0% interest for the first six months on a new platinum double plus credit card.
After six months it goes to 6%.
After a few months, we will not receive you payment on time and it does matter to us if you really did mail it on time. Your new interest rate is now 15%: however, if you make timely payment for the next 6 months we will consider giving you a lower rate. We suggest you make your payments online.
After a couple months of paying online, you will attempt to make a minimum due payment of $150 online, but you will get an error message. You will try again. Still an error message. You will try a third time, and still no luck. You will call customer service and they will confirm your payment did not go through. So you will mail a check. About a week later, you will get a notice from your bank that you are over drawn. Three $150 online deductions will have come out of your account. You will be charged $27 for the two that caused the overdrafts, plus $27 for each of the $2, $3, and $4 checks that you wrote. You will also notice that they had given you 3 cents interest for your $5 minimum balance in your savings account, which they will have transferred to your checking account and charged you $3. Some of your checks will get returned and you will later get a letter from them stating you owe them $25 for the returned check. It will take you days to straighten this out.
Just before going into the hospital, a vacation, or someplace else where you will not be able to check your account for a while, you will get another online error message. Learning from past experience, you will not attempt to send additional payments. When you return you will check your account online. It will say, you owe the minimum amount due which is $150, so you will make the payment. The following month it will say the same and you will make another $150 payment. The next month when you go to make a payment, it will say your minimum amount due is $450 and your interest rate is now 30%. You will call customer service and they will tell you that you have been behind in your payments for the last three months. Your payment from before going into the hospital was never received. We changed our minimum due amount on the screen from black to red to indicate this to you. You will probably have missed that in the fine print.
Isn't it amazing how just changing the print size on an ad can totally change your expectations. I get several credit card applications every month. Most have a larger print telling about the 0% interest for the first 6 months, but you usually need a magnifying glass and a law degree to read the fine print where they lay out all the ways they will take advantage of you.
The high cost of living, along with spouses and children have forced many Americans to resort to credit to meet their expenses on the hopes that promotions and better times will pay it off. Now many of them are rapidly approaching retirement serious in debt with currently no hope of paying off the debt.
People also occasionally fall on hard times and one or two events will trigger a serious downward spiral as described above and the banking industry has been allowed to take advantage of the situation with high interest, and unreasonable overdraft and late fees. For some reason, the credit industry believes that taking additional money from people who are living paycheck to paycheck will make them better able to meet their financial needs.
The credit industry should treat all people equally by having one interest rate for everyone. They can negotiate on the length of time to repay the loan.
They need to lower the debt to income ratio for extending credit. Don't keep giving out more and more high interest credit just to pay high interest payments on existing debt.
A check overdraft fee or an over the limit fee would be limited to 1% of the amount actually over. It is ridiculous to charge $27 for each $2, $3, etc. or for only being over by a few dollars.
Do away with the credit score. This just allows the credit industry to take advantage of people. Currently a lower credit score means higher interest and higher monthly interest payments leaving less money to meet other financial needs.
A straight minimum due each month instead of the ever decreasing one that drags repayment out for years.
If someone is late on a payment, the bank could increase the minimum due by 25%. A $20 minimum payment would go to $25, but the additional amount would go to paying off the principle instead of higher penalty interest. This would help pay the debt off faster.
A credit company could charge a late fee, but again that fee would go toward the principle.
If people fail to take advantage of this, the credit company needs an easy preapproved way to set up a minimal deduction without penalty fees from the person's paycheck.
The bottom line is we need to get people out of debt and we need to do it quickly and fairly. The credit industry has been making tremendous profits by taking advantage of people who have fallen on hard times and they have made the situation worst. Its time for some payback.
The credit industry may see some reduced profits, but if managed properly the will still see profits. If nothing is done, people will file bankruptcy at an alarmingly increasing rate and the financial infrastructure of the nation will crash.