Customer Reviews

Maxed Out: Hard Times in the Age of Easy Credit

5 star:		(10)
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3 star:		(7)
2 star:		(5)
1 star:		(3)

 

 

While I do think this book goes a bit overboard at times, that is balanced by the explanations of how credit card companies may really operate (often in synch with motivational speakers and economic "experts" who encourage people to take risky chances to incur MORE debt) -realities that the average consumer often does NOT understand.


The confusion starts with reading the fine print on those credit card agreements. Admit it - do you understand every word or does it often sound like a foreign language? If you say "foreign language" you are not alone because there was a recent news segment showing college educated people scratching their heads and confessing that they couldn't understand the terms of the fine print in many credit card agreements.

How many people know that a credit card company may raise interest rates even if the consumer pays THAT card on time but misses a payment elsewhere - even on something like a utility bill or library fine...or if their credit rating drops, even for a month?

How many know that the terms of agreement can change with minimum warning? Think of it - if you bought a suit or dress or anything else, how would you feel if the salesperson came knocking on your door a month later and said, "Oops, we changed the price. You now owe $10.00 more than you originally paid." That's how insane these random change of "terms of agreement" are.

How many people even read the "new agreements and terms" that many suddenly come in the mail? They seem to come pretty quickly and they seem to change all the time. The last one we got said we had the "option" of turning down the new terms (raised interest) but if we did so, had to pay the full balance in full immediately! Luckily, we had a very small balance, paid it and refused the "new terms"... but this could stress many consumers with larger balances.

Having said that, I am NOT one of those people who think credit cards are universally EVIL or the work of the devil. In fact, I think they can be an asset if used wisely by savvy consumers, within limits. However, I do feel that most credit card companies profit from the fact that the average consumer does not pay off their bills every month, wracks up often huge interest rates and simply gets deeper into debt. Question is - is part of the problem the fact that credit card companies count on the ignorance of consumers and take advantage of that....or is it due to the fact that consumers lack financial savvy? Where is the line between the two?

Also, keep in mind that most Americans don't save very much money and the combination of that and PAYING interest rates isn't helping matters. Putting 10 or 12 percent of one's income in savings, rather than paying interest, would go a lot farther in building financial security, wouldn't it?

In any case, I think this book is a step towards educating oneself about the risks of credit cards. But it is only a start. After finishing it, I suggest you conduct some searches here and at message boards and get the info from other people about the realities of credit cards, the pros and cons and how others have used them, for better or worse.

And, a personal suggestion.. if you are EVER tempted to use those 0% or 1.99% short-term, limited time offers, be SURE you ask if your payments will go towards the higher interest or lower interest debt you ALREADY have on that card (if you do). If you don't have a balance on the card then NEVER charge anything on that card till you pay off the debt and ask about any fees involved with using those offers. In short, be pro-active, be educated and know the facts. Credit card companies will often go out of their way to keep you from GETTING the facts but that doesn't mean they are all evil. Credit, used wisely and as part of a budgeted plan, can help you financially, raise your credit score and prove you know how to integrate credit into a total financial plan, which should include saving regularly, planning for retirement and the rest.

One final anecdote: A few years ago, we used a store credit card to buy a new fridge (when our other one suddenly died, for good) and got the new one for 0% interest, paid it off in a year (so the interest didn't go up), had no fee for the use of the card and got free delivery and installation as well. It was a win/win situation and we paid NO MORE for that fridge than we would have if we'd paid cash on the spot. However, we did not charge ANOTHER thing on that card, had a 0 balance to start with and made sure we paid on time every month. In the meantime, the balance of our funds stayed in the bank, earning interest. You do the math. What harm did that small debt do? None.

Having said that, be aware that store credit cards often charge HIGHER interest than many other types of credit cards so you do have to stay informed and know what decisions you are making - and the consequences of those decisions.

UPDATE: Now you can see the movie, too:


Maxed Out

Pawnshops, check-cashing outlets, title-loan stores, bank branches, and financing companies, along with billboards advertising credit card repair companies, bankruptcy attorneys, and loans of one kind or another (especially mortgage refinancing) - these are the signs of growth in America's "new economy."

Rising debt is a serious problem in America - unfortunately, Scurlock fails to treat it in a structured manner, with trends, detailed data on the size of the problem and biggest causes and information on debt collectors and their practices, nor does he show the problem in a larger perspective of how we have been living on the edge - first through protected union jobs and extensive overtime (taking advantage of the fact that America's manufacturing capabilities had survived WWII intact), two-income families, credit-card debt, "new" mortgages (more lenient lending standards, interest-only, negative-amortization), and using real-estate as an "ATM machine" via mortgage refinancing. In addition, many of those currently without serious debt basically live from paycheck to paycheck - but a hospitalization or layoff away from serious debt.

The problem is obviously not limited to households - the federal government's annual budget is in deep deficit, as are its trust funds for Social Security and Medicare. Finally, there is the enormous and mounting U.S. trade deficit.

Marketing debt has become increasingly easy - millions of pre-approved applications are sent out each year, "bait and switch" loan operators flourish, shoppers are enticed with offers of eg. "10% off on today's purchases" if you apply today, and vendors are willing to pay the processing fees because studies show that those with credit cards spend an average of 30% more. And until lately, there's been the housing bubble, luring many into "investing" in hopes the market continues to rise (overall default rates now 4.95%, with defaults at 13%+ in the "sub-prime area). Making money for lenders doesn't seem to have been a problem either, with usurious rates, and high fees for late-payments, over-borrowing (even when approved), defaulting on other debts, etc., etc.

Bottom-Line:" "Maxed Out" provides some good background information, but fails to meet the needs of one seriously interested in the topic.

Thank you for writing this book, James Scurlock.
I was held hostage with outrageous fees by some credit card co's for many years .
I am free now and found I can live very well without credit cards.
If the day ever comes that I do want one, I will only consider getting one from USAA. They answer to their members, not shareholders.
You stated on page 22 of your book there are fees for going over the limit which is true. But many times going over the limit doesn't even involve buying a thing. One can get over the limit fees when their available credit limit is lowered and loan shark interest fees are piled on. If you can't pay the balance off, you can easily find yourself stuck in debtors prison!

As for debt buyers, I wish more experts would warn people about the interest these agencies charge, and not agree to anything until they know exactly what they are getting into. Be very wary.
I was scared and alone and agreed to make monthly payments on a debt to a debt buying agency .
I believed for many months I was repaying the debt they said I owed, only to find out $1700.00 later that my debt was not being reduced but was actually increasing because of the interest they were charging and keeping me in the dark about that fact . It wasn't enough for Citibank to get over a decade of payments from me, and know I was trying to send as much as I could. They had to squeeze out all they could by selling a balance that they knew was all interest and fees. And they know I had paid the original balance more than once! They made a lot of money on my ignorance. Now they send me more offers of credit which I shed!
I was in such a fog at that time in my life and felt so much shame and guilt I didn't even realize for many months how many years I had actually paid on that card.
Suicide crossed my mind, but was not a serious thought.
I was wrong to get into debt, but nobody deserves the treatment these co's and debt buying agencies pile . The "punishment" doesn't fit the "crime"
I'm on the right track now . Thanks to you and wonderful people like Elizabeth Warren who have helped me a great deal. You have both been so kind to respond to my emails.
Thank you!

What "An Inconvenient Truth" did for Global Warming, "Maxed Out," the book and the documentary should do for America's impending debt crisis. Author and moviemaker James Scurlock sounds the warning about credit card companies' predatory lending pratcices, but he also makes a larger and much scarier statement about America's addiction to debt and how it may well cause a major societal breakdown sometime in the near future. All of this comes from a Wharton Business School graduate and former (Daddy) Buch campaign worker who quite obviously has had his eyes opened as to the crisis America will soon no longer be able to deny. Particularly unnerving are the quotes Scurlock digs up from various political leaders which show how clueless they really are about even the basics of how America's financial system works.

Whether you read the book or see the movie, "Maxed Out" contants an imporatnat message we all should heed.

To his credit, Mr. Scurlock righly points out that under the current laws, the banking industry targets the poor and uneducated with this country with predatory tactics, with impunity.

On the downside, this book is full of assertions (including statistics)and strongly held opinions, but except for occasionally mentioning an author or book he recommends, the author has NO documentation (formal citations, footnotes, index, etc) for his many assertions. Instead, the book is a rambling litany of anecdotes, which are likely atypical, as he points out that he searches hard to find interviewees to make many of his points.

However, reading this, two important points crystallized in my mind, as far as potential solutions (Scurlock doesn't offer real solutions, he just bemoans reality):

a). Whether it be the litany of books, pieces on television such as PBS, etc. or the frightening statistics such as the massive level of credit card debt in this country(over $9000 per household), or modern economic theory (which believes that credit cards with their long payoff periods cause us to overspend) -- it seems like the LONG TERM debt that credit cards (especially high rate cards) allow is a fundamental problem. Implementing a maximum payoff period of say 12 to 18 months as a law, after some sort of warning period to prepare folks in debt -- could fundamentally alter the landscape (though it would take political courage by congress, so is highly unlikely).

b). Given the dramatic rise in personal debt over the past 25 years, which has largely mirrored the dramatic use of credit cards -- consumer debt might well be THE primary reason for the growing wealth inequality in this country. Bringing back some reasonable level of usary laws, to limit the predatory behavior of banks and short term lending institions, should help curb this massive growth of high interest debt among the poor.

Like Michael Moore and Morgan Spurlock, James Scurlock is a consumer advocate with a populist bent and a tendency for hyperbole. I had no doubt reading this book (and watching the more restrained DVD) that Scurlock knows his stuff -- his research is considerable and he has a background in business. The gap between the rich and poor has been well documented elsewhere, so some of his foundational arguments aren't exactly seminal. It does, however, always merit a mention that business has been deregulated in alarming ways, none of them helpful to anyone but profiteers. Anyone wishing to examine the moral health of a country would need to consider unethical business practices as a corrosive effect. It is difficult to see the value of free markets and the "invisible hand" when examing in the "selling money for profit" industry.

Unfortunately, in illustrating his concerns with real people, Scurlock pulls out every trick in the bleeding heart bag. I lost count of the number of people he writes about who had family members commit suicide due to the stress and shame of financial ruin (and by extension, by the unethical practices of the debt industry.) I have a very hard time believing that money stresses are the sole motivator in suicide -- if that were the case, the global population problem would be over during one lean period. The book works when Scurlock focuses on facts; when he resorts to personal stories it starts to seem manipulative. He glosses over the biggest counterargument -- that even the "poor" in these stories are living far better than people did in the 1920s, an era Scurlock fears we are reproducing.

As much as I despise simplistic "personal responsibility" arguments, I'm afraid Scurlock resorts to similar reductionism. A lot of the debt illustrated in this book is frivolous and rooted in materialism. It is sad that people's lives are ruined over debt... but who in their right mind buys a Lexus or Escalade when they're making a median income? That isn't a business problem, it's a common sense problem.

We are facing many financial problems in this country -- one need only look at the military and Katrina relief effort to see two glaring examples. "Maxed Out" is interesting when it focuses on the bigger picture, but the personal financial stories don't gel well with the dire feeling of those larger issues.

"Maxed Out" is a scary book, especially if you have children or if your income is at all precarious. (Hey, wait a minute - that's most of us, isn't it?) As other reviewers have noted, it is not the book it might have been. There are few details and virtually no statistics - in fact, there isn't even an index. (And why on earth not? It would make it so much easier to dig out the many interesting facts and anecdotes that Scurlock shares with us).

But that's OK. This is not an academic survey, or a consumer report. It's quite simply a wake-up call - a shrill, insistent alarm bell. Scurlock warns us that the credit card industry, and the banks that run it, are Not Our Friends. On the contrary, they want us to get into debt up to our eyeballs, and keep making minimum payments on maxed-out accounts until we die. (Even then, they may hire shady "collectors" to harass our nearest and dearest, trying to get them to pay up even if they are not legally responsible for the debts).

Did you know that credit card companies (i.e. your friendly bank) refer to people who pay off their bills on time every month as "freeloaders" and "deadbeats"? Or that anyone can get multiple cards and vast amounts of credit, even if they don't have enough income to justify a single low-limit card? (Or, indeed, any income at all). Or that a "preferred customer" means someone "willing to make minimum monthly payments forever"? Or that the US Bankruptcy Reform Act of 2005 was written by the banks, and that its main purpose is to make it harder for individual consumers to go bankrupt and thus get a fresh start? Or that the two main markers for those most likely to go bankrupt in the USA, in the 21st century, are being female and being a mother?

Scurlock's analysis, while hair-raising, is convincing, and fairly well documented. (As well as being supported by experts such as Elizabeth Warren, author of "The Two-Income Trap"). He argues that the traditional way for banks to make money was by borrowing from individual depositors, and lending to companies; whereas today, banks have discovered that they can make more money faster by lending to consumers instead. How many of us have seen a relative or friend stumble into the "bear trap" of debt - drifting into larger and larger balances, paying more and more interest, until one day they realise there is no way back?

I finished this book with a hard, icy feeling in my stomach. It had struck me that, whereas I had always thought that banks were just huge, unfeeling businesses that were indifferent to our welfare, they are actively hostile. Sad but true: the banks are our enemies. If you doubt that, read this book in conjunction with Joel Bakan's "The Corporation: The Pathological Pursuit of Profit and Power".

GIven that this book came out just before the sub-prime crisis hit the headlines it is very prescient. It provides a narrative that explains what we are witnessing. I agree with another reviewer who said that Scurlock is at his best when he is focussing on facts -- revealing how the banking and credit card industry have changed and how the economy has shifted to a "financial economy," from a service economy. I do think Scurlock has done his research, but I wish a lot more of that was included in the book. Some tables and graphs (he talks about them but doesn't show them), and some basic numbers about the scale of debt and its growth would have strengthened the book immensely. The book does not have an index. Scurlock, perhaps because he is a filmmaker, is an engaging storyteller with a dry sense of humor and he inserts himself into the narrative. This mostly works, but sometimes it's a bit intrusive and comes at the expense of providing more fact and analysis. This is a journalistic, not an academic book, and if you accept on those terms it's a good quick read and will leave you wanting to know more about the subject.

Very interesting read. You can learn a lot about the practices of lenders and get a quick snapshot of common americans, who are totally baffeled by credit terms, but totally driven by the need of money. Some stories deserved their fate, but some, as the stories described them, are victems of a lending system that preys on the ignorant with legal talk and slight of hand mathematics.

You'll learn lessons that will protect yourself.

The book "Maxed Out" is a pretty dire indictment of the material ways of American consumers and how the financial services industry has been hand-in-glove in dragging customers to the brink by the lure of a "better life" and pushing the unfortunate ones over.

James Scurlock is thorough in his anecdotal research and brings out a side of the financial services industry, i.e, the customers that get behind in their payments and the industry that profits from them in a really scary way. While some of the positions that Scurlock takes are definitely extreme, he does it effectively to make a point: that unbridled and irresponsible consumerism is not a game meant for everybody, and that the unfortunate that get behind this game have to pay a heavy price. The book should raise some alarm flags in the reader's mind about taking financing schemes (any debt, basically) and their claims too literally and cause a re-examination of whether they really need that second car and the fancy plasma TV when they are struggling to keep pace with their previous debt. However, I also feel Scurlock could have steered clear of some gratuitious Bush/ Republican bashing. This detracts somewhat from the book.

This is an issue that is immediate and urgent not only for America but also other developing countries like India, China, Russia that aspire to an American way of life and are willing to pay for this through debt.