CBS Evening News With Dan Rather

News Show Transcript
May 10, 1999

DAN RATHER, anchor:

Tonight’s Eye on America begins a two-part series focusing on your wallet and your potential for credit card problems. There’s a good chance that in your mail box today was a credit card offer, maybe two or three. Banks are doing out so many because credit card interest adds so much to their bottom lines, but it can leave you drowning in debt. CBS’s Anthony Mason has the facts on Guarding your Money.

ANTHONY MASON reporting:

As a bicycle messenger, Dennis Christenson has learned to dodge New York cabbies and navigate the streets. It was his credit cards that caused him to crash.

Ms. DENNIS CHRISTENSON (Credit Card Holder): The offers came so frequently, it was like, ‘Yeah, ,why not?’

MASON: On eight cards, he was given a staggering credit limit.

Mr. CHRISTENSON: I would say probably close to $100,000

(Shot of Christenson at work) Thank you for calling Breakaway (Messenger Service).

MASON: On a salary of $37,000, Christenson got himself $40,000 in debt, but the banks kept raising his credit limit.

Mr. CHRISTENSON: They would send me a letter saying, ‘Ok, you have this much more credit,’ and before I knew it, I was drowning.

MASON: Dennis is now one of a record number of Americans filing for bankruptcy, 1.4 million last year. But the credit card companies keep flooding our mail boxes with four billion offers a year.

Consumer advocates complain that by mail or by phone, banks will now offer credit cards to just about anyone with a pulse. And they’re not far wrong. Ms. Beth Sholom gets a lot of those calls.

Unidentified Woman: They say, ‘Hello, Beth?’ You know, they have an offer for me, would I be interested in a- in a very low interest credit card?

MASON: But this isn’t Beth Sholom. This is. It’s a synagogue.

Woman: It’s a synagogue. And we all laugh about it, because it’s so stupid.

Mr. CHARLES JUNTIKKA (Bankruptcy Attorney): They’re almost like drug pushers in a sense. They want to get you hooked on credit.

MASON: Charles Juntikka is New York’s busiest bankruptcy lawyer.
So these are all bankruptcy cases?

Mr. JUNTIKKA: Yeah. Y- actually. This isn’t all of them.

MASON: He handles 1,500 cases a year now and, when it comes to blame, says the credit card companies should get equal billing.

Mr. JUNTIKKA: They lend middle-class people virtually half of their disposable salary for the entire year. So they know they can’t pay it back that quick. That’s why they target them.

Mr. JAMES CHESSEN (American Bankers Association): It doesn’t do a credit card company or a lender any good to put money in the hands of people that can’t handle it.

MASON: James Chessen is with the American Bankers Association and lobbies for the credit card industry.

Mr. CHESSEN: I mean, we always say that if you can’t afford to repay your debts within a couple of months, then you shouldn’t be charging them.

MASON: But try to find that advice in those enticing offers with their low teaser rates. The real cost is in the fine print. And then White House believes it’s time for a consumer protection bill.

Mrs. HILLARY CLINTON: Many consumers don’t understand that when they pay only the minimum balance on their bills, it may take years to pay them off.

MASON: For example, if you borrow $5,000 at 15 percent interest and make only the minimum monthly payment, it would take you 32 years to pay off the card at a totally cost, including interest, of nearly $13,000.

(Graphic on screen)

Borrowed $5,000

Interest Rate 15%

Minimum Payment Only 32 Years

Total Cost $ 12,789.46

Mr. JUNTIKKA: The credit card industry has become like the new loan sharks, because they-they get rates of return-effective rates of return that if a guy on the street did it, he’d go to jail.

MASON: The consumer protection bill, now in Congress, would require prominent disclosure of those costs on all offers and statements. The banks oppose the legislation.

Are you still getting credit card offers in the mail?

Mr. CHRISTENSON: Regularly.

MASON: And what happens to them now?

MR. CHRISTENSON: They just go in the garbage.

MASON: Credit cards made Dennis Christenson feel like he was on easy street. Now he’s trying to pedal his way out of a credit jam. In New York, I’m Anthony Mason for Eye on America.

RATHER: Credit cards, quote, “the new loan sharks.” Tomorrow, in part two of Guarding your Money, CBS will give you a look at the soaring rate of bankruptcy and why, in this booming economy, so many people are going bust.