We have created a culture where many Americans don’t think they have to live within their means. So, if they “need” something,” they buy it on credit. More new stuff is acquired even if they must rent a storage space for the old stuff. If people lose their jobs, they try to maintain their old level of consumption. In times past, people in a financial jam would have gone to parents and family, and the parents would tell them “You don’t need that if you are using my money.” But, with a credit, debit, or pay-day loan, they don’t have to face anyone saying no.
There are twice as many pay-day loan offices than there are Starbucks, and people may pay over 400% interest for a two week loan. Overdraft protection on a debit card is not called a loan but euphemistically termed a “courtesy” by the banks as they collect enormous fees. Some people will take money, if available, no matter their chance of repayment. And financial organizations take advantage of this. As one wag put it, there are two words Americans love to see—“Free” and “All you can eat.”