The United States of Debt, Episode 2 Transcript, for Slate Plus members.

Read About Why You Use Your Credit Cards So Much … and What You Should Do About It

Read About Why You Use Your Credit Cards So Much … and What You Should Do About It

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May 19 2016 4:35 PM

Why Do We Use Credit Cards So Much? An Episode 2 Transcript.

Read a transcript of the second episode of the United States of Debt, which looks at America’s love affair with plastic.

Credit cards.
Credit cards.

Photo illustration by Slate. Photo by BernardaSv/Thinkstock.

To listen to Episode 2, visit the show page

The transcript below supplements the United States of Debt, a Slate Academy. To learn more and enroll, visit

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Helaine Olen: Are you near your wallet? Do me a favor. Open it up. Count the number of credit cards you have in it. I’m gonna guess you have either three or four—that’s the average number most Americans have. And I’m going to guess something else too. I bet you use them more often than you want to. Who doesn’t?

Helaine Olen Helaine Olen

Helaine Olen is a former columnist for Slate and co-author of The Index Card. She was the host of the Slate Academy series the United States of Debt.

I’m Helaine Olen, a columnist here at Slate. And this is Episode 2 of the United States of Debt. Today, we’re going to talk about that little piece of plastic that drives us all crazy. Yes, I’m talking about our credit cards.

Why do so many of us run up more charges than we can comfortably pay off? Why do credit card companies lend us money anyway? Why do so many people—even if they have a decent income—have a hard time escaping the credit card trap? What can we they possibly do to get out from under?

Chapter 1: “I Use Credit Cards to Have a Life.”

Yannerys Castillo: My name is Yannerys Castillo. I am 26 years old.

I was born and raised in Brooklyn, New York. I have an associate’s in business administration. I went to Hesser College, and I’m also pursuing my bachelor’s in human services. I have an eight-year-old daughter who is full of life and keeps me motivated and determined to just do the best thing by her and by us.”

Olen: Yannerys is a single mom. She’s worked for four years at a Brooklyn-based nonprofit, helping low income clients access the government services they need.

She herself works with the organization’s financial counselors. That’s because, despite her best efforts, she maintains a balance on her credit cards.

Castillo: So I have one credit card. It’s a Discover Card, and I’ve been a member since 2011. That is when I separated from the father of my child and I moved into my own place. And I had to use my savings towards the security deposit and so for the first two to three months it was a bit of a struggle. At that time, I was earning $30,000 a year. I was a single parent with a child. All my savings went towards the security deposit and so I had to start using my credit card to basically get by and purchase like furniture, food and things like that.

Olen: It’s fair to say a significant portion of Yannerys’ debt comes from the pressures of raising a child on her own in the most expensive cities in the United States. In fact, women are more likely to carry a credit card debt. That’s partially because of lower earnings and responsibility for raising their children.

Carmen Rita Wong: There’s just not enough discretionary income in our budgets.

Olen: Again, that’s our expert Carmen Rita Wong from the first episode, who formerly hosted a personal finance show on CNBC.

Wong: So when you have stagnant wages—we all know this—and your expenses are bigger how- where is the money going to come from. So a lot of folks are using credit cards for the staples of life. And not just because they have spending problems.

Olen: And Yannerys was using her cards for the staples of life. But she was using them for other things too.

Castillo: Oh, boy. Do I have to be completely honest? I like to go out a lot. I’m 26. So, there’s a lot of going out to bars with friends and families. You know, things with my daughter. I like to give her things that I did not have when I was a child so I, like, every year take her to go see Disney on Ice.

I just took her to see Ariana Grande at the Barclays Center. You know? But then I didn’t want to sit all the way in the back so I—you know, paid for pretty good tickets. I felt good because she enjoyed it but then, you know, it was about $300 that I paid for the tickets.

Olen: Yannerys wants the best for her daughter. She wants her to have the same things other kids have—from toys to clothes to education. She wants her to attend college, so she’s putting away $100 a week in a separate bank savings account for her. But the result of all of this is more spending.

That’s not unusual, says Rebecca Barrett-Fox, who has studied people who attend get out of debt groups and is now a visiting assistant professor of sociology at Arkansas State University.

Rebecca Barrett-Fox: Oftentimes, these are people who grew up less advantaged, and they’re trying to break into a new class, and they’re not incorrect in thinking that one way you break into that higher class is having—cultivating more cultural capital; so, cultivating more experiences. You know, can your kid go to a camp, can your kid go on a field trip?

So, all the other kids in the class get to go on a field trip and you don’t have the money for it, or they get to have a spring break trip, or school ski trip, and—and you don’t have the money for that, there’s stigma attached to that, and that stigma really tells us that we don’t respect poor people; that people who can’t afford these things are valued less, you know, they’re not the kind of people we want to be. And, so, we put money into maintaining that appearance—the appearance that we have the money to do this—to our detriment.

Olen: The card accepts it all. No judgment.

When I first met Yannerys late last year, she had a Discover card, a Victoria Secret card, a Target card, and oh yeah, Children’s Place card, so she could buy her daughter clothes. She was making progress on her credit card debt, whittling it down from $10,000 to $6,000, thanks in part to three hefty promotions that all but doubled her salary to $65,000. But still, $6,000 was a lot of money to owe at double-digit interest rates, and she wanted it to go away.

Chapter 2: But at What Point Is It Too Much?

Olen: It’s not just people struggling to get by on low to mid five figure incomes. There are also people like technology salesman Kirk Arthur and his husband Alfredo. They earn a comfortable six-figure income, have an adult son, and live in a condo in Miami’s hot MIMO neighborhood.

They also have a heck of a lot of debt.

Kirk Arthur: The BMW? Oh, I love that car. I love that car. It’s a red convertible. And for Miami it’s fantastic. It’s fast. It’s Florida, and you can’t live without a car.

And I’m going to be honest—just—Miami is a car town. I hate to say this. I enjoy having a really nice car. It is one of my—it’s a pleasure to have. It’s a joy. It’s fun. There’s really no practicality about the vehicle whatsoever, except that it is small. It gets 30 miles to the gallon. But it’s still a BMW, and it’s still a sports car, and I just really enjoy having it.

Olen: On top of the nice cars, there’s between $20,000 and $30,000 in credit card debt. Some of it, Kirk says, comes from the need to charge business expenses on a personal card and then wait for an employer to reimburse. But some of it, Kirk admits, comes from the fact he and his partner like to live life large.

But that’s not how their debt began.

Kirk says the habit began when their son was a small child, shortly after the couple met 20 years ago.

Arthur: At the time, I was only dating people with a master’s degree or higher. I was 28. So, when he said he was a nuclear chemical engineer, I was like, oh, that’s it; we’re getting married. It was love at first sight.

And then on our third date, he goes, oh, there’s something I need to tell you. And that’s when he told me he was a single dad, and that was a decision point. Like, oh, OK. But I was a social worker at the time, working with teens. So, I figured, well, I guess I could have one in my house all the time.

Olen: But children … they cost money.

Arthur: And because we have a son, you have to live in a certain neighborhood. You know two gay men, we could live in a one-bedroom apartment, you know, in any part of town and just get through it. But you have a son, so you have to live in a good neighborhood, good school districts. So you have to live in the right school district to get your kid into a good school. It’s your child. You know, it’s your child’s education, so you’re going to push yourself a little more, a little more than you can afford.

Olen: So the couple moved to a more expensive neighborhood than they could easily afford, and gave Alfie the best education they could. The move cost money, and because they were spending more on housing than they could comfortably afford, the credit card bills mounted. Alfie’s an adult now, but they got used to living with debt.

Olen: How come, given you guys earn about $200,000 annually, you just don’t pay off the credit card debt every month?”

Arthur: We don’t know. (laughing) We really don’t live beyond our means, but we live right up to the limit. And we both agree, it’s a tremendous amount of money that we spend. And for some reason, we just can’t seem to break the habit of spending money. I don’t really—I can’t explain it.

And truthfully, we’re enjoying life. That’s kind of where we are. When you’re broke, it’s horrible, but when you’re affluent, it’s just—you know, it’s just a little itch in the back of your head. It’s not like a monkey on your shoulder.

Olen: One of the reasons why Kirk might be spending more? There are several studies show that most people spend more when they use plastic.

Wong: We are electronic consumers now. A lot of us are. Especially if you are under a certain age, right. I mean, this is how you tend to use your money. You’ve probably had some kind of debit card from the time you were a tween. So that feels normal. But as we know, that cuts out the whole psychological process of really digesting the fact that you are parting with your hard-earned money.

Olen: That’s Carmen Rita Wong again.

Olen: Do you think that people growing up with debit cards and credit cards in a way that wasn’t common 30 years ago, when we were growing up, do you think that normalizes debt in a way? In a way that it just wasn’t normalized earlier?

Wong: I think what it does that it really makes the borders between actual money and borrowed money very blurry. So, I don’t even think people realize the debt. It’s kind of like it all flows into itself.

I mean, I know I see this with my young daughter where she—I have to really explain to her that when I put the card into the ATM machine that that’s really my money. I’m not borrowing money. I’m not taking money from the bank. It’s actually my money that the bank is holding onto. And then the difference between that and what a credit card does.

Olen: It’s pretty easy to rationalize all sorts of spending, as we know from Kirk. But many people can’t manage that sort of credit card balancing act. Ultimately, funding a life on a credit card doesn’t work.

Louis: We bought a home and, of course, we had to furnish the home. We spent a truckload of money getting our house the way we wanted our house to be.

There was quite a bit of conspicuous consumption going on. For me it was CD’s, and all kind of other electronics stuff. For my ex-wife it was art, and we’re not talking like a $100, $500 pieces of art. I’m talking two, three, four, five grand that I didn’t know anything about.

I would just see all these paintings and figure coming in the house and I’m like oh, that’s a nice touch. It’s only when we were getting divorced that I found out. I was like, you paid how much for this?

Olen: That’s Louis. He’s an academic on tenure track, here in the United States.

Louis has struggled with bills for much of his adult life. He currently owes $35,000 on his credit cards. He first borrowed money to get through college, but the trouble with credit cards began back in the 1990s, when he married and bought a home while in graduate school.

Louis: I just fell for it. I was like wow. They’re offering me these credit cards. Of course I should have known better but part of me was like alright, I’m doing something.

You know, I’m a homeowner. They’re offering me these cards with these balances. And I thought, OK, these could be backup cards that I could use for emergencies.

Well, the emergencies kept piling up and up and up and, you know, I did the thing that you all say we shouldn’t do, I bought groceries, paid gas, did all these things.

Olen: That’s right. That’s something experts tell us to never do. Putting necessities on your credit cards is a number one sign you’re living beyond your means—and an intervention is needed.

Louis divorced. And life kept happening.

Louis: So I’m paying off some of the credit cards but I still have more. And, by the time I transition into my next relationship, there was a big surprise; the birth of a child.

And you have children, so you know, children are not cheap. Love my daughter dearly but she is expensive. And we’re not even talking about buying her really fancy things, you know, just the upkeep. So, money had to go into that.

Olen: Quickly, back up cards became living cards. Of course, once upon a time, the ability to borrow this money wouldn’t have been available to Louis. Or Kirk. Or Yannerys.

Chapter 3: Are We to Blame? Let’s Take a Look Back.

Louis: I got my first credit card when I was in college.

That was really interesting. I’m a junior—I’ll never forget this as long as I live. I’m walking through the student center one day, minding my own business, and they had the tables set up and, I’ll never forget, there was this guy from Visa and it was almost like pssst. Hey buddy. I mean literally it was like that.

So, I come and he says would you like to sign up for a credit card. Now mind you, I’m like a 20-year-old student, you know, not making any money and I was like I don’t earn any money right now. I’m not working.

And he said, no problem. No problem. You can sign up for it and we’ll start you off on a $500 balance. Now mind you, they didn’t even ask if my parents should cosign for this. It was just basically like sign here. Take your picture. Wait. You’ll get it in the mail. So, I got—that was my very first card, a Visa card, for $500 balance.

Olen: Until the passage of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, better known as the Credit CARD Act, this sort of thing was all too easy. Now people under the age of 21 need a co-signer—you know, like mom or dad—to get a credit card, unless they can show independent income that’s adequate enough to let them pay the bill. But why would anyone be offering a credit card to a college student with next to no income anyway, no matter what the law says?

Well, prior to the late 1970s no one would have lent Louis this much money in any case. And he would have never gotten into this much trouble. He—and we—can thank a Supreme Court decision known as Marquette National Bank of Minneapolis vs. First of Omaha Service Corp.

It used to be if you issued credit cards to people in, say, New York, you had to play by New York’s rules. Marquette changed things. After Marquette, a company needed to abide by the laws of the state where they were located. The result? Credit card companies could set up shop in the state with the loosest regulations, then lend money to people all across the United States, regardless of state laws.

No surprise, many states competed to make their laws as bank-friendly as possible. And a number did away with their usury laws entirely. With no limitsor very high limits on interest rates, it suddenly became profitable to give credit to people who couldn’t pay it back in a timely fashion.

As a result, credit card debt began to surge. People used the suddenly available credit to paper over stagnant salaries and the surging cost of health care, housing, and the cost of raising of children. Oh yeah, and while they were at it, they bought some luxuries too.

And when they couldn’t pay the money back? Credit card issuers were fine watching the interest charges pile up. That’s how they were making their money.

Chapter 4: Bad Luck

Louis: So, get a car that’s not very reliable. That all of a sudden it decides that, you know what, I think I’m going to mess with you.

So, I take it back to the shop and one thing after another. I mean I’m talking transmission. Of course, the brakes, the rotors and then there’s some other thing that goes kaput. Put this in financial context, $600 bill, $500 bill. And I mean, you know, it adds up. It adds up. It adds up.

Olen: He was already dealing with a ton of credit card, not to mention student loan bills. But to make things worse, life kept happening.

Louis: The first time my account was frozen was right after I got my first tenure track job. I’ll never forget it. I was actually home in Philadelphia and I remember my mom asking me, can you stop by the supermarket to pick up—I don’t know. Some fruit or something. I can’t remember. So, I said sure. No problem. So I go in and, you know, I had my ATM card and I put it in. Insufficient funds. And, I’m like, this is crazy because I know I had at least about $1,500 in the account at the time.

I did it again. I thought it was a mistake. And then I look up and I see this negative balance of nine grand. I’m like what in the world? And then it hit me like, oh my goodness. I had my cellphone and I happened to see there was a voice message and who was it from? Debt collector.

Olen: Louis panicked and ignored calls from debt collectors, until they froze his account. It was too much for him. But Louis is far from alone. If someone maintains a balance on their credit cards, the average amount owed is several thousand dollars.

This shouldn’t come as a surprise. A famous federal reserve survey released in May of 2015 revealed that just under half of us wouldn’t be able to come up with $400 without selling something or turning to borrowed money. That’s right. Four hundred dollars. And this happens in Louis’s family all too frequently.

Louis: My mother was a public school teacher in the Philadelphia system and my father, as I mentioned earlier, was a postal worker.

So, they have their pensions and their social security and that’s all they live off of and they don’t have much wealth, if any. And then when they needed it, you know, it was just like, can you loan me this, can you loan me that? And, what are you going to say? No? So, I was more than happy to do so.

There are certain things, like for instance, when my father gets really sick, my mom has to call the ambulance service. She gets a bill for $1,100. $1,100 to her is like a million dollars, so she needs help with that. So, a lot of my money is going into helping out my parents right now and, of course, expenses of being a parent, which adds up pretty quickly.

Chapter 5: Systematically Left Behind

Olen: Let’s pause for a moment here to discuss one other thing. If an African Americans, like Louis, possesses a credit card, the chances are they maintain a balance on that card. African Americans are more likely to report being called by bill collectors than whites.

Maya Rockeymoore, the president of the Center for Global Policy Solutions is an expert on the subject. The problem begins, she says, with income.

Maya Rockeymoore: And for every one dollar of income earned by whites, African Americans and Latinos only earn $0.67. So, already you’re starting with an income gap.

So when it comes to wealth, the disparities are stark in America. For one, every one-dollar of wealth earned—owned by the typical white household, the typical Latino household only owns $0.07 and the typical African American household only owns $0.06. And so that means that not only—we have a double whammy in communities of color with both income and wealth being dramatically stark in terms of the disparities. And that means that they’re driven to use credit cards to help them meet their daily living expenses.

Olen: Wealth, compounds over time. If your parents have money, if your grandparents have money, they can pass it on to you. Also, they don’t have to ask you for money if they get into a spot of trouble. That allows you to build up wealth.

Rockeymoore: Many of these people are actually pressured to actually help support other family members. And so there’s little wealth in these family networks to draw on, and those who might be in a position to earn some wealth find themselves tapped by family members to help support them.

Olen: African Americans and Latinos—thanks to discrimination, thanks to slavery, thanks to being on the margins of the U.S. life for many, many years—didn’t get the opportunity to build up wealth over the years. As a result, in 2016, it’s still harder for them to do so.

Rockeymoore: Well, it plays out in terms of these first and second generation populations going to college are not able to build assets in a way that you would expect, and in a way that their white counterparts do.

It plays out in terms of loans that are never repaid. It plays out in terms of extended family households where not everyone is carrying financial weight. It plays out in terms of contributions and donations being made to help older adults in the family make ends meet, or even children in the family make ends meet. And so, you know, the extended family networks are actually used as a source of resources even though these extended family networks—they don’t have a lot of wealth.]

Olen: And that’s certainly part of Louis’ problem.

I was also curious about whether or not there was an issue with the lack of financial knowledge in traditionally discriminated against communities.

Rockeymoore: You have all these households, particularly of color, who have been historically left out of the mainstream economy. That means that their families have not had direct engagement with things like the stock market or, you know, bonds, stocks and bonds, et cetera. Or even running a business, for example.

This has not been the traditional experience of most of these households. And so if you don’t get financial education at school, and if you’re not getting it through your family because your family has been historically unbanked or underbanked or hasn’t had access to certain kinds of capital markets, then you’re starting with a knowledge deficit.

Olen: And then throw in a financial deficit. No wonder people of color end up falling behind.

Chapter 6: Can We Break the Cycle?

Olen: Four months after we first met with her, Yannerys told us some good news.

Castillo: Oh, so the big news is that I paid off my credit card.

Olen: Yay!

Castillo: Yay, congrats to me, pat on the back. I was able to pay off my credit card with my tax return, a cumulative of about $6,000.00 both for—with federal and state return. And that whole amount went to pay off the credit card.

So, you know, as soon as tax season came along, I filed my taxes at work because that’s one of the free services that we provide. And as soon as they said, “Oh, you’re going to receive like—it was like $6,200.00.” And I was like, “Great.” That is exactly what I need to pay off my credit card. As soon as I got that return, I did not blink. I—I was like boom, Discover, paid it off.

And it was just a huge relief for me because I know I did not owe that much anymore. I mean, mentally it was a weight lifted off my shoulder. I’m able to manage my money now stress free and better. And I continue to work with the financial coach at work on those kind of goals.

Olen: Yannerys had already paid off and cut up her Target, Victoria’s Secret, and Children’s Place cards. She was beyond thrilled. She told everyone—people at work, her sister, the rest of her family, her friends.

Castillo: Honestly, I did not celebrate as far as like going out and celebrating, but is there such thing as like celebrating spiritually? Like it just—it just really felt good. It was like a goal checked off, a big, big accomplishment. And it just really helped me out again mentally, where I was able to say, oh, my God, I literally paid this off and I—I no longer want to be there again.

Olen: Only one thing. By the time she returned to Slate’s studios to tell us all about her victory over debt ... it had started to come back.

Olen: So are you still maintaining a balance sometimes?

Castillo: Yes, I still maintain a balance, and it helps out with my credit. That’s a habit that I’m still working on, trying to stay away from the credit cards, but slowly and surely, I will get used to it.

Olen: Where is the balance now, and where is it coming from?

Castillo: So, the balance for my Discover, right now it’s maybe like 230, and that was strictly entertainment for the last like month and a half, two months. And then for my Amex, it’s for groceries, and it’s about like 275 actually.

Olen: Yannerys told us she’d recently opened up a brand new American Express card.

Olen: OK, and are you hoping to pay it off this month?

Castillo: Not pay it off, but I do send $100.00. I do have it in my budget to send $100.00 a month if I have a balance to—in each of the cards.

Olen: Can you not afford to pay it off, or you don’t want to?

Castillo: Oh, no, I can—I can pay it off if I want to, but I don’t.

Olen: This story doesn’t surprise Rebecca Barrett-Fox.

First, she says, people don’t fully acknowledge the magnitude of their debt.

Barrett-Fox: Most people who have a credit card don’t like having a balance, and one piece of evidence of that is that they lie to themselves and they lie to researchers about how much of a balance they’re carrying. According to Federal Reserve, 53 percent of people make only the minimum payment, and 12 percent of people with credit card debt have taken a cash advance in the last year.

Olen: And something else too. For a lot of people who pay down their credit card debt, relief is temporary.

Barrett-Fox: And so it’s very easy a year later or two years later to find yourself in the same place because your needs haven’t changed, your income hasn’t changed and, so, the—the same—you’re going to end up there in the same place for the same reason you did in the first place.

Olen: For a lot of people, that’s their reality.

We’ll come back to policy solutions in the final episode of the United States of Debt. But for now, you want some personal finance advice.

As I said in The Index Card, published earlier this year, there is no better way to simplify and gain control over your financial life than by eliminating high interest debt. So how do you begin?

First get your head out of the sand. Sit down with all your bills. Consider meeting with a financial coach, who can help you come up with a plan you can live with.

But don’t go to just anyone. And certainly not the get out of debt organization you heard on advertised on TV and radio. A lot of them are in it for the money, and could make your situation worse. You want to go to a trusted nonprofit. One place to start? Reach out of to an organization like the National Foundation for Credit Counseling. Their website is

And something else. If it’s all this credit card debt is too overwhelming, make an attorney who specializes in bankruptcy to find out if you’re candidate. Whether you bankruptcy can help you depends on your specific situation, including what kind of debt you have, what your assets and earnings are, and where you live. It’s not an easy process but it’s almost certainly easier than devoting years of your life to paying down bills you have no hope of escaping. Sometimes we really do need a fresh start.

Finally, there’s no need for embarrassment. It won’t help with anything. And lots of people are in this position. After all, we live in the United States of Debt.

Do you remember what it was like to get your first credit card? What was your first big purchase? What was your highest balance ever, and how did you pay it down? Share your stories of debt with us. Send us a voice memo at and we might run some of your responses in a bonus segment or upcoming episode. You can also dial (929)279-3328 and leave a message for us there. Feel free to remain anonymous.

Lastly, if you haven’t already joined our private Facebook discussion group, you should now! You can find us at

Thank you for listening to this episode of the United States of Debt, a Slate Academy. Jennifer Lai is our producer. In this episode you heard music from Kai Engel and Chris Zabriskie. I’m Helaine Olen, and I hope you’ll join us next time. And remember, to sign up and hear more stories of debt in America, visit