Immoral Practices of the Credit Industry
It is a common practice for creditors to increase a consumer’s interest rates upon an inspection said consumer’s credit report and discover that the consumer has additional creditor debts. These types of interest rate hikes often times exceed 29.0% APR.
The rationale behind such a move on the part of the creditor is that they believe that the consumer will inevitably file bankruptcy, so they may as well force the consumer into making a minimum payment that only covers interest and does not effectively reduce the principle balance charge accounts. Now, with Chapter 7 nearly impossible, the interest rates continue to rise.
On numerous occasions, the creditors charge interest rates that are so high that the finance charges actually exceed the minimum payments. Before long, a consumer who was making their creditor payment in full and on time is now over-the-limit due to extreme finance charges is subject to hefty over-limit penalties. Such penalties make bad situations worse, and forces consumers into the dire position where they are unable to purchase food, or even afford their housing and utility payments.
I hereby submit that creditors are not responsible in the issuing of credit. When applying for a home loan, a mortgage lender or brokerage will perform a budget analysis and verify the income of their potential customers. The question needs to be asked, why do creditors not also verify proof of income and a consumer’s capacity to repay debt before issuing high-limit unsecured revolving charge accounts? From the candidates, the answer must be demanded.
Exploiting the elderly, children, and the under-educated
Every day elderly American citizens on a fixed Social Security income, the labor of whom this country was built upon, receive letters from creditors offering high-limit credit cards. These are Americans who are retired; because of their age, and perhaps also because of illness, they cannot work, and because of the nature of their limited income they often times cannot afford necessary medications, an adequate amount of food, or to turn on their heat in winter and their air conditioning in the summer. To these Americans the gifts of credit cards are received as “a miracle from God,” as I was told so often by elderly consumers.
It is only until the creditors increase their minimum payments do these consumers realize that they cannot afford to juggle a debt load that will take over forty years to pay off making the minimum payments, which is an absurdity to a seventy year old consumer.
Opposite of the class of our citizenry who laid the groundwork for today’s America, the creditors also find easy prey in America’s future; our high school and college students. At the age of eighteen, when most teenagers are either preparing to graduate from high school or go into college, they are bombarded by a barrage of offers for “free money” from a never-ending slew of credit card companies.
Eighteen and nineteen year olds do not yet have the life experience to understand such financial concepts that are necessary in order to responsibly manage one or more unsecured revolving accounts. After all, they do not even possess the responsibly to consume alcohol, which is why the drinking age is twenty-one.
For the creditors to take responsibility for their own actions would be as simple as requesting a recent pay stub from a consumer to verify that the income is available, along with standard credit checks which are already in place.
The McCain Response
In 2005, I attempted to contact both of my Senators, including Arizona Sen. John McCain, who is again running for President. I provided them both with facts about how the bill would hurt working class Americans. Yet, in light of the issues, McCain calls the legislation, “…an important step toward a fair and balanced approach to restoring personal responsibility to our federal banking system,” saying nothing of the person responsibility of the creditors, who prey on the weak.
McCain expressed his “surprise” that bankruptcies were being filed in record numbers at a time of “low unemployment” and “high wages.” Perhaps he meant low unemployment in the Philippines, China and India, where many of our jobs have gone. As for high wages, he could only be referring to his campaign contributors, because wages for average Americans are at an all time low.
The content of the letter is unaltered.
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