow low income students to receive credit and the higher income students none, their corrupt practices seem obvious. To prey on the weak is financially beneficial, but on the other hand it is ethically questionable. The greed of large companies like this continues to astound me the more I learn. I disagree on your opinion on witholding credit cards to wealthier clients, mostly because their motives seem more corrupt than noble. Addiction to credit is what they depend on, what company wants a reliable customer? It brings them less revenue.
In Maxed Out, Mark Mumma of Oklahoma City, Oklahoma, describes the business practices of the credit card company Providia. After Mumma's “debt queen” of a wife left him (and the debt she racked up from her medical bills), Mumma was forced into bankruptcy. Within months, Providia sent him an application to apply for their credit card. His Abtronics, which was originally four equal payments of $29 ended up costing him with interest, late fees, and overlimit fees, $715.47. By later registering with ProvidianFinancialSucks.com he learned more about them. Disturbingly, Providian employees would post to the website, harassing the people against their company. One employee said to customers that he or she was going to have a “big lawsuit on your hands” because of the posting of his or her Providian information. The employee went on to say that he or she hopes the customer has a lot of money to pay for an attorney, then says that he or she would not be a customer if he or she in fact did. This might possibly be directly related to the customer base, people who have been through bankruptcy who can not default again and who are desperate for money. Mumma found out other disturbing practices through a former employee of Providian. She said that the company holds the checks they receive or simply shred them, banking the company an additional $70 per client in late fees. This disgusting company paid $400 million to settle charges it defrauded customers in 2001-2002. If the morally corrupt company is not bad enough, the directors will drive you insane. Two years after the grotesque settlements, President Bush appoint an ethics “czar” to “clean up corporate America. His choice Deputy Attorney General Larry Thompson. Who better than a former director of Providian, who later is suggested to be involved in its crimes? These seemingly immoral people land in high government jobs with high payrolls. Providian's policies are to no benefit of their customers, they are in the self-interest of the employees and owners of the company. Greed leads them to suck dry the average American while they are knocked down on the ground, trying to build their life from the ground up, just looking for some help along the way.
In Maxed Out, Mark Mumma of Oklahoma City, Oklahoma, describes the business practices of the credit card company Providia. After Mumma's “debt queen” of a wife left him (and the debt she racked up from her medical bills), Mumma was forced into bankruptcy. Within months, Providia sent him an application to apply for their credit card. His Abtronics, which was originally four equal payments of $29 ended up costing him with interest, late fees, and overlimit fees, $715.47. By later registering with ProvidianFinancialSucks.com he learned more about them. Disturbingly, Providian employees would post to the website, harassing the people against their company. One employee said to customers that he or she was going to have a “big lawsuit on your hands” because of the posting of his or her Providian information. The employee went on to say that he or she hopes the customer has a lot of money to pay for an attorney, then says that he or she would not be a customer if he or she in fact did. This might possibly be directly related to the customer base, people who have been through bankruptcy who can not default again and who are desperate for money. Mumma found out other disturbing practices through a former employee of Providian. She said that the company holds the checks they receive or simply shred them, banking the company an additional $70 per client in late fees. This disgusting company paid $400 million to settle charges it defrauded customers in 2001-2002. If the morally corrupt company is not bad enough, the directors will drive you insane. Two years after the grotesque settlements, President Bush appoint an ethics “czar” to “clean up corporate America. His choice Deputy Attorney General Larry Thompson. Who better than a former director of Providian, who later is suggested to be involved in its crimes? These seemingly immoral people land in high government jobs with high payrolls. Providian's policies are to no benefit of their customers, they are in the self-interest of the employees and owners of the company. Greed leads them to suck dry the average American while they are knocked down on the ground, trying to build their life from the ground up, just looking for some help along the way.
Maxed out gave the audience an inside look at the nightmares of credit card debt. Although I do agree that some responsibility should be placed on the credit card users, this film makes it apparent that in many cases it is the credit card companies whom make it too easy to acquire numerous cards regardless of income. This was made clear through the specific example of the credit card companies on college campuses. Freshmen college students are most susceptible to the evils of the credit card companies. The companies would make it extremely easy for these freshmen to acquire credit cards even though they knew the students realistically wouldn’t have been able to pay the fees. What was most shocking was that corporations would almost trick students into signing up for a credit card by offering shirts or Frisbees or other goods just for filling their information out on a sheet, unknowingly applying for a credit card. We watched that as the students came to the realization that their fees and debt from their credit cards become too much, in two cases it was too much to live with and the students actually ended up committing suicide. Although these were two drastic cases I do agree, after watching the film, that credit card companies should be banned from college campuses.
Sounds like the credit card companies to me. Thtey keep you in debt as long as possible so you pay thte monthly fee and they make money. They target young adults bcause they know that they cannot pay off the debt and try to keep them in debt as long as possible using those hidden fees you mentioned. Mortgages are much he same, they say 30 years to maximize profit. My Dad paid half again wha was asked monthly and paid it off in something like 17 years and paid less than if he didn't.
Credit goes hand and hand with the American way. It is a part of the culture. Dave Ramsey tells us that you got to pay for the stuff you use. He has been there done that. Credit puts too many people in an economic slump that they are unable to rise from. The credit companies want to keep people in this downward spiral. As a fellow human being they have left the little man out of growing from the credit this country is given. The credit companies are malicious they want to keep people in debt that is how they make money even though they are making money.
This documentary examines the American lifestyle and the spending habits that drive people into debt. Credit card companies and lenders are the primary focus of this film as causes to this problem. These two practices have always seemed ideal to me in theory for it makes commercial purchases affordable for the middle class and even the lower class. Their existence allows these groups to buy necessary goods and pay them off at a steady rate which amounts to only slightly more than the retail price. However, these methods, while excellent in theory, have failed in practice. Throughout the documentary, we examine the myriad faults that the credit system has been laden with since its inception. Through research and interviews presented, the audience sees how credit card companies viciously target vulnerable customers. They target those who have been bankrupt before because the option of defaulting on debts a second time is impossible. They target young college students with no credit history by persistently advertising to them through the mail and even on college campuses. These students are young, naïve, and financially risky but this plays right into the plans of these companies. They hope that customers fall into debt because that when rates are increased and fees are added. Ultimately, many people dig themselves into a rut and continue to do so, drive to either declare bankruptcy or die. In addition, the world of information is not yet protected fully, though privacy from the government is ensured, privacy among other citizens and corporations is not. This opens up a wealth of opportunities for companies to exploit and abuse information. Lastly, not even all of the information is completely accurate due to credit bureau errors which could permanently ruin one’s credit. Credit had worked exceptionally well at the beginning, when its use first started booming after World War II. But then capitalist aspirations and greed took over, causing fees to skyrocket and predatory practices to be implemented.
Maxed Out Appearing towards the beginning of the movie, Beth Naef is one of the more intriguing characters featured in this movie. One of the things she said that stuck with me afterword was that if you look like you are making money eventually you will. This statement came on the heels of her admittance that the home she was building would not be affordable if interest rates were to go up. This practice is, in essence, what ruined the market back in 2007. As I stated above in my explanation of the movie “Inside the Meltdown,” the process in which people stretched themselves far too thin and did not plan for varying factors such as interest rates, deaths, or unemployment led to bad mortgages sold on the market etc… The thought process behind the idea itself, though, is a flawed one that many people, nevertheless, believe. Money should not be spent in exorbitant amounts on the hopes of the money coming back. This is the idea that confidence men trying to obtain investments in strip malls in West Texas pedal. Money should be earned through good sense, not by spending more money. That would not only lower your profit margin, but also puts you at extreme risk. As stated before, however, this is one of the key concepts of our market, and frankly, in my opinion it needs to be changed.
The actions of the executives of the credit card companies you described in your overview of Maxed Out remind me of the same motives people involved in Enron, such as Kenneth Lay, possessed. It is clear that the credit card executives did whatever they could to maximize profits, and this proved to be the same for the leaders of Enron. Both of the parties disregarded the well-being of anybody besides themselves and made huge profits at the expense of others. Taking part in the “fast life” proved to be a downfall for both credit card companies and Enron. This proves that illegal activity and greed are commonly the main reasons for the financial difficulties and setbacks faced by people involved in the business world.
In the film Maxed Out, I disliked the position of the credit companies. Their way of gaining profit by targeting the weak and the poor is clearly unethical. The fact that it is easier to get a credit card if you don’t have a job than if you do is insane. They are setting people up for failure and they know it, which is why they continue to do it. People who get into debt with these companies basically own them their lives until they die. These companies won’t stop though unless this becomes illegal or someone in a higher position is able to look beyond the money. What credit companies need to start doing is scanning their customers more carefully and treating them as actual people. For example it is much easier to take someone’s money if you know nothing about them as opposed to if you understand what kind of pain the person is being put through. People should also be more educated about debt before they are allowed to accept credit cards so they know what they can and cannot do. People need to understand that this can happen to them and the harsh life that debt can bring to them. Although the companies can seem bloodthirsty this is not entirely their fault, some people just think of short term money but don’t think of the repercussions of mindless spending. So all in all who is to blame? The credit card companies for picking on the susceptible or those people mindlessly buying into it without care for
Maxed Out is quite simply a documentary on credit debt and how people are taken advantage of by credit card companies. The documentary explains how credit card companies intentionally target college students. The companies know that college students will be unable to balance tuition and credit card fees, thereby pulling themselves into debt. The credit card companies want to pull people into a lifetime of debt because that means a lifetime of revenue for the company. The practice of intentionally pulling college students into a lifetime of debt is underhanded and morally reprehensible. I believe, however, that college students are mentally competent and are legally adults. Therefore, there is no issue with targeting a demographic that is supposed to be self-competent. Credit cards are not a necessity and college students need to be responsible enough to recognize whether or not they can afford a credit card. I do, however, find issue with banks that raise interest rates on low-income families with the purpose of putting the family in debt. The practice is predatory and is nearly as abhorrent as the practice of raising interest rates on the mentally handicapped. I feel that to take advantage of a mentally handicapped person is possibly the worse thing any company could do. I appreciate this documentary for bringing out some of the darker practices behind credit.
Your response on "Maxed Out" about how credit card companies target college kids is frightening. This is because I personally do not know how to use a credit card yet and I am going to college next year. This action is truly evil because these companies are financially attacking young students and families that are already burdened by college costs.
Response to Classmates' Responses:
ReplyDeleteLarge credit-card companies seem to prey on the weak and innocent in the same way that the drilling companies prey on people who own homes on "their" potential land. These credit-card companies attack recent college graduates, people who have gone through bankruptcy, and other easy victims. Where are their morals? From the sounds of things, Gordon Gekko would get along well with these companies, because apparently they share the same belief that greed is good. When reading my classmates' posts, it interested me that the credit-card companies were so up front about sharing the fact that 50% of their credit profit comes from the weakest of the weak (the aforementioned groups). The rising interest also interests me because the agreements are so encrypted to some people that if anyone was able to understand them, they would be offered a job. For those who are lost in the agreements (about 99% of us); they are cheated through "credit."
Response to a film I did not view.
ReplyDeleteCredit card companies are, simply put, legal loan sharks. Primarily attacking college students and recent graduates, credit companies ensure themselves of people overspending what resides in their bank account and then continues to add interest on money that these people already do not possess. It is puzzling as to how these companies feel no remorse in taking advantage of these young adults and acting as the conduit in which they will become trapped in debt for the rest of their life. As charismatic as the credit card companies may be, people need to take responsibility while spending and saving their money.
In the Documentary Maxed Out, the action of credit card companies trying to give college students credit cards I find to be very controversial. A normal college student, during the school year, probably does not have a job and has no true source of income. In addition, if they are paying for their own education they have either little or no disposable income at all. In saying this, there is no way a college student can meet a minimum spending requirement, and then worry about paying for the bill when there is added interest. Also, the fees from missed payment and increased debt make it nearly impossible for the student to dig their way out without their parents basically bailing them out (if the parents even can). Not only is that devious, but making it seem so nice and simple at the credit card tables. There is so much fine print on those boards, and knowing the average 17-18 year old…nobody really wants to read fine print. This grants these companies the ability to scam and maneuver in so many different ways.
ReplyDeleteOne thing however that I do feel is NOT the credit card companies fault is the stupidy of several consumers. Throughout the film, different people complained saying the credit car companies were always out to get them, and they were targeted for being unlikely to pay the minimum. Now, in some instances this may be true but maybe, just maybe they didn’t make the smartest decisions. The consumer is the controlling factor in the grand scheme by choosing appropriate purchases. In saying this, there should be equal blame placed on the consumer for any massive debt or any unacceptable credit report.
One of our countries greatest economic issues, along with the rest of the world economy, is debt. Though the national debt takes all the headlines in the media, personal debt plagues millions of citizens. Unfortunately for us, credit card and finance companies, such as Providian, feast on ordinary citizen's accumulation of credit. As a person's credit rises, they owe the finance company more money due to cumulative interest rates. Because of this system, credit card companies encourage customers to spend more money, only to build up their credit, resulting in more economic gain for them while it nearly ruins the life of the people they are preying upon. In Maxed Out, the story of Mark Mumma shows just how companies like Providian plan to make their money, which I find to be disturbing.
ReplyDeleteProvidian, a finance company and credit card provider, target customers who have a history of credit issues, such as Mark Mumma. By targeting these customers, Providian has a higher chance of landing a customer that will accumulate more credit by not paying all of his credit card bills in a responsible manner. In turn, the higher accumulation of credit, the more money the customer will owe the credit card provider. These companies make more money from people who have bad credit and are not as responsible as those with good credit. Though this benefits the credit card companies, the owners of bad credit, most of trying scratching to just get by, suffer as their debt rises and rises, while the finance companies make more and more money off of them. The rich get richer while the poor get poorer. In the end, Providian owed $400 million for defrauding those customers with sub-prime credit.
This documentary specifically hits home with many American family as it discusses debt mostly with credit. Almost every American family is now using credit and this film exposes the consequences to using credit when the industry is so corrupt. Liz Warren seems to be the most cautious of all the experts in the film as she warns multiple times against the creditors and banks because she knows just how profitable of an industry it is for them. It is clear that they will do anything to give you a credit card or a loan because they will make money off of them.
ReplyDeleteMark Mumma’s story was fascinating because it showed his downfall with the fraudulent credit card company Providian. He then used a website that he created to alarm other consumers about this credit card so that they do not suffer the same way that he did. I find Mark’s method honorable because he did not stay quiet about his story, but tried to be helpful towards others.
There are multiple ways in which the banking industry derailed the life of John Ballew. Not only did it have an impact on John, but saw first hand the ways the banks were manipulating with American lives. His local bank in which he tried to have a job at continued merging over and over finally stabilizing at JP Morgan Chase (another merger bank). The type of people these banks were looking to hire were not people that had background in banking however, a background in sales. They wanted employees to sell everything from credit cards, banking loans, all the way to car loans. The modern bank was all about selling credit to consumers. This credit is what has some Americans into debt up to the hundred thousands. People such as Dave Ramsey who was successful but indulged into too much credit and ended up losing luxuries such as his Jaguar car. Credit has consumed so many lives and will continue to do so.
I agree with many of this films points because it provides awareness for all the people using credit and loans. It shows that the consumers can have their lives consumed by loans, interest and credit. People should be more aware about the financial decisions that they are dealing with and should check more closely into the banks they are dealing with. Therefore, in my opinion the documentary “Maxed Out” does an exemplary job exposing corruption and raising awareness for the everyday American.
Although I do agree that people should be responsible in their spending habits, I do not agree that all the blame should be put on them. It appears as if the credit card companies deliberately play upon the dreams of the poor, to make their money. They seem to present a dream to the poor, the ability to make life easier and pay gradually for what they buy, but they take advantage of their dreams and make it so that their customers cannot brake out of their debt. There is a reason that companies pour millions into advertising, it works. People should not be punished for trying to achieve their dreams.
ReplyDeleteStudent Responses
ReplyDeleteIt seems to me that the movie Maxed Out illustrates a point known for years, companies target the poor and uneducated because they are the most likely to take advantage of short term gain financial offers and worry about the long term affects later. This has been a pattern in this country for decades and one the federal government is still unwilling to step in and fix. The concept of the poor getting poorer while the rick get richer is seen in all aspects of society, from dollar stores selling unhealthy and inexpensive crap, to convenience stores and fast food restaurants strategically placed in poor neighborhoods, to Rent a Centers luring in uneducated customers with rent to own gimmicks that end up costing consumers far more than an outright purchase.
It is the role of the federal government to educate consumers as to the risks involved with credit cards and other gimmicks and to punish companies that take advantage of legal gray areas to exploit consumers.
Starting off with an antiquated cinematic sample ripped straight from the grayscales of yesteryear and continuing with a barrage of US economic news throughout televised history synched with the familiar artistic brainchild of Queen and David Bowie (as well as the only song worth listening to from Hot Space), Under Pressure, Maxed Out is quite possibly the most informative indie documentary not to be featured on Pitchfork. Highlighting the effects of lending and credit, this film provides some startling figures that will leave an impression in even the most unaware of viewers, such as the fact that banks give out $3 trillion in credit a year and that the average American household has more than $9,000 in credit card debt. In addition to highlighting the business practices of the major credit card companies, Maxed Out introduces another dimension to debt which, despite being able to control lives to a comparable degree, is lesser known the big names such as Chase or Mastercard: debt buyers.
ReplyDeleteDebt buying is, exactly as its name implies, the act of purchasing one’s debt after the payments are charged off and are then sold off. This field has been gaining unprecedented growth on Wall Street, to the point where investors purchased $75 billion of bad debt in 2005 alone. Perhaps the most interesting aspect of these so-called debt buyers is the duality of humanity that they exhibit in their line of work. On one hand, debt buyers research their clients to not only find out why they fell behind on their payments, but also what kind of person they are. This creates a more personal relationship between debt buyers and their clients, the kind of relationship that puts a more sociable and human face on the industry of purchasing debt. On the other hand, these very same debt buyers also gamble away the debt that they purchase from debtors, with no guarantee of a profit. For the debtors, it is not simply a game in which debt is thrown into the uncertain winds of chance, but their very livelihoods at stake. The whimsical nature of these debt buyers essentially means gambling lives, one of the least humane and unsettling acts someone can perform.
Maxed Out
ReplyDeleteCredit card companies seem to be finding many different ways to seduce people into having significant amount of credit card debt. Credit card companies do this by advertising easy ways to acquire if they get a credit card. Before somebody knows it they have multiple credit cards with unrealistically high interest rates and can’t pay their bills. Then, they fall into an endless cycle of debt where they go month to month barely paying off each bill and not progressing forward. In my opinion, there is absolutely no likable principle that credit card companies use to benefit anyone. Everything they do seems as if it’s a scam that leads nowhere except to more debt.
The worst aspect of the credit card companies is the fact that they advertise their cards to college students who are just learning to live on their own and are completely vulnerable. Companies bribe the students with free products and that almost seem irresistible to turn down because all you have to do is sign their name. College students who are already living with barely any money and minimum wage suffer the most because they don’t yet have the knowledge to make proper financial decisions. As said in the movie, the credit card companies are basically mimicking the days of sharecropping and slavery where slaves were forced to work for very little money but could never completely pay off there debt. Therefore, the slaves were legally forced to work and never quit because they were perpetually in debt to their owners. Credit Card Companies are basically repeating this process by sending people into a never ending debt cycle. However, in reality it’s not the credit card companies that are causing people’s debt problems. People’s lack of responsibility for their financial stability is the real cause. People shouldn’t blame the credit card companies for their own poor financial decisions.
Student Response
ReplyDeleteMaxed Out: I do not feel it is very respectable for credit card companies to give college students credit cards. For one, there is barely a way that can afford to meet the minimum requirements needed for that card, especially if they are working to specifically pay off college and nothing else. It is just a scheme to put college kids, and eventually their families in insurmountable debt. On the other hand however, those college kids should be smart enough to realize that they do not need a credit card at that time, and they should read the contracts' fine print before signing off basically the money they have saved for college.
Student Response
ReplyDeleteAgain i agree with the statements about how credit card companies are not to be the one to be blamed. People should have control of their spending and they should control how they spend it. Meaning people should know that they need to be able to pay their bills and function and not have credit card debt change their lives because they didnt read the fine print or because they were simply not paying close enough attention.
RESPONSE:
ReplyDeleteFrom what I've just read, I think that the business practices of Credit Card Companies are shameful. Luring college students, ridiculously high interest rates, and placing people in a vicious cycle of debt, interest and “repayment”. But, who is really to blame for that cycle? Is it the companies, the people themselves, or a consumerist culture. I say its a mix of the three. The goal of companies is to make money, and the credit companies do a very good job of this, even if they are like vultures. They make offers that, as mentioned by others, are too good to refuse. Individuals are to blame for making poor decisions, and not understanding their situations, perhaps they just never learned how to be responsible. I think that the major cause of credit problems today is society and today's culture. I worked at a daycare this summer, and all I could hear on some days was, “When I grow up I want to be a millionaire” I doubt whether or not some of those kids understood what a million was. I think that this deire for property leads to potentially reckless fiscal behavior such as irresponsible credit decisions.
Student Response:
ReplyDeleteI had only heard about the strategy of the credit card companies "giving" credit to college students a few months ago, and after watching this video it has given me even more reason to be wary of credit cards while in college. The way the credit card companies manipulate an already at risk group of people is unforgivable. The credit companies say, "It's necessary to have some credit history...so here take this credit card and spend "x" amount." The problem with this is that "x" is way too big. If they companies wanted their customers to have a good credit history then they wouldn't tempt them with such large credit sums. They would start out with small portions and work up from there. Instead the credit card companies seem to want their customers to default so they can make more money off of them.
The deplorable tactics that are discussed in this documentary are not surprising to me at all quite frankly. The picture that they paint for the credit card companies is exactly how I would have pictured them as well. They are strictly concerned with greed and making money, and they do not care what procedures or tactics that they have to use to take advantage of the hardworking ordinary American. This just goes to show how easily said American can be manipulated into using credit cards so carelessly, and then in the end the debit they are put in always goes in favor of the credit card companies themselves.
ReplyDeleteI was very shocked at how low these companies can go as to taking advantage of mentally challenged people, which really pisses me off because I worked every day this summer with mentally challenged people, and to take advantage of someone who has lesser brain capability or who will not know any better is just simply disgusting. Taking advantage of low-income families or even students is one thing, but to do such a heartless act against someone who society considers "mentally retarded" is just unacceptable. I am really surprised that credit companies are able to get away with doing such things.
Then again that is just the way society works. People and companies will literally do anything to make money and get ahead in life. But to go as far as charging some people such high debt it causes them to kill themselves, it really just goes to show how society has evolved today into a monster that will crush anything and anyone in its way on its road to success.
“They know what their problems are, they just don’t want to fix them...Not because they’re too expensive, but because they’re contrary to their objective.”
ReplyDeleteThis quote, from the movie Maxed Out epitomizes the credit card industry and how credit is allocated. Essentially, credit card companies want people who are risky to have as customers. Rather than people who pay punctually, these companies want the people who are most likely to be late: the people who have lower credit scores. This, ironically enough, is because credit card companies make the majority of their prophet on these very same people. Since they have low credit scores, they are likely to be late and are thus subjected to paying huge late fees and interest fees. For example, in the movie a certain piece of abdominal workout equipment is illustrated as four payments of $29. However, since there were late fees and high interest rates on the product, over time the equipment ended up costing some $712. Therefore, these card companies want their customers to be late so that they can make extreme amounts of prophet like in this instance.
I do not like this business practice, but I can somewhat understand the rationale behind it. If the credit card companies are taking huge risks on people who are unlikely to pay, they should have some sort of reward. This is a simple risk versus reward concept. However, the extent to which these banks and credit card companies exploit their customers is unfathomable. Once a person is late for their bill, credit card companies basically hold them captive. Interest on credit is so large that each U.S. household has $9,205 in credit card debt and pay $1,300 a year in interest. People feel like they get into a hole that they can not get out of. Such huge debts lead many of these people to suicide. But these companies do not care about the wellbeing of their customers, but the money that these people can earn them.
But which problem is less difficult to solve: get companies to change their policies or get everybody to pay their bills on time? I believe that both need drastic change, but I think that although it would be extremely difficult, late fees and interest rates of credit card companies need reform. I do not agree with the policies that are currently in use. In addition, I believe that not only should these fees be reduced, but also, there should be more incentive to paying your bills on time. In many instances, these people miss the bill once, and therefore think, “what’s done is done”. They don’t realize that they are entering credit hell. In short, it is not in one’s best interest to be subject to the will of these credit card companies. Like the quote at the top of the page from the movie Maxed Out says, these huge fees are problems that should be changed, but because they make so much money for the credit card companies, they are not going to be changed any time soon.
The documentary Maxed Out illustrates credit card companies taking advantage of those who will not be able to pay their credit by giving them credit cards. The companies did this in order to make more money off the consumer through high interest rates that the consumer would take forever to pay back (or as it turned out the consumer would need to file for bankruptcy). Many practices that the credit card companies participated in were despicable, but there were some positives.
ReplyDeleteI disliked many of the credit card companies’ practices. For example, a credit card company gave $13 million dollars to The University of Oklahoma to be able to give out Oklahoma Credit Cards on campus. Furthermore, they would entice students with no credit history to sign for a credit card by giving them a free Oklahoma Sooners t-shirt. In my opinion, credit card companies should not be bribing students to sign up for a credit card, nor should they give out credit cards to college students that have no credit history. That the companies are giving credit cards to 18 year old unemployed students along with minimum wage earning students and those already months behind in other card payments illustrates that the credit card companies are trying to take advantage of people.
While many of the credit card companies’ practices were appalling as they took advantage of people, I did like one practice that the companies made. Even though it is hypocritical to give minimum wage college students credit cards, but to deny the cards for other young men and women who are making a higher salary, I liked this for a different reason than why the companies denied the cards. If you think about it, these people who did not receive a credit card will now become much more financially responsible as they will probably not spend more money than they take in, so they will probably not be one of the many Americans declaring for bankruptcy. While the credit card companies are definitely greedy for denying these young people who could pay the bill without months of interest cards, it does teach these men and women to be more financially responsible, which I like.
In my opinion, the credit card companies made many poor decisions in bad taste, but some of their decisions can turn out to be good for the consumers as they will not become addicted to credit.
Drew Houser,
ReplyDeleteYour analysis of Maxed Out seemed to be in great detail and provided a great summary of the "credit crisis" of our generation. The film also seemed worthy of your time and, time permitting, I might check it out. One point of inquiry I have for you is your thoughts on government regulation. There is certainly merit in this situation, and correct me if I am wrong, that government regulation would offer a solution. The "hidden fees" you speak of require a strenuous read of the agreement and would not be understood without the proper education. Would you favor regulation by the government in this instance then?
“Maxed Out”
ReplyDelete“Maxed Out” is the frighteningly true and accurate story of credit and creditors. The film takes the viewer through the world of the creditors, the credit card companies who issue credit cards to everybody, then violently hunt people down to pay their bills. I would like to explore the minds of people who incur debt as a result of overspending, or falling for the traps of these credit card companies. On many occasions, people take out second or third credit cards to attempt to pay off debt in the short term for a first card, however, fail to see the future repercussions and massive debt they incur down the road. Unfortunately these people fall into the traps of credit companies, misunderstanding the interest agreements, and overspending. These people have no help once they are in debt because credit companies will stop at nothing to make back the money loaned plus interest.
Credit companies have become deceitful in their advertisement in order to appeal to people who cannot understand what they are getting themselves into. This deception can lead consumers into a downward spiral into debt which rapidly can suck up everything that individual’s own, and destroy their lives.
Maxed Out
ReplyDeleteThe documentary Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lending shows the dangers and evils of credit cards and lending. Throughout, we are given an array of examples on how simple it is for some to get into debt and how relentless the companies who are owed money are, even in the most unfair of situations. Companies will lend to those who they know cannot pay them back, such as low-income poor and college students, essentially tricking them into a lifetime of debt with the possibility of easy money.
A particular practice shown that I disliked was that of the money collectors. Their job is to coerce people in debt to pay what they owe. In theory, that seems like a relatively fair enough idea, if done fairly, however many of the techniques they used in attempt to get the money were cruel and thuggish. They would try to scare or even embarrass people into paying bills that they cannot necessarily pay. Pushing a person who are already in a poor enough position to be in debt is simply cruel and immoral.
Most debt is caused by the lack of knowledge of the consumer when they are getting loans or using credit cards, so hopefully with more awareness will come less debt and less likelihood for people to be held at the hands of lending companies.
Maxed Out documents credit card companies profiting off the interest of loans to lower income families that can not afford to fully repay their debt. Throughout the film, investigative reporter Mike Hudson travels directly to those affected to learn their stories.
ReplyDeleteFrom the Brown family in Aberdeen, Mississippi to Queens, New York, and Pennsylvania, every family tells the same story: they were having difficulty making ends meet for the basics and resorted to credit. As the credit bills piled up, the interest rate increased. The cycle increased with each passing day, and the calls became more numerous. The credit companies threatened foreclosure, public humiliation, etc. All the while secret hidden fees were becoming realities for the families struggling to pay off their debt. “They raped us” one disgruntled credit debtor said.
Hudson compares the system to slavery, stating that after slavery sharecropping became the law of the land. Former slaves were in debt to their landowners, who continuously worked to appease them. Yet this was to no avail. In modern times, lower income families are continuously working to pay off their debt to the credit card companies, which is as fruitless as the sharecropper's task.
Hudson's reporting, in my opinion, deserves both accolades and scrutiny. He is a great investigative reporter for finding the truth behind the rhetoric. Traveling across the country to personally hear the tales of those directly affected by the credit companies absurd interest rates provides a personal narrative behind the numbers presented throughout the film. I disagree that the current system represents a modern—day slavery. I understand Hudson's point, that families are working to survive their debt. The fact remains, however, that those in debt did receive substantial financial aid to help them meet their daily needs. Slave owners did not provide anything of worth to the slaves. Hudson here may simply be hyperbolizing the situation to make his point more evident.
Maxed Out would treat the families affected by the credit system as facts and figures if Mike Hudson's investigative reporting were cut out. He helps put a face to the injustice through superb first-hand reporting, despite slightly hyperbolizing the situation.
I thought that this documentary about credit debt was very interesting, but at the same time, I thought that it was rather sickening. I think that it is absolutely unbearable to hear about people committing suicide over credit debt, as the movie talks about. I just cannot imagine how people can get themselves into that much debt, that they would commit suicide. I really thought that this documentary showed how unethical the business of credit cards is. I mean, it seems a little wrong for credit card companies to target college students, knowing that they will not be able to balance the cost of tuition with their credit card payments. What is more, is that the companies are able to charge college kids with rather steep interest rates, when the college kids are late with their credit card payments. This seems really unethical, but at the same time, it is really smart. This is the best possible way for credit card companies to make money, even though it seems wrong. At the same time, it may not be wrong at all, because the college kids are not forced into purchasing credit cards. To me, it is wrong that company representatives trick kids into thinking that they can afford credit cards when they cannot, but at the same time, the companies can’t make the kids buy the credit cards against their own will.
ReplyDeleteTo me, the best thing about this documentary is that it sends out a warning message to students. I do not think that it is bad to get a credit card as a students, but I definitely think that if one has any doubt whether or not he can afford it, then he should not get it. Credit cards are simply a convenience, and if one can’t afford having one, he should just stick to paying with cash, so that he doesn’t end up in debt.
This documentary makes me pretty angry when it talks about how some of the big banks have made a lot of their money recently by targeting low-income families with higher interest rates. What is even worse, is that the documentary talks about how the bigger banks have taken advantage a mentally challenged people, raising interest rates on them, so that they can maximize their profits. I really think that this is just horrible, and I could not even imagine how greedy someone would have to be to do something like this. Overall, this was not my favorite of the documentaries, but i definitely appreciated the warning signal that it sends out to young people, with regard to credit debt.
In response to Dylan,
ReplyDeleteYou gave a very well written review of "Maxed Out" and it seems that your perspective on the credit companies practice is logical. If the credit companies allow low income students to receive credit and the higher income students none, their corrupt practices seem obvious. To prey on the weak is financially beneficial, but on the other hand it is ethically questionable. The greed of large companies like this continues to astound me the more I learn. I disagree on your opinion on witholding credit cards to wealthier clients, mostly because their motives seem more corrupt than noble. Addiction to credit is what they depend on, what company wants a reliable customer? It brings them less revenue.
In Maxed Out, Mark Mumma of Oklahoma City, Oklahoma, describes the business practices of the credit card company Providia. After Mumma's “debt queen” of a wife left him (and the debt she racked up from her medical bills), Mumma was forced into bankruptcy. Within months, Providia sent him an application to apply for their credit card. His Abtronics, which was originally four equal payments of $29 ended up costing him with interest, late fees, and overlimit fees, $715.47. By later registering with ProvidianFinancialSucks.com he learned more about them. Disturbingly, Providian employees would post to the website, harassing the people against their company. One employee said to customers that he or she was going to have a “big lawsuit on your hands” because of the posting of his or her Providian information. The employee went on to say that he or she hopes the customer has a lot of money to pay for an attorney, then says that he or she would not be a customer if he or she in fact did. This might possibly be directly related to the customer base, people who have been through bankruptcy who can not default again and who are desperate for money.
ReplyDeleteMumma found out other disturbing practices through a former employee of Providian. She said that the company holds the checks they receive or simply shred them, banking the company an additional $70 per client in late fees. This disgusting company paid $400 million to settle charges it defrauded customers in 2001-2002.
If the morally corrupt company is not bad enough, the directors will drive you insane. Two years after the grotesque settlements, President Bush appoint an ethics “czar” to “clean up corporate America. His choice Deputy Attorney General Larry Thompson. Who better than a former director of Providian, who later is suggested to be involved in its crimes? These seemingly immoral people land in high government jobs with high payrolls.
Providian's policies are to no benefit of their customers, they are in the self-interest of the employees and owners of the company. Greed leads them to suck dry the average American while they are knocked down on the ground, trying to build their life from the ground up, just looking for some help along the way.
In Maxed Out, Mark Mumma of Oklahoma City, Oklahoma, describes the business practices of the credit card company Providia. After Mumma's “debt queen” of a wife left him (and the debt she racked up from her medical bills), Mumma was forced into bankruptcy. Within months, Providia sent him an application to apply for their credit card. His Abtronics, which was originally four equal payments of $29 ended up costing him with interest, late fees, and overlimit fees, $715.47. By later registering with ProvidianFinancialSucks.com he learned more about them. Disturbingly, Providian employees would post to the website, harassing the people against their company. One employee said to customers that he or she was going to have a “big lawsuit on your hands” because of the posting of his or her Providian information. The employee went on to say that he or she hopes the customer has a lot of money to pay for an attorney, then says that he or she would not be a customer if he or she in fact did. This might possibly be directly related to the customer base, people who have been through bankruptcy who can not default again and who are desperate for money.
ReplyDeleteMumma found out other disturbing practices through a former employee of Providian. She said that the company holds the checks they receive or simply shred them, banking the company an additional $70 per client in late fees. This disgusting company paid $400 million to settle charges it defrauded customers in 2001-2002.
If the morally corrupt company is not bad enough, the directors will drive you insane. Two years after the grotesque settlements, President Bush appoint an ethics “czar” to “clean up corporate America. His choice Deputy Attorney General Larry Thompson. Who better than a former director of Providian, who later is suggested to be involved in its crimes? These seemingly immoral people land in high government jobs with high payrolls.
Providian's policies are to no benefit of their customers, they are in the self-interest of the employees and owners of the company. Greed leads them to suck dry the average American while they are knocked down on the ground, trying to build their life from the ground up, just looking for some help along the way.
Maxed out gave the audience an inside look at the nightmares of credit card debt. Although I do agree that some responsibility should be placed on the credit card users, this film makes it apparent that in many cases it is the credit card companies whom make it too easy to acquire numerous cards regardless of income. This was made clear through the specific example of the credit card companies on college campuses. Freshmen college students are most susceptible to the evils of the credit card companies. The companies would make it extremely easy for these freshmen to acquire credit cards even though they knew the students realistically wouldn’t have been able to pay the fees. What was most shocking was that corporations would almost trick students into signing up for a credit card by offering shirts or Frisbees or other goods just for filling their information out on a sheet, unknowingly applying for a credit card. We watched that as the students came to the realization that their fees and debt from their credit cards become too much, in two cases it was too much to live with and the students actually ended up committing suicide. Although these were two drastic cases I do agree, after watching the film, that credit card companies should be banned from college campuses.
ReplyDeleteresponding to Maxed Out
ReplyDeleteSounds like the credit card companies to me. Thtey keep you in debt as long as possible so you pay thte monthly fee and they make money. They target young adults bcause they know that they cannot pay off the debt and try to keep them in debt as long as possible using those hidden fees you mentioned. Mortgages are much he same, they say 30 years to maximize profit. My Dad paid half again wha was asked monthly and paid it off in something like 17 years and paid less than if he didn't.
Credit goes hand and hand with the American way. It is a part of the culture. Dave Ramsey tells us that you got to pay for the stuff you use. He has been there done that. Credit puts too many people in an economic slump that they are unable to rise from. The credit companies want to keep people in this downward spiral. As a fellow human being they have left the little man out of growing from the credit this country is given. The credit companies are malicious they want to keep people in debt that is how they make money even though they are making money.
ReplyDeleteThis documentary examines the American lifestyle and the spending habits that drive people into debt. Credit card companies and lenders are the primary focus of this film as causes to this problem. These two practices have always seemed ideal to me in theory for it makes commercial purchases affordable for the middle class and even the lower class. Their existence allows these groups to buy necessary goods and pay them off at a steady rate which amounts to only slightly more than the retail price. However, these methods, while excellent in theory, have failed in practice.
ReplyDeleteThroughout the documentary, we examine the myriad faults that the credit system has been laden with since its inception. Through research and interviews presented, the audience sees how credit card companies viciously target vulnerable customers. They target those who have been bankrupt before because the option of defaulting on debts a second time is impossible. They target young college students with no credit history by persistently advertising to them through the mail and even on college campuses. These students are young, naïve, and financially risky but this plays right into the plans of these companies. They hope that customers fall into debt because that when rates are increased and fees are added. Ultimately, many people dig themselves into a rut and continue to do so, drive to either declare bankruptcy or die. In addition, the world of information is not yet protected fully, though privacy from the government is ensured, privacy among other citizens and corporations is not. This opens up a wealth of opportunities for companies to exploit and abuse information. Lastly, not even all of the information is completely accurate due to credit bureau errors which could permanently ruin one’s credit.
Credit had worked exceptionally well at the beginning, when its use first started booming after World War II. But then capitalist aspirations and greed took over, causing fees to skyrocket and predatory practices to be implemented.
Maxed Out
ReplyDeleteAppearing towards the beginning of the movie, Beth Naef is one of the more intriguing characters featured in this movie. One of the things she said that stuck with me afterword was that if you look like you are making money eventually you will. This statement came on the heels of her admittance that the home she was building would not be affordable if interest rates were to go up. This practice is, in essence, what ruined the market back in 2007. As I stated above in my explanation of the movie “Inside the Meltdown,” the process in which people stretched themselves far too thin and did not plan for varying factors such as interest rates, deaths, or unemployment led to bad mortgages sold on the market etc… The thought process behind the idea itself, though, is a flawed one that many people, nevertheless, believe. Money should not be spent in exorbitant amounts on the hopes of the money coming back. This is the idea that confidence men trying to obtain investments in strip malls in West Texas pedal. Money should be earned through good sense, not by spending more money. That would not only lower your profit margin, but also puts you at extreme risk. As stated before, however, this is one of the key concepts of our market, and frankly, in my opinion it needs to be changed.
Dylan Newman,
ReplyDeleteThe actions of the executives of the credit card companies you described in your overview of Maxed Out remind me of the same motives people involved in Enron, such as Kenneth Lay, possessed. It is clear that the credit card executives did whatever they could to maximize profits, and this proved to be the same for the leaders of Enron. Both of the parties disregarded the well-being of anybody besides themselves and made huge profits at the expense of others. Taking part in the “fast life” proved to be a downfall for both credit card companies and Enron. This proves that illegal activity and greed are commonly the main reasons for the financial difficulties and setbacks faced by people involved in the business world.
In the film Maxed Out, I disliked the position of the credit companies. Their way of gaining profit by targeting the weak and the poor is clearly unethical. The fact that it is easier to get a credit card if you don’t have a job than if you do is insane. They are setting people up for failure and they know it, which is why they continue to do it. People who get into debt with these companies basically own them their lives until they die. These companies won’t stop though unless this becomes illegal or someone in a higher position is able to look beyond the money. What credit companies need to start doing is scanning their customers more carefully and treating them as actual people. For example it is much easier to take someone’s money if you know nothing about them as opposed to if you understand what kind of pain the person is being put through. People should also be more educated about debt before they are allowed to accept credit cards so they know what they can and cannot do. People need to understand that this can happen to them and the harsh life that debt can bring to them. Although the companies can seem bloodthirsty this is not entirely their fault, some people just think of short term money but don’t think of the repercussions of mindless spending. So all in all who is to blame? The credit card companies for picking on the susceptible or those people mindlessly buying into it without care for
ReplyDeleteMaxed Out is quite simply a documentary on credit debt and how people are taken advantage of by credit card companies.
ReplyDeleteThe documentary explains how credit card companies intentionally target college students. The companies know that college students will be unable to balance tuition and credit card fees, thereby pulling themselves into debt. The credit card companies want to pull people into a lifetime of debt because that means a lifetime of revenue for the company.
The practice of intentionally pulling college students into a lifetime of debt is underhanded and morally reprehensible. I believe, however, that college students are mentally competent and are legally adults. Therefore, there is no issue with targeting a demographic that is supposed to be self-competent. Credit cards are not a necessity and college students need to be responsible enough to recognize whether or not they can afford a credit card.
I do, however, find issue with banks that raise interest rates on low-income families with the purpose of putting the family in debt. The practice is predatory and is nearly as abhorrent as the practice of raising interest rates on the mentally handicapped. I feel that to take advantage of a mentally handicapped person is possibly the worse thing any company could do. I appreciate this documentary for bringing out some of the darker practices behind credit.
THIS IS JACK ROWLAND COMMENTING
ReplyDeleteResponse to Billy Roddy
Your response on "Maxed Out" about how credit card companies target
college kids is frightening. This is because I personally do not know
how to use a credit card yet and I am going to college next year. This
action is truly evil because these companies are financially attacking
young students and families that are already burdened by college
costs.