Debt for Sale: A History of the Credit Trap, by Brett Williams. Philadelphia: University of Pennsylvania Press. 2004. Cloth, ISBN 0812218868, $24.95. 154 pages.
Paying with Plastic: The Digital Revolution in Buying and Borrowing, 2d ed., by David S. Evans and Richard Schmalensee. Cambridge: MIT Press. 2005. Cloth, 0262050773, $62.00; paper, ISBN 026255058X, $24.95. 367 pages.
Currently, revolving credit card debt in the USA is estimated at $800 billion and rising. U.S. households own more than one billion active credit cards, which they use to charge nearly $2 trillion worth of goods and services annually. Less than 50 percent of credit card borrowers pay off their balances in full every month. Interestingly, credit card companies refer to these borrowers as deadbeats. The remaining borrowers roll over some, or all, of their debt. The above books take different perspectives concerning the recent increases in credit card borrowing. The David Evans and Richard Schmalensee book gives readers an uncritical view of the credit card industry from the inside. Brett Williams' book presents the negative aspects of consumer credit lending, especially the effects of modern credit lending practices on borrowers (Manning 2000; Stavins 2000).
The first edition of Paying with Plastic openly thanked Visa for financially supporting the authors' research--a fact that becomes apparent when reading the book. Nonetheless, this book deserves some consideration. The first chapter serves as an adequate introduction to understanding the invention of credit cards. Credit cards were initially an easy way for retailers to gain personal information about their customers. Furthermore, it was quickly discovered that when people were given lines of credit at a store or gas station they spent more money.
Chapter 2 attempts to explain the evolution of money and credit, but this chapter can be skipped without remorse. For a more accurate treatment of this subject read chapter 3 in L. Randall Wray's Understanding Modern Money (1998): Chapters 3 and 4 present the history of credit cards and how they became accepted.
Chapter 4 argues that credit card companies deserve respect because of their efforts to extend credit to everyone--forgetting that exorbitantly high interest rates mixed with late fees, over-limit fees, and various other fees have punished low-income credit cards users who have no other option than to borrow from the credit card companies. Chapter 4 also describes...