In our opinion: Exercise restraint when confronted with credit card offers

The pastor of the First Baptist Church of Lincoln Gardens in Somerset, N.J., has the right idea. He collected a lot of unsolicited credit card offers from his congregation recently, stuck them in a pan and, in a ceremony that received media attention, set them on fire.

This is not to say that the responsible use of credit is bad. It isn't. But there is plenty of evidence that banks and other lending institutions are once again broadening their scope of potential borrowers, and the only sure defense against trouble is for consumers to exercise restraint. That may not necessarily involve fire, but it will involve throwing offers in the trash. Even that can be difficult when the officers are handsomely printed and promise easy money.

The Rev. DeForest B. Soaries Jr. in New Jersey likens debt to slavery. He is not the first to do so, and it is an apt comparison. It is especially true when the indebted person has a low income and is tempted to borrow more than he or she can reasonably pay back, and for items that are not necessary.

The New York Times recently reported that credit card lenders are looking for ways to make up the money lost because of recent new regulations enacted as a result of the financial crisis. To do this, they again are looking at subprime borrowers, who typically will pay high interest rates and accumulate expensive late fees. In December, these lenders issued 1.1 million new cards to people with damaged credit. That was 12.3 percent more than in December of the previous year. More auto loans also are going to risky borrowers. That is an area of concern because new lending regulations do not cover loans for cars.

This new push doesn't just affect low-income borrowers. Investors are buying securities consisting of bundled auto loans. The Times said $11.7 billion of these were sold last year, compared to only $2.17 billion in 2008.

The concern here should be obvious. These behavior patterns sound similar to what housing markets engaged in before the Great Recession.

Markets tend to self-regulate, and we hope investors are not so forgetful of recent lessons that they will repeat risky behaviors to the same extent. If so, they deserve the consequences. It also should be obvious that Congress, in an effort to regulate bad behavior, tends to instead create incentives for other sorts of bad behavior. But the calculated decision to target vulnerable people for profit is disturbing.

The Times profiled Annette Alejandro, who just recovered from bankruptcy and has no job or car, but still has to go through piles of credit card and car loan offers every day in her mail. Soaries has found that many people in his church are experiencing the same thing. One who showed up at the credit card offer burning ceremony talked about the effects of debt. "When you are out of debt, it's freeing," she said, according to mycentraljersey.com.

Indeed it is, and the only sure way is through self-discipline.