Predatory Lending

A recent article explains how some lenders are reaping up to a staggering 104.3% on cash advances.1 “Sharks” and “predators” they are called and rightly so, for like wounded fish those with less than perfect credit are being preyed upon at an alarming rate. I call it legal extortion or predatory lending. We live in money system that caters to the rich by targeting the desperation of those caught in an arena of financial woes. Playing the money system is a lot like playing against the house at the casino and—how often does the house lose?

We live in a time flooded by easy-credit offers. “Poor credit—bad credit—no credit? Please do not be misled; there is nothing easy about it. A typical credit offer showed up in one mans mail on the morning of February 28th that boasted a no annual fee, 0% APR on purchases until October 2003, and a credit line up to $2.000. This offer might have been tempting to the man who fell one month behind on his auto insurance premium and was another nine months getting back on track. The truth of the offer revealed a 23.99% APR that would increase to 28.99% for various reasons. And the $2,000 line of credit would most likely, if you read the fine print, be only $250. In the same mailing was another offer of credit with a more reasonable APR of 9.99% but, —what about the fees? This offer came with an account set up fee of $29.00, program fee $95.00, annual fee $48.00, participation fee $72.00 annually, and additional card fee of $20.00—that’s $264.00 in fees above the normal fees imposed by the credit industry at large. Fortunately the man didn’t fall prey to either credit offer.

Whether it’s a cash advance or a credit card offer consumers are ultimately responsible for the decisions they make. Still, I cannot help but think there is something quite disquieting with the conduct of the money system steering our financial future. Creditors are taking advantage of consumers whose circumstances and desperation are plunging them into lifelong habits of poor spending. My personal conviction is that all those who plunder the unfortunate with unethical business practices, will in the end, meet their day of accounting. In the mean time though, how can we escape the grim financial future the predators have prepared for us in their money system? Simple—do not play the game. Say no to the cash advances. If you can’t survive on a full paycheck this week what chance do you have with a smaller one next? Throw the credit offers away. They are designed for the sole purpose of prospering an already prosperous money system. Keep your quarter.

1 Dan Allsup, “The Poverty Sharks,” The American Legion Mar. 2003: 42

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