Whether you're an entrepreneur or a consumer, credit card convenience can really cost you. Hi, I'm Nicole Anderson, vice president of marketing at USA Federal Credit Union. The US Senate's committee on banking, housing and urban affairs convened on January 25th to examine the practices of credit card companies in taking unfair advantage of consumers. Our first guest is Brad Dugdale, and he knows a lot about some of those unfair advantages. Mr. Dugdale co-authored the book "Let's Save America, Nine Lessons to Financial Success." Brad, as a bank board member, and a wounded credit card consumer, tell us a little bit about your interesting vantage point on this heated topic.

Well, you know it's a very interesting confab, and conundrum in a sense that we have this miracle of compound interest, we're not teaching people how to embrace it so they can become financially successful. But in the meantime credit card debt is being sold to Americans in many, many innovative ways, and thus more and more people are being trapped by compound interest, instead of being empowered by it.

Well, set our discussion up today and tell us a little bit about what, in your opinion, is the current state of consumer debt in America.

Well, let's just see how well the credit card industry has done.

Ok.

If you go back and you look in 1980, there was about $50 billion in credit card debt. Today that number is $860 billion.

That's incredible.

Now think about that. If you had a business plan and you said I want to take this balance from $50 billion to $860, most people would say that was a pretty successful execution.

Absolutely. So why, in your estimation, do you feel that they have been so successful?

Well, there's been a couple of key things. You know, one, they were successful in winning a Supreme Court case that let them headquarter in states that have no limits. And they basically,

And that's no limits to interest rates, correct?

Yeah, that's correct. And so they basically nationalized the banking industry and so a lot of banks headquarter in South Dakota and in Delaware because there are no limits that they can charge. And that gave them the ability to mass market to all the states and basically, you know, usurp any usury laws that were out there in the nation. But the other thing that's probably more disturbing in my opinion, is that they've loosened the underwriting standards. If you go back, you know I graduated from college in 1980. If I wanted a credit card, I had to fill out a balance sheet, I had to tell people what my cash flow looked like, and there was a good chance I could be denied. Or the amount of credit that would be given to me would be limited. Today, if you can fog a mirror, you can get a credit card. And so what they've done, is they have over time loosened the underwriting standards and more and more people are signing their names on the dotted line because anyone can get a card.

Sure. Now, tell me a little bit, that's a good segue. What do you feel is the...
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