by
Carl Hampton
02/16/2010
Let’s sit back and take
a minute to think about really bad ideas.
Putting a fork in a toaster, now’s that’s a
bad idea. Going on
vacation with the in-laws is another bad
idea. Paying 79.9 % interest on a credit
card, yep, that’s a really bad idea.
Can paying that much be
legal or is it Hard Money? Well for your
information it is completely legal, and even
worse many hard working Americans are
actually being forced to pay that much.
Right now a national
bank is charging 79.9% on their credit
cards, and as long as they fully disclose
their terms per the federal Truth in Lending
Act, it is completely legal. But in my
opinion it is quite shocking that not only a
financial institution would try something
like this, but also they are getting away
with it.
The national average in
America today for credit cards is 14.15
percent and someone is getting away with
almost 80%? In the last few months,
situations such as this has become a topic
of much conversation on Capital Hill, in
fact there is talk of reinstating a
nationwide cap on credit card interest
rates. In December a lawmaker proposed a
bill to cap rates at 16 percent, and
hopefully for the debt of the American
people, something similar to that goes
through.
In recent times due to
the fragile financial state of the nation it
is fairly predictable that someone is going
to try to make this time of heartache and
suffering work for them financially. In a
time where the unemployment and foreclosure
rate is up, it is human instinct to look out
for one’s self, but honestly who would agree
to 79 percent interest? Credit Counselors
have been warning consumers more and more to
read all of the fine print, no matter how
tedious, before signing and to seek all
options in order to make a well informed and
well educated decision and this guidance
should not go unnoticed.
A new act put into law
in 2009 limits the upfront costs that credit
card companies can charge on accounts held
by consumers with bad credit or little to no
credit history. Because of the laws that are
popping up to help those who need them,
companies are getting more and more crafty
with offers that shift the money from high
start up fees to high interest rates. This
way lenders still get their cut, but they
are within the letter of the law. Also,
because of the way that the new laws have
been written, companies are tightening their
credit standards. This means that the
approximately 70 million people with
“problem” credit, or credit lower than 640,
may take 16-24 months to improve their
credit, when before the credit crunch it
would have only taken 8 to 16 months.
Right now companies are
still testing the waters with the 79.9%
cards, stating that it takes up to 9 months
to read market trends. But my question is
why is this permitted? These companies are
taking one of the basic necessities for
living wealthy in America- credit, and
marketing it to the un-wealthy with similar
tactics to dangling a steak on a string in
front of a starving animal. They are showing
a glimmer of hope- a credit card, which if
you pay on time will raise your credit thus
allowing you to pay your bills and give your
credit score just a little more strength.
But in fact they are hurting the people who
need the most help. Realistically they are
offering hope to high-risk clients that will
most likely not be able to pay after the
interest is added. Thus, financially beating
the already downtrodden. Aren’t you glad
that in “the richest” country in the world
(according to the media) this kind of
financial strong-arm tactics are legal?
