‘Frontline,’ WGBH-TV, Boston, and The New York Times: ‘The Secret History of the Credit Card’

Jan 16, 2006  •  Post A Comment

When Lowell Bergman worked on a piece on credit card company MBNA for The New York Times, he learned that the credit card industry is the most profitable sector of the banking business.

He began exploring the topic in more detail for a “Frontline” documentary titled “The Secret History of the Credit Card” that ran in November 2005, which found that there is no cap on the interest rates credit card companies can charge on a credit card loan. Because of this, many credit card companies export debt to states that have no usury laws or limits on interest rates.

“They can change the terms of the contract anytime,” Mr. Bergman said. “They do this every day, and it’s legal and used to be called ‘loan sharking.'”

Most credit card users aren’t aware of this process until they miss a payment and incur late charges, he said. “The credit card industry is barely regulated by anyone. It is almost impossible to get out of credit card debt, even if you go bankrupt,” he said.

The story worked, he said, because of the contradictions it addressed. “Credit cards have democratized credit to the vast population, but the contradiction is they can enslave you to death, and they don’t explain this to you and they don’t have courses in high school to tell you how to manage your finance,” he said. “You should educate people as to what the consequences are. There is more drug education than there is credit education. You learn more about why drugs are bad than what happens if you miss a credit card payment.”