Stateside With Rosalea
The Town Bike, Part 3: Unleashing The Hounds Of 7-Point Type
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.
--PEACE--