Stateside: Unleashing The Hounds Of 7-Point Type
The Town Bike, Part 3: Unleashing The Hounds Of 7-Point Type
See also… Part 1 - Part 2
There's an ad running on TV here at the moment that features a white version of the black dog that lives at the White House. You know, one of those scotty terriers from the Black and White whiskey bottle. In the ad, the dog watches its master messing under the bonnet of a car, realizes something is wrong and runs inside to its mistress. Doggie is relieved to find that she's already at her computer, on-line to a cash advance website.
Every day is pay day, the ad implies, and the happy little doggie is ecstatic that it will soon get a rawhide bone to chew on because the instant cash will allow its owner to repair the car and drive to the supermarket to buy dog toys. Cash advance loans of this type--secured by a promise to repay it directly out of your next pay packet--are very expensive credit.
The Federal Trade Commission's website gives the example of borrowing $100 and securing it with a check for $115 which the cash advance company can deposit the next week. If you extrapolate that 15 percent charge to an annual percentage rate, you are paying a 391 percent APR.
Looking at it another way, what if you find you have to roll over the loan for another couple of weeks? In effect, you'll be buying $100 at a cost of $160. Since you're doing this because you're strapped for money in the first place, it's only a matter of time before you lose your home (if you ever managed to be credit "worthy" enough to own a mortgage on one).
Nowhere in the doggie ad is the actual cost of credit addressed in any way that would catch your attention. This is, I suppose, the optimum way to create Mr. Bush's much vaunted "Owe-nership Society"--the catchphrase of his vision for the people of the United States of America. More people than ever before own (yes, with an 'n') more debt than every before and fewer people than ever before own realizable assets than ever before. Realizable assets on which they won't make a loss, that is. Like a car.
As I've said in previous columns, I own quite a lot of debt, so my furiously pedalling-away-from-debt legs are a prime target for the hounds of hell, cunningly disguised as cute little cuddly doggie-woggies. My savings bank sent me an invitation to get a new credit card at zero percent interest for the first six months. "Carrying a balance on your credit card can help you manage your monthly cash flow," the flyer says. "Wouldn't it be nice to also have a way to earn a return on your interest charges?"
Excuse me? The only way that the first sentence can be true is if you pay off the balance in full each month, which completely negates the worth of the offer to get 10 percent of your interest charges returned to you! Well, I didn't fall for that one. But I did fall for another part of the offer, which was that I'd pay zero percent interest on balance transfers.
That's a no-brainer, I thought. I'll transfer the high-interest balance on the credit card I already have with that bank to this new card. Off I go on-line and click through the "I agree to the terms and conditions" screen and three weeks later get the new credit card AND a letter saying that "We cannot accept transfers for cash/to self/to a person with same surname." Hellooo! Did you think I was going to transfer the balance of someone else's credit card account onto my new card?
Well, of course, it's me that's the no-brainer. Not that, even now, I can find anything on the bank's website or in the fine print that they have any such balance transfer policy. But why would a bank encourage, let alone allow, you to stop paying for the use of its credit lines?
Now that the law regarding personal bankruptcies has been tightened up, financial loan institutions are free to rip the scotty clothing off their hounds of hell--25 percent interest rates--and sic them on the customers like me who pay off more than the minimum balance each month and who were never going to walk away from their debts anyway.
Like, what do I have the power to do about it except pay whatever rate they impose? It's right there in the fine print, after all.