Credit Vultures
Every week I am asked to use my charge cards. There is the continuous
ongoing pressure to buy and charge more to get bonus points or other
'benefits'. Advertising for new credit cards is huge and junk mail
credit card offers are continuous. Why all the pressure to give credit?
Is it that profitable?
Interest rates have been at 45-50 year lows and yet retail charge card
rates are as much as 28% and higher. What's going on?
I believe that there are many delinquent accounts that increase the
cost of doing business. Marketing of credit is intense and adds to the
cost. Most mid and higher income customers pay their balances off in
full each month, using the cards only for convenience. The low incomers
who are unable to make the full payment, are charged this exorbitant
interest, which puts them further in debt.
Besides the heavy marketing there are sometimes questionable tactics
used to squeeze more money out of the pockets of those who may be in a
money crunch. Pay your balance in full or get charged interest on the
whole statement amount for the month. Don't fall behind on payments or
your interest rate could climb higher. If paying on line do it a few
days early because there could be some suspicious delay in crediting
your account promptly.
Some department stores lose money on retail but show an overall profit
because of their credit business, so I guess it is profitable.
Does
this sound like a nice way for corporations in our free and democratic
society to make profits?
Other
information at the Financial
Consumer Agency of Canada.
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return Greed
Profit Consumerism
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