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Less than two generations ago America discovered mass production. Scarcely one generation ago America discovered mass distribution. In the present generation America is discovering mass finance. But since this adage was written, some forty years ago, America has rapidly progressed out of the discovery stage--it is not well into the application stage.

While many people may regard consumer credit as a relatively new concept, such is not the case. It probably began in the United States early in the nineteenth century (a few years after it was initiated in England), but it has only in recent years acquired such a position of social and economic imminence. Today, credit is an integral part of our life style and the volume of consumer credit sales reaches monumental proportions.

At the beginning of 1970 over half of all U.S. families were making installment payments of some kind other than mortgages. Consumer credit outstanding (excluding mortgage debt) totaled the phenomenal sum of 122.5 billion dollars. Consider also that consumers pay anywhere from 6% to 40% for the use of that money.

Yet, while the consumer indebtedness is substantial enough to warrant concern, credit is not entirely unfavorable. It allows people to enjoy a higher standard of living than would otherwise be possible. There is also the element of convenience--it allows people to buy things before they can pay for them. There's also the added period of enjoyment people get from using products and services while they are paying for them.

On the other hand, the unwise use of credit has serious ramifications. Each year thousands of people have declared personal bankruptcy. Perhaps the primary reason being that they buy things they don't need or can't pay for. Many overextend their financial capacity due to their lack of sound financial skills and the comparative ease with which credit is granted. They then become credit risks after skipping payments and getting into trouble with creditors.

Unfortunately, little can be done to protect the consumer from himself. Therefore, attention must focus on protecting the consumer-borrower from the lender.



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