Credit Cards Should Have A Warning Label for People Like Me

Danger

Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

I could tell by the writing on the envelope resting on top of the stack of the day’s mail that it was the settlement check I had been waiting for.

I am included in a class action lawsuit against Chase in which they are accused of pulling a “bait and switch” by offering customers a fixed, low interest rate to lure new customers to transfer balances and then later jacking up the minimum payment policy. This happened back in 2009, and resulted in my inability to meet my monthly financial commitments. It was also the driving factor that caused my wife and I to finally do something about our finances and enroll in our debt management program. Chase agreed to a $100 million dollar settlement, each member of the suit receiving a minimum of $25. The actual amount paid to each member of the lawsuit was based upon other factors including the size of your balance at the time the new policy took place.

I opened the envelope anxious to see how much my financial crisis was worth in the eyes of the judicial system. The check read $25, the minimum payout. I thought of all the arguments about money my wife and I have had over the last 4 years as we’ve struggled to get our finances back on track. I thought of all the cuts in our spending and all the sacrifices that we’ve made as we’ve downsized to live within a restricted income in order to make a huge debt management plan payment each month.

It just didn’t seem like enough.

I had told myself that I had no expectations but my disappointment seemed to indicate otherwise. I’ve always said that I don’t blame anyone but myself for our financial crisis. Nobody made me lie to my wife. Nobody forced me to rack up a mountain of credit card debt. I didn’t wish for a large settlement check (well, maybe just a little bit). I think that I was, however, looking for some kind of validation that my financial problems weren’t 100% my fault, and that somehow Chase’s actions had contributed to our problems. When things go wrong, people never like to admit that they were the cause of their own misbehavior, and I’m no different.

I was beyond disappointed, I was angry.

That evening I was trying to relax, and maybe even drown my disappointment a little bit with alcohol. As I poured myself a glass of wine, I noticed the warning message printed on the label of the bottle:

Government Warning: (1) According to the surgeon general, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems.

I know it’s standard procedure to have this warning on all products that contain alcohol, but isn’t this really just common sense at this point? I thought of other common sense warning labels that I’ve seen, including the one on my lawn mower:

Danger: Keep hands and feet away

This warning label seems extraordinarily unnecessary. Would someone really think that it was a good idea to put their feet or hands anywhere near a running lawn mower? Just what kind of person are these labels intended for? Is anyone really that stupid? I thought there could only be two possible reasons for having labels such as this: Either 1.) someone harmed themselves and successfully sued the manufacturer because there was no warning label, or 2.) the manufacturer is trying to protect itself against such a lawsuit.

Thinking about the lawsuit from which I just received my $25 windfall, I couldn’t help but wonder if credit card companies could save themselves a lot of time, effort, and money defending itself from lawsuits by putting a warning label on their cards.

I doubt you’ll ever see Chase (or any other credit card company) put a warning label on their credit cards though, because that would essentially be an admission that their product could potentially be harmful to people. They would have to admit that they provide incentives such as low introductory rates to get people to open an account, hoping that they will get some number of customers that use their new line of credit to live beyond their means. They pay interest on their revolving debt forever, giving the credit card companies a constant revenue stream, but hurting their own financial picture.

If there was a warning label on a credit card, I envision it saying something like this:

Use of this product may result in loss of sleep, relationship trust issues, and be detrimental to your long term financial security.

If such a warning label would be put on credit cards, some people would think that using credit cards responsibly is simply common sense.  They would wonder who would be so stupid as to charge up more than they could afford.

I would know that the warning label is for people exactly like me.

About Travis

24 Responses to “Credit Cards Should Have A Warning Label for People Like Me”

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  1. JMK says:

    You’re right, it will never happen but wouldn’t it be a great idea. Of maybe that card applicants must take a workshop on financial responsibility before being granted the card.

    I don’t personally have an issue with credit cards, in fact I pay for virtually everything in my life with my card in order to earn the flight miles. I do however feel guitly on a fairly regular basis. I fully realize that the only reason credit cards offer the benefits they do is because they are making money off a lot of other people. I’ve never paid them a cent of interest, but am certainly profiting from the benefits offered. On one hand I feel like I’m taking advantage of the system, but on the other hand, I’m doing nothing wrong. So far the “I’m doing nothing wrong” half of my brain keeps winning and our family keeps flying every year on those free flights.

    • Travis says:

      JMK, you’re one of the people that know how to use credit cards to your advantage, without giving into the temptation to abuse them. I envy you. :)

  2. While I think it would be useful for some type of warning, I don’t think it would actually do much. You know that many people still smoke even though there are warning labels on cigarettes and people still drink when pregnant. It might work for some, but people don’t really care. They will still do it, not matter what any label dictates.

    • Travis says:

      You’re right, Grayson, there’s always some part of the population that warning labels just go in one ear and out the other. On the other hand, you never know…….sometimes it’s a statement of education. Because of those warning labels on alcoholic beverages, people are very aware of the effects of alcohol on unborn children. Also, while that warning label on my lawnmower is almost laughable, does it cause me to be just a little more careful while the mower is running? I dunno…that’s hard to quantify, but it’s entirely possible.

  3. Good post! I would tend to agree with Grayson. I think it would be incredibly helpful, but I have doubts as to how effective it would be. I think that a lot of people simply don’t care and would not do what’s needed to either pay off the balance in full or actively get themselves out of debt and then make the necessary adjustments in order to avoid it for the future.

    • Travis says:

      It would be an interesting discussion to see take place though, wouldn’t it? Would credit card companies put a warning label on their product which asserts their product is potentially harmful to people, if it would protect them from lawsuits? I like what JMK stated in a previous comment requiring people to take a financial responsibility course before getting a credit card…..so they KNOW what can happen if you misuse the product.

  4. The lawyers got the lion’s share of the $100 million, you can bet on that. I taken to ignoring those invitations to join class action suits. In my experience, the pay out usually doesn’t cover the cost of the postage to mail in the form, not to mention my time!

    The warning label is an interesting idea. Seems like most things that have the potential to cause great harm if used improperly have warning labels. Why not credit? What might be even more awesome is a requirement to complete a personal finance course before one can open a credit card account.

  5. Mackenzie says:

    Great post Travis! You are right about how detrimental credit cards can be to one’s financial security. Maybe if I had had that warning label, I would be in a different situation altogether!

    • Travis says:

      Thanks, MacKenzie – It certainly would make me think twice if I had to see that warning label each and every time I pulled out my credit card!

      • JMK says:

        I had a friend who knew she had a tendency to abuse her credit card. She also wanted to take a vacation. She wrapped her credit card in a picture of a beautiful beach so everytime she wanted to use it she was reminded of her travel dream. Same principle would work well with a picture of your dream car, a picture of your dream house if you are saving for a downpayment, or your currnet house if paying off the mortgage is the goal. Anything to remind you at the critical spending moment that you’ve already set another goal for yourself.

  6. “Nobody made me…” “Nobody forced me…” I went blind after that. We need to get you on some kind of tour where you can make others realize just how important taking accountability for their own actions is.

    I think if everything that was “dangerous” needed to be labelled, you wouldn’t have a single product produced going out without one. Almost everything can be perceived as harmful in one way or another, and there would inevitably be some person or group making a big stink about labeling this, that, and the next thing.

    Sometimes, we just need to make people realize that it’s up to them to use common sense and that the legal system isn’t their personal playground. I mean who in their right mind doesn’t know that the coffee container from the drive-thru will pop open under the slightest pressure between a person’s legs and scold them? (and some other stupid lawsuits but I’ve written enough already)

    • Travis says:

      My suggestion that credit card companies put a warning label on their product is certainly a novelty – I don’t believe it will ever happen.

      It’s common sense that putting your hand near a running lawn mower is dangerous, and the result could be a serious injury. It’s common knowledge at this point that drinking heavily while pregnant can harm your unborn child. It’s such common knowledge at this point the warning labels seem borderline asinine. The warning labels are there now to basically to say “Hey, this is common sense, we’re just reminding you that if you do this, it’s YOUR fault.”

      And we now get to the whole point of the post – which you’ve caught on to – the effects of misbehaving financially should be common knowledge. I don’t think that many adults realize what the long term effects of misusing credit can have. I think many people would view a warning label on a credit card reading “Using this product will cause loss of sleep, relationship trust issues, and be detrimental to your long term financial security” to be shocking. I think many people would read that and wonder how in the world using a credit card can cause those things. That’s why I’m out here telling my story day after day….to show people exactly how those shocking statements can come true.

      If we can make people understand misusing credit and abusing your finances has SERIOUS consequences that can have lifelong effects, then we can make the suggestion of such a warning label less shocking and more like “Hey, this is common sense, we’re just reminding you that if you do this, it’s YOUR fault.”

  7. Laurie says:

    Great post, Travis. I just love what you said about “When things go wrong, people never like to admit that they were the cause of their own misbehavior, and I’m no different.”. We searched for years to find some reason (besides the one in the mirror) as to why we were in the financial mess we were in. It just had to be that we didn’t make enough money, or something. I’m so glad we’ve faced ourselves now, as it’s given us the courage to change. BTW, close to 12 inches up here today so far. We’ll get our money’s worth today out of that snow plow we charged last fall. :-)

    • Travis says:

      It’s the old cliche, right Laurie? Admitting you have a problem is the first step……..not until we admit to ourselves that we are the cause of our own pain can we begin to work on the solution. I’m really happy to hear that you have turned things around and are now heading in the right direction!

      We also got close to 12 inches from the storm – and true to that recent blog post – I used a shovel. Great workout! :)

  8. Alan says:

    Hi Travis,

    I guarantee you are 100% correct that if the cards did come with a warning label people would wonder who the idiots are that need to be warned. Well apparently that would be America in general. The nation of common sense warning labels. After reading your post though it was nice to see that you admit that your financial issues were mainly brought on yourself. My wife and I had gone through denial looking for someone else to blame which at the time was the timeshare we purchased. (Talk about something that needs a warning label) I do think you have a gripe though that the bait and switch did put you in a bad spot with the higher minimum payments. I think Discover is doing that to us as well but not sure. We are able to make the payments fine though so I am not too worried about it just yet.

    • Travis says:

      I hear you on the timeshare, Alan….my wife and I attended one of those high pressure sales pitches on vacation. We were enticed by the $100 each they offered – but after 3-4 hours of sales pitch, I vowed NEVER to do that again. My vacation time is worth more than that! I don’t think I’ve ever been on your site, Alan – I’ll definitely have to check it out!

      • Alan says:

        The first time I did a timeshare we got free tickets to a disney park. I was able to go alone. Since I never trusted those things I was able to get in and out in about 90 minutes. The second time we did it we were in Cancun and it needed to be a couple. I could have been in and out of there in no time again to get the free tickets for the booze cruise (which was very nice), but my wife lit up on the whole thing. It was hard to say no at that point.

  9. Credit Cards are useful as long as you pay them off before any interest kicks in…. especially if you have a cash back or rewards cards… the key here is pay it off before any interest kicks in!!!

    • Travis says:

      Very true, Will, the problem is when people (like myself) spend more than they really can afford, and get into the “making the minimum payment game.”

  10. Jerry says:

    I totally agree. It would be a little insurance for people who might otherwise get in over their head. And, it would lead those who can’t handle it to move on.

    • Travis says:

      My assertion that credit cards should have a warning label is maybe a little “tongue in cheek,” Jerry – I’m sure it would never happen. As mentioned, we do need to somehow educate the masses of the dangers of credit card misuse – maybe a warning label isn’t it, but it has be be done somewhere.

  11. I am not 100% convinced that credit cards should come with a warning label. They should come with a small device that initiates an electric shock on the user based on the amount of the purchase. If you are putting your fast food meal on credit, you get a small jolt. If you are charging a new $750 designer handbag that isn’t made any better than a $25 one, you get a mega jolt. It would cause people to be a little bit more responsible with their credit usage.

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