Over my career, I have seen thousands of consumers that have credit card lines in excess of their annual salaries. Some are sinking under their burden. Some have been fiscally responsible and have minimal amounts outstanding. My 21-year-old daughter, who\u2019s in college, gets pre-approved offers all the time. She has no ability to repay debt, yet the offers flow in just the same. We all know how these lines are accumulated. The banks, in their infinite stupidity, keep upping credit lines because the customer pays the minimum payments on time. My daughter\u2019s credit line started at $1,000 and has been increased over the last two years to $4,400. She has no increased earnings to support this. But the banks do it without asking. And without being asked. The banks reel in the consumer, charge interest rates higher than those charged by the mob, increase lines without the consumer asking and without their consent, and lure them into overextending. And we can count on the banks to act surprised when they aren\u2019t paid back. Shame on them.<\/p>\n
As a banker, let me describe what we do wrong when we accept and review an application for a credit card. First, we don\u2019t verify income. The first \u201d\u02dcC\u2019 of credit: Capacity to repay, is completely ignored by the banks, just as it was in when they approved subprime mortgages. Then we ask for \u201chousehold income\u201d\u009d \u201d\u201d as if other parties in the household could be held responsible for that debt. They cannot. And since we don\u2019t ask for any proof of income, the customer can throw out any number they think will work for them. Then we ask if they rent or own and how much they pay. If their name is not on the mortgage, they can state zero. If they pay $1,000 in rent, they can say $500. (Years ago we asked for a copy of the lease to verify this number.) And finally, we don\u2019t ask how much of a credit line the consumer is looking for. The banker can\u2019t even put that amount into the system. There isn\u2019t any place on the application for that information. We simply put unverified information into a mindless computer and the computer gets the person\u2019s credit score and grants them the biggest line that score and income (ha!) qualifies for.<\/p>\n