Susan Keating is the president and chief executive officer of the National Foundation for Credit Counseling — the nation’s largest and longest serving nonprofit credit counseling organization.

At a glance
Name: Susan C. Keating

Hometown: Washington, D.C.

Career highlights:
  • President, CEO of the National Foundation for Credit Counseling (NFCC)
  • Highest-ranking female CEO of a U.S. bank holding company
  • President, CEO of Allfirst Financial, Inc. (2000-2002)
  • Recognized as one of Pennsylvania’s 50 Best Women

Her experience in financial services spans three decades and has provided her with a solid insight into the issues facing the credit industry.

Keating joined the NFCC in March 2004.

She took the top position after heading up Allfirst Financial Inc., which had been among the top 50 largest U.S. banks and the largest U.S. holding of Allied Irish Banks.

Keating has served as a board member for several reputable organizations such as the Financial Services Roundtable.

She chaired the Consumer Issues Committee for the public policy group, which represents the largest firms in the banking, securities, investment and insurance sectors.

You’ve said that raising minimum credit card payments is in the best interest of consumers over the long term. Why is this policy good for them?

In the long term, it is a way to break free of this whole revolving debt cycle that many consumers really can’t seem to escape. I believe this policy is aimed at helping consumers pay off outstanding balances and at getting out of debt more quickly.

In the short run, however, what we’ve seen is that it has created financial stress for consumers. Particularly, for those who are continuing to charge and use credit without considering the consequences of the debt that they are accruing. These people may be actually increasing their debt and thereby creating an additional burden for themselves because of the higher minimum payment requirements.

So, in the short-term we are seeing some stress and that’s problematic, but overall I think the intention and the objective is right on.

Credit cards are the most common form of credit. However, many people fail to read the disclosures regarding the use of their credit cards. What can the banking industry and/or the government do to encourage a person to read and understand these disclosures?

This all comes back to financial education.

Financial instability, unmanageable debts and bankruptcy are huge sources of stress that can tear families apart, destroy peoples’ emotional and physical well-being, and deprive children of a sense of security and limit their opportunities. That is why I believe that innovative credit products and innovative credit education should go hand-in-hand.

We all have an obligation to help consumers understand what it is that they are signing up for. In that regard, there are incidences where the card issuers are not disclosing the nature of the credit in ways that make it really understood. The average consumer might not understand the language or understand the terms or conditions.

I think it is everybody’s obligation including the cardholders to understand and to ultimately get educated on what that loan is about.

U.S. senators and scholars have expressed concern that credit card agreements have increased over the years from one page in 1980 to presently more than 30 pages in length. What are some key things in the document that consumers should know?

The key thing in any disclosure is what really are the terms and conditions of the loan. Here are the specifics to understand: What is the basis for how I must repay? If I do not pay the loan as agreed or go beyond what I’ve been approved, what are the consequences? What are the rights of the issuing institution to change the parameters beyond what I initially signed up for?

How can consumers determine a safe credit card from a bad credit card?

I think it is more fundamental than that. Step back and think about credit cards as a loan instrument to purchase goods and services and then evaluate a card or a product.

If I understand how that loan is set up, what the terms and conditions are, when the rates can change, when I may be assessed more fees because of different kinds of behaviors, then I am an informed consumer.

The difficulty today is that we have a whole culture set around spending and this sort of unbelievable focus on consumerism and buying more, and buying better, and buying bigger. It’s without the additional understanding that if we are using credit to make those purchases that there’s a financial obligation.

Are you seeing a change in how consumers approach their use of credit since the new bankruptcy law required credit counseling to file and be discharged from bankruptcy? 

I really can’t respond about a direct link to how consumers are responding relative to the law. What I can say is that we know consumer debt levels continue to rise.

NFCC agencies are the largest provider of bankruptcy-related services to consumers. We conducted two major surveys of our agencies: one at the six-month mark of the new bankruptcy law and one at the one-year mark. We know consumers who filed or considered filing for bankruptcy at the six-month mark were financially devastated. At the one-year mark, we actually found the outstanding debts for the consumer contemplating bankruptcy had deteriorated further.

The other thing that is so pertinent to this topic of financial literacy and financial education is that our clients said at both the six-month and at the one-year mark that the No. 1 reason for seeking bankruptcy counseling was poor money management.

From your experience, what do you see as the most common mistakes consumers make with their credit cards?

The biggest mistake is not paying as agreed; not paying the bills on time. The other mistake compounding the problem is overspending and going over credit limits.

Bankruptcy scholars have noted that medical debt is among the main reasons why people become bankrupt. Health care providers are collaborating with financial institutions to offer medical credit cards to patients for them to pay their bills. Some of these cards offer high interest rates. What is the best way to finance or pay for an unexpected medical expense?

Certainly cards and card lines of credit are one way to pay off outstanding bills and outstanding debt. But, the consumer once again, must use credit responsibly and be aware of the credit card or loan’s terms before using it. We see many clients who are financially devastated with the rising cost of health care and the increase in their overall medical bills. This is clearly a problem and continues to be so. It’s very complex and not easy to respond to.

I have said this often, but it really is not a shame to get into debt. It’s a shame when consumers don’t reach out and get help when they need it, or get help before it’s too late and they have no other alternative but to file for bankruptcy.

If someone is in desperate shape, I would really encourage those consumers to reach out and get help from a qualified professional at one of our NFCC agencies.

Federal Reserve Chairman Benjamin Bernanke recently forewarned of a debt crisis and urged Congress and the White House to make policy changes to Social Security and Medicare as more than 70 million baby boomers approach retirement. He says if changes aren’t made rising deficits will occur as well as a rapid growth in debt and interest rate payments. How is the credit counseling industry preparing for this wave of retirees and educating consumers about credit?

The credit counseling sector, specifically the NFCC, is concerned about the fact that more consumers are taking on more debt and not saving. Our role, our vision, is to help educate consumers to be financially empowered, better prepared for the future and to move beyond the crisis mode so they can be free of debt.

The mission of the NFCC is to set the national standard for quality credit counseling, debt reduction services and education for financial wellness through its 115 member agencies.

Last year NFCC agencies counseled nearly 2 million clients through nearly 1,000 locations across the United States and Puerto Rico. In addition to counseling individuals, we are doing a lot of education in our communities to help consumers think about their financial future and to plan for it.

We work with community groups, churches, schools, the YMCA’s and community centers. We offer free education and classes. Find out where these classes are by checking with your local agency.

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