The Wall Street Journal. Classroom Edition: Debating Current Issues: Easy Credit

For many Americans, borrowing money is easier than ever. But some economists worry that all that borrowing is setting the economy up for a fall.

In this debate from The Wall Street Journal Classroom Edition, Allen Grommet, a senior economist at the Cambridge Consumer Credit Index, and Ruth Ann Marshall, President of MasterCard North America, discuss the benefits and drawbacks of expanding consumer credit.

YES Is Easy Credit Good for the Economy?

BY RUTH ANN MARSHALL

If you like old movies, you know this scene: A hardworking individual goes to the local bank to get a loan. The banker responds, “Sorry, but you don't have enough property to guarantee the loan.” Well, that wasn't just Hollywood fiction. Not too long ago, the only people who could easily borrow money were people who already had money.

Today, millions of Americans have access to credit, with the major determining factor being their ability to repay. How did credit become more democratic? For one, federal laws enacted over the past 30 years have ensured that people of all ages and backgrounds have greater access to credit.

Thirty years ago, Americans traveling overseas bought traveler's checks or risked carrying cash. Now a debit or credit card gets you local currency almost anywhere in the world. College students have learned the value of having a card in an emergency when their cars break down far from home. And payment cards give small businesses financial flexibility that was unknown in the 1960s.

Then there's e-commerce—a category of spending that would be just a gleam in a futurist's eye if it weren't for debit and credit cards and the protections behind them.

Some critics believe the price for democratization of credit is too high, yet the truth is the vast majority of consumers use credit responsibly. That said, we believe one consumer in trouble with credit is one too many. But the answer doesn't lie in making credit harder to get. The answer lies in improved financial education in schools and more widespread teaching of basic money-management skills.

Because of the efforts of the financial-services industry, Americans now have more choices and more technologically advanced ways of managing their money than ever before. If the past three decades are any guide, those choices and advances will only continue to grow in the coming years.

Credit cards offer both convenience and risk to consumers who may be tempted to borrow more money than they can afford to pay back.

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