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A new credit card aimed at millions of low-income families is to charge interest at up to 70% - the highest ever charged by a credit card company.

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Rob from the poor and give to the rich.

I remember talking to a guy that works as a trainer for collections people, and saying that it was understandable that credit card rates be a little higher since not everyone pays back the credit they use. But he was saying that the percentage of people who don't pay is only about 7%, if memory serves. Which certainly would not necessitate the 18 and 19% the banks charge on major credit cards and certainly not the 28.8% charged on department store cards. Which is compounded monthly and in the case of Dept. store cards works out to 35 plus % annualised for those carrying balances. Anyway something should be done about that because people are being taken advantage of.

I sometimes think that if the Bay and Sears weren't collecting exhorbitant rates on their cards they'd go out of business, that must account for a great deal of their profit.

I'm also extremely bothered by many new charges on credit cards these days. Like charging credit card customers an over the limit fee any where from 10 to 30 dollars for the month. It would be better if people weren't at their limit or carrying any balance for that matter, but when they do go over the limit to get hit with an extra charge like that when they are already being charged a very high rate of interest is not fair. In fact it's insidious when you think that they actually can decline purchases that put someone over their limit in the first place. Now they're saying we'll let you go over your limit but we'll charge more, a little fee, for the service/priviledge. How disgusting.

MBNA was the first to start charging this fee here in Canada that I became aware of, CIBC was the first Canadian company to do so, and the Presidents Choice MC which is a subsidiary of CIBC, I noticed the Royal bank has jumped on the bandwagon.

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Marketed under the slogan: "Stay in control of your budgeting"

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The transcript is at the link below and you can also watch in streaming video as they archive all of the programmes.

The Secret History of the Credit Card

Apparently, the state of South Dakota has become the credit card capital of the USA. All kinds of credit card companies relocated there after the state deregulated the banking industry a decade or so ago. A couple of other states followed later.

Some incredible stuff apparently goes on down there. Let's say you have a credit card with an interest rate of say 10%. Then you have a late payment on a bill...doesn't have to be the credit card bill...it could be any bill that you owe.

The credit card company will all of a sudden jack up your credit card interest rate to 20% because now you're a "bad risk" even though you've been making your regular credit card payments.

Anyway, I'm no expert on banking regulations in Canada, but it seemed the U.S. banks engage in all kinds of practices that would probably be illegal here. Not that I have any great love for Canadian banks...I'm sure they'd do the same if they could get away with it.

Oh yeah...and one other thing. In the documentary they mention that the banking industry refers to folks who pay off their monthly balance very month...and therefore don't pay any interest charges as "deadbeats". Interesting eh?

[ 12 February 2005: Message edited by: radiorahim ]

I await the national media campaigns, the beseeching entreaties from the pulpit to “think of the children!” and the calls from Stephen Harper to “ethnic and religious groups” that this is a slippery slope that will lead to moral decay, transvestitism and yellow spots on your dinky. (Well, that was just a stab in the dark at what Harper’s gonna say, but I’m convinced by now that even he doesn’t know what it’s gonna be until he opens his mouth, so how am I supposed to predict with any accuracy?)

Anyway, I await the outpourings of scorn, outrage and indignation (followed quickly by calls to amend the laws to prevent this wickedness. For does not that font of all our laws, the most holy, revered wholly revised bible state:

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If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.
— Exodus 22:25

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.... Take that baseball cap off, stand up straight and show some respect!That's GAWD talkin' boyo!

Have no fear, babblers! Leuca and Springy will be along any moment, reassuring us that the general public will not stand for this, and calling for a [angelic choir] Free Vote [/angelic choir] in the House of Commons...

....... just wait......

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Originally posted by Barcode:
I can understand there maybe circumstances when it is necessary to use a credit card,

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No it's not. It's never "necessary". I don't have a credit card, and I have all the necessities.

I will never have a credit card again, on principle. I refuse to support such leeches. You know how people feel about boycotting Walmart, the evil empire? I feel that way about credit cards, times ten.

Credit card companies prey on poor people (like students) by giving them limits they can't afford to pay back. As for the middle, upper-middle, and upper class people who get charged usurous interest rates, I couldn't care less. For poor people, credit cards are a trap. For people with money, credit cards are a luxury. People with money can pay through the nose for their luxuries for all I care.

[ 12 February 2005: Message edited by: Michelle ]

This isn't an apology for getting into debt, nor does it contradict your sound advice that if you can possibly avoid using a credit card, don't use it. I am just saying that this industry is full of predatory jackals and its about time we started regulating them more tightly.

[ 12 February 2005: Message edited by: robbie_dee ]

The people I see (co-workers) who have cards are maxed-out and living far beyond their means. It's scary, really -- they have little hope of ever digging themselves out of this horrible pit of debt, and go on to consolidate loans, switch balances to other cards, etc. in a desperate attempt to do so. It's just sad, and serves to remind me on a daily basis why I do NOT want to get a credit card. (Although I was sorely tempted over Christmas to apply for one, not that I would ever be accepted)

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Originally posted by Michelle:

No it's not. It's never "necessary". I don't have a credit card, and I have all the necessities.

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Well, their are certain things that it is damn near impossible to do without one, including -

renting a car
renting a room (unless you put up $100+ d.d.
any on-line shopping or memberships
reserving air or rail tickets
concert or other "event" tickets
others that don't come to mind before caffiene

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I will never have a credit card again, on principle. I refuse to support such leeches. You know how people feel about boycotting Walmart, the evil empire? I feel that way about credit cards, times ten.

Credit card companies prey on poor people (like students) by giving them limits they can't afford to pay back.

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*digging toe in carpet*

You can rent a car with a cash deposit. You can shop online with Paypal, which doesn't require a credit card. You can reserve air tickets through a travel agent by paying up front, or by going to the train station and buying the ticket ahead of time. You can buy concert or event tickets with cash.

It's not quite as convenient. But convenience is a luxury, not a necessity. It would be more convenient for me to pay rock-bottom prices at Walmart, but I don't, because I don't want to support them.

Robbie_dee, I didn't want to sound like I was criticizing poor people for getting in over their heads with credit cards. I object, by the way, to you lumping together the "poor and working class" in this context. Lots of "working class" people make very comfortable incomes, if you consider unionized employees like teachers and highly-paid factory workers to be "working class" rather than "middle class". For those with comfortable incomes, who use their regular income to pay for necessities, credit cards are a convenience and a luxury, and they therefore fall into the category I mentioned above of people who I couldn't care less if they're charged 100% interest - that's what they get for supporting such an evil industry.

Anyhow, I wasn't criticizing poor people for getting in over their heads with credit cards. I was one of them when I was a student! I had limits I couldn't possibly pay back when used, and I was one of those responsible credit card users who generally paid the entire balance, or if I carried, paid on time every month and stayed within my means. And then several months of unemployment hit. I used them to live off of, and got in too deep. Stupid? Probably. But I wasn't eligible for EI, having been a student instead of working beforehand, welfare wouldn't have even paid my rent, and the credit was available. And credit card companies KNOW that most students will find themselves in a financial bind at some point or another, and that they will be too desperate to resist the temptation to use their card. That's how they make their money, after all.

Other students I've known in this situation (and I've known too many, unfortunately) have either wound up paying off the debt for years to come (with a bad credit rating due to a consumer proposal and a huge chunk of their monthly income going towards the interest), or declaring bankruptcy.

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Originally posted by Michelle:

You can rent a car with a cash deposit.

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You can shop online with Paypal, which doesn't require a credit card.

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You can reserve air tickets through a travel agent by paying up front, or by going to the train station and buying the ticket ahead of time.

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You can buy concert or event tickets with cash.

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As for the ethical aspects of it, I think the best way is to pay it off in full every month (and since I seldom use my cards, that's not too difficult). Then you're using their money for free, as James says, and not supporting the industry very much (you still are a little bit though, because they make money off the commissions that they charge the retailers).

Some people may have another option, BTW. Some financial institutions offer Visa/MC debit cards, so you're not actually using credit, but debit. That's the best solution, if it's available to you. Unfortunately it often isn't; back when I lived in Winnipeg I looked into this, but the nearest credit union I could find offering this was located in Kenora. Maybe we should be clamouring for more of this; if I could use debit to buy my plane tickets while avoiding travel agent fees, I would.

[ 12 February 2005: Message edited by: Mike Keenan ]

I personally think that if we on the left concentrated as much energy in boycott movements for credit cards as we do for Walmart and other industries, instead of, oh, I don't know, having our political parties ENDORSING them with their logo, then we'd be getting somewhere.

Just on a couple of points -

The car rental thing: Last time I did that, the deposit was $500, cash. Hoe many people have that lying around ? So, let's say I absolutely need to rent a car to go to a job interview. Unless I have the amount of the rental plus the deposit on hand, no car, no interview, no job.

You're right, it's a $500 deposit. If you can't afford the deposit, then you can't afford to rent a car, because that's how much the deductible is on the insurance if, god forbid, you should get into an accident. That's usually the reason they charge that deposit, to cover the deductible.

As for the problems with paypal, well, then don't use it. There's no NECESSITY to buy things on the internet. I haven't bought anything on the internet since getting rid of my credit cards. I buy them from real live stores, where I can walk to and pay by cash or debit!

I don't think the most "ethical" thing to do is to have a card and pay it off every month. I don't care if you're using their money by doing so. I think the most ethical thing to do is to not give them any business at all. And even if you pay off your card every month, you're still giving them money every time you use it, because the people who take the payment pay a transaction fee for your purchase. So you're STILL supporting the industry with every transaction you make, even if you're not paying interest on your monthly statement.

As for using the VISA/MC credit cards where you give them a lump sum of money (say, $500), and then you get a "credit" card with a $500 limit that you have to pay off every month - that's gotta be the best scam on the poor I've ever seen.

"Hey, I've got a deal for you. You give ME $500, and then you can borrow however much of it you want. But make sure you pay me back the whole balance every month! If you want to keep your money that I've lent to you for longer than a month, I'll charge you interest on your money!"

Unbelievable. No thanks, that's not a "best solution" if you ask me. I'll just keep my $500 under the mattress, and if I need to use it, I'll "borrow" it without interest and pay it back to the mattress when I can.

Also, this argument about buying plane tickets through a travel agent versus buying them with a credit card (I want to avoid the fees!) is the same kind of argument that many left-wingers will not stand for one moment when people use it to justify shopping at Walmart. "I would shop ethically, but then it might cost more!" Obviously we can all come up with some extreme example of a poor person needing to travel by plane somewhere as an absolute necessity, and needing to avoid fees. But for the most part, travelling by plane is a convenience and/or a luxury, whether you're doing it to go on vacation, or to cut time out for business travel, and therefore, that whole, "But it costs more!" argument doesn't cut it.

[ 12 February 2005: Message edited by: Michelle ]

[ 12 February 2005: Message edited by: Michelle ]

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Originally posted by Michelle:

Why would someone "need" a car to go to a job interview? Have buses and trains disappeared?

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As for using the VISA/MC credit cards where you give them a lump sum of money (say, $500), and then you get a "credit" card with a $500 limit that you have to pay off every month - that's gotta be the best scam on the poor I've ever seen.

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Also, this argument about buying plane tickets through a travel agent versus buying them with a credit card (I want to avoid the fees!) is the same kind of argument that many left-wingers will not stand for one moment when people use it to justify shopping at Walmart.

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If it makes you feel any better, I keep my credit cards in a drawer and seldom use them. If I didn't have them, though, I'd have had to wait a month or two before I could have scraped together the deposit for my apartment- I had to get a cash advance on my card (and yes, I know, the interest rates on cash advances are even worse than regular card rates, but there you go). And since I was staying with my ex and her mum at the time, it would have been an uncomfortable living situation. For some people (not me, I hasten to add) it would have been downright intolerable. So it's useful to have a card for emergencies.

[ 12 February 2005: Message edited by: Mike Keenan ]

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Why would someone "need" a car to go to a job interview? Have buses and trains disappeared?

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What if the employer's place of business is 50 km. from the nearest public transport ? Travel agencies; what of people who would have to drive an hour each way to get to the nearest travel agency? I know many people who are just so situate.

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No it's not. It's never "necessary". I don't have a credit card, and I have all the necessities.

I will never have a credit card again, on principle. I refuse to support such leeches. You know how people feel about boycotting Walmart, the evil empire? I feel that way about credit cards, times ten.

Credit card companies prey on poor people (like students) by giving them limits they can't afford to pay back. As for the middle, upper-middle, and upper class people who get charged usurous interest rates, I couldn't care less. For poor people, credit cards are a trap. For people with money, credit cards are a luxury. People with money can pay through the nose for their luxuries for all I care.

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Originally posted by Barcode:
If you need to build a good credit rating, a credit card is a thing to have.

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Originally posted by James:
What if the employer's place of business is 50 km. from the nearest public transport ? Travel agencies; what of people who would have to drive an hour each way to get to the nearest travel agency? I know many people who are just so situate.

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What if the employer's place of business is 50km from where you live and you have no way of getting there besides renting a car? Then I guess you'd better not apply for that job unless you have your own car, or have enough money to rent a car every single day to get back and forth to work.

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But I do think that your blanket position that anyone who has or uses a credit card (I don't) is "less than ethical" overlooks the fact that not everyone lives in downtown Toronto or any other large city.

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I haven't always lived in downtown Toronto or in a large city. I CHOSE to live in Toronto because I knew that I'd be able to find work here with affordable transportation to and from. And I've lived without a credit card in smaller centres too. Golly, what did everyone in small towns do before there was an internet to buy everything from online? I guess they just starved.

If you live way out in the sticks with nothing around that is within walking distance, then you likely either already have a car. Or if you don't, then certainly renting a car on a regular basis wouldn't be an option either. I've known people who lived in the country or small towns and survived without a credit card.

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If you're making online purchases for items you can't acquire offline, then a credit card might be a good thing to have, especially if that is the only payment system they have in place.

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I can't imagine what necessities there are that you can ONLY buy online by credit card, except maybe membership to porn sites or something. Oh wait, that's not a necessity! By the way, I'm not advocating only ever buying necessities. I'm all for the occasional splurges. But I would rather splurge on something that doesn't require supporting the credit card industry. And there are lots of them out there.

[ 12 February 2005: Message edited by: Michelle ]

quote:

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Originally posted by Michelle:

What if the employer's place of business is 50km from where you live and you have no way of getting there besides renting a car? Then I guess you'd better not apply for that job unless you have your own car, or have enough money to rent a car every single day to get back and forth to work.

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[ 12 February 2005: Message edited by: Mike Keenan ]

[ 12 February 2005: Message edited by: Sara Mayo ]

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Originally posted by Sara Mayo:
Wouldn't taking a taxi be the solution? Might even be cheaper than renting a car.

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Having your own transportation is an actual stipulated condition of many, perhaps most jobs. I can think of many situations where it would make perfect sense for someone to rent a car for the first month on the job, then buy or lease something economical.

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I agree, but I've heard that this is double-edged even if you don't use the card. Supposedly having several cards with highish limits marks you as a poor credit risk, because you have the capacity to go dangerously in debt very quickly. Can someone confirm this?

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What I mean is, if you have six cards, each with a $1500 limit, you could very quickly go $9000 in debt with little chance of paying it off. I've been told that this could be a disincentive for someone else to lend you money, since the chance of default would be greater than if you only had one card. But I could be wrong.

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They can be handy to deal with an "urgent" or "emergency" situation where you have a bill that needs to be paid but just don't happen to have the cash.

But its very easy to get into "over use" and then become addicted to credit/credit cards.

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I can't imagine what necessities there are that you can ONLY buy online by credit card, except maybe membership to porn sites or something. Oh wait, that's not a necessity! By the way, I'm not advocating only ever buying necessities. I'm all for the occasional splurges. But I would rather splurge on something that doesn't require supporting the credit card industry. And there are lots of them out there.

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[ 12 February 2005: Message edited by: Mike Keenan ]

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Well, I'm not so sure about that (anything I've ever needed for a course has been available at the university or college bookstore). On the other hand, if the bookstore is taking advantage of students by charging ridiculous markups (as they often do) then supporting it is arguably no more ethical than supporting the credit card companies.

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Originally posted by Mike Keenan:
Some people may have another option, BTW. Some financial institutions offer Visa/MC debit cards, so you're not actually using credit, but debit.

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I've never heard of Canadian banks offering this. I know American banks routinely do this, since it's the easiest way to set up an EFTPOS system for them.

Interac makes these debit-cards-that-look-like-credit-cards rather superfluous in Canada anyhow.

This book was first printed in the 1980s and apparently still exists. The author of that book, in three words, sums up the biggest defect of debit-cards-that-look-like-credit-cards:

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Ths book is a phenomenal expose of what banks and other financial institutions will do to skim money from you. The book is not just about credit card but also about the debit cards referred to in the book at(sic) Financial Death cards.

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The problem with such cards is that if someone steals your "credit" card, they can run out your bank account and right into your overdraft. The author of that book tells the heartbreaking tale of an elderly couple who suffered this unfortunate experience, and could not get recourse because they were on vacation and didn't know their cards had gotten stolen (they had gone past the 30-day-dispute-the-charges limit) and were in the hole for $100,000.

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Originally posted by DrConway:

I've never heard of Canadian banks offering this.

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Interac makes these debit-cards-that-look-like-credit-cards rather superfluous in Canada anyhow.

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The problem with such cards is that if someone steals your "credit" card, they can run out your bank account and right into your overdraft. The author of that book tells the heartbreaking tale of an elderly couple who suffered this unfortunate experience, and could not get recourse because they were on vacation and didn't know their cards had gotten stolen (they had gone past the 30-day-dispute-the-charges limit) and were in the hole for $100,000.

Let that be a warning to those who are tempted to agitate for wider availability of "VISA check cards" as they're often called in the USA.

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Or are Leviticus and Paul the only sections of the bible we're allowed to cite, while ignoring stuff like the portion of Exodus above? Why is it one set of moral imperitives when dealing with queers and a whole different set when dealing with the "moneychangers"?

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Originally posted by Hephaestion:
All that aside, getting back to the sheer evilishisness (evility?) of this dastardly scheme, how 'bout we *demand* that the federal government just go all "biblical" on their asses and issue an outright ban on such usurious interest rates?

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347. (1) Notwithstanding any Act of Parliament, every one who

(a) enters into an agreement or arrangement to receive interest at a criminal rate, or

(b) receives a payment or partial payment of interest at a criminal rate,

is guilty of

(c) an indictable offence and is liable to imprisonment for a term not exceeding five years, or

(d) an offence punishable on summary conviction and is liable to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding six months or to both.

Definitions

(snip)

"criminal rate" means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement;

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[ 12 February 2005: Message edited by: Mike Keenan ]