Before I go into the myriad of ways credit cards snare and hold you financially imprisoned for the rest of your life, I have to point out one lender’s ad that literally made my jaw drop.
A very attractive young woman appears on your screen to tell you that she represents a lending institution that will lend you about $2,000 with no questions asked other than your name and how they can locate you.
She goes on to say that you can have the money immediately and you will be required to pay the loan in one year.
To this statement she adds something like this:
“I know the money is expensive but you can always pay it back faster than you originally thought if you want to.”
Across the bottom of the screen, in small letters, which you can read and understand if you are careful, are words to the effect that the annual interest rate is over 125%. That is one hundred and twenty five percent. If you borrow $2500 and keep it a year, you have to pay the lender about $5500.
If you need money badly enough to agree to pay 125% yearly interest, what are the chances you will be able to pay the $5500 at the end of the year?
If you pay $1000, the lender will be happy to extend the $4500 remaining balance for another year at 125% interest.
You don’t have to be a graduate of the Harvard School of Business to know where this leads.
Forgetting the morality of charging 125% interest on a loan, how can the laws of this country allow such parasites to live off the problems that poor people have?
We need to take a long, long look at what some lending institutions can do to literally take the life’s blood of a borrower.