Jun 05 2009
Credit Cards - Loan Sharks, A Rose By Another Name
Most of us have at least one of these nasty little things, and for the privilege of using it we pay dearly. The average credit card interest rate is around 14 to 15 %. Cards range from low rates of around 8% to high, at around 19.5%. As with everything, your cc interest rate depends on several factors, for most of us, we are paying in the 18 to 19.5% range though. Now there have been talks by both Canadian and US governments to make us more aware of what we are paying, and how long it will take us to pay it off. Oh come now, if it isn’t obvious to us that we keep making minimum payments, and still not reducing the debt, then there is something wrong with us. What needs to happen is there has to be something put into place to cap the amount of interest a credit card can charge. 19.5% is highway robbery, it’s plain and simple, legalized loan sharking. The principle behind loan sharking was to keep you in ‘owing’ and only ever able to pay the interest, never the principle, that way the lenders have you by the proverbial “short and curlies” until such time you either go bankrupt or die. Even in death there is no escape, creditors have first claim to the estate, and if there is no estate then it is considered a loss.
Recent headlines abound with the staggering numbers of unsecured personal debt we are bound to. We are unfortunately, in part, products of our own making, and in part, products of necessity. In order to do anything in today’s day and age we NEED to have a credit card. You can’t rent a car, take a trip, reserve a hotel or anything without having a credit card. Almost everything you do these days requires a credit card of some sort or other. They are a necessary evil!
Instead of pointing out to us just how long it will take to pay a card off by just making minimum payments, a cap NEEDS to be put on the interest such cards can charge. If any one of us in the private sector tried to give a loan at 19.5% interest I am sure we would be arrested for loan sharking. Granted, Credit Card companies don’t send ‘Big John’ to break a leg if you don’t pay, but they might as well. Threatening phone calls garnisheeing wages and bank accounts, amount to the very same thing in my book. I have stood in the grocery store a day before Christmas, just after having received an unemployment check, and discovered that a collection agency had gone in a wiped out my entire bank account. This was in spite of the fact that they cannot, by law, take your funds if you are on EI, welfare, or if it would cause ‘undo hardship’. Acts like this are enough to drive a person to desperate measures, and all because we allow it. However if we try to function without a credit card, we are discriminated against….it’s an evil ‘catch 22’. I wish I had an easy answer; we all work too hard, for too little, and have it taken by banks, government and credit departments. We are taxed, service charged and exorbitant interest rated into a society of extreme debt. What it boils down to is that our cost of living has far surpassed our incomes. Something needs to change in a larger sense than just lowered rates on credit cards. In the meantime, financial advisors and credit councilors can offer some sound advice. Try to get a consolidation loan from your bank, pay off all your credit cards….. and then (now here’s the hard part for some) cut all but 1 of them in half and send them back to the issuing company. With your last credit card call the company and have them LOWER your credit limit to a manageable amount, something that you know you will be able to live with and handle. Many companies hate to do this, but will, it isn’t in their best interest to have you pay off your card on a regular basis, they make their money (profits) on the interest we pay. It would cripple big business if even a small percentage of people did this, but what the heck, if it gets the message across that we aren’t going to take this anymore….then let’s do it!
