(Not) Learning From the Subprime Meltdown
The National Consumer Law Center put out a new report Thursday exposing the greedy, narrow-minded approach of credit card companies that extract hundreds of millions of dollars in fees and other revenue from subprime borrowers. You don't have to look far into history to see how similar greed and short-term thinking led to the subprime mortgage meltdown.
In one example, after saying no to a "diner's club" credit card feature, a married couple was still charged $100 for the club after buying a $130 crib on the card (in addition to the $50 application fee). Because the credit limit was only $200 a month (not a lot considering the $150 initial charges, right?), the couple was charged for exceeding the limit and in total ended up spending $700 for the $130 crib. Another credit card featured in the report regularly charges $178 in initial fees for a credit limit of $250, leaving a buying power of only $72.
Strapping consumers with unaffordable debt may make for nice short-term profit and lavish incentive bonuses for executives, but there's a reason why even the books of Deuteronomy and Leviticus put significant limitations on lending "upon usury." As the report makes clear, lawmakers ought to start doing more of that.
This report should be given to every person who files bankruptcy.
These "fee harvesters" target those who have filed.
Theses co's send offers with letters saying they want to help you "re establish" your credit. Or tell you "you deserve a second chance", or my favorite
:
"Your credit score entitles you to get credit"
So how high does ones credit score need to be to get credit from a predator err... I mean "fee harvester?"
I filed bankruptcy 2 years ago and I started recieving offers from these predators even before
I had my discharge papers. I could wall paper a whole room with the piles of offers I have recieved.
But I am not naive or desperate, and every offer I recieve is promptly shredded.
I know there are others though who do accept these offers and find themself in a trap they
can't escape from.
I have written to lawmakers about this. I may as well go bang my head against the wall. It's not top priority. And I doubt it ever will be.
Bonnie
http://pictures.aol.com/galleries/pupart@cox.net/
November 3, 2007 1:56 PM | Reply | Permalink