With all the negative information being reported about the predatory practices used by cash advance and payday loan lenders; it is confusing to read about the tactics credit card companies use without any reference to being predatory themselves.
I watched an in depth documentary on credit card tactics from a leading Sunday morning news show. Their report was made up of multiple interviews . It focused on credit card predatory practices, not payday loan and cash advance lenders, and the consumers who have fallen into trouble using third party money.
The most shocking information that I took away from the documentary was the tactics credit card agencies used to reel in the low-income population. Does anyone remember the days when it was only those with money who had easy access to credit cards? All it took was an idea to stretch credit lines to those with smaller incomes using smaller credit limits and higher interest rates to make the credit card industry the booming business it is today.
A cash advance lender will not change terms and conditions of the loan.
There are no rules and regulations to the credit card industry. Did you know that terms and conditions can be changed even after you agree to the initial ones? The promise is no assurance that what is stated in the fine print will continue to regulate the card as long as it is out. The price you pay for an item today could instantly change tomorrow once your interest rate has been hiked without any particular reason. People who make on-time payments may still be subjected to these increases, with no rhyme or reason. You may get your notice of contract changes no matter how punctual you are on payments. “Universal default” applies to any aspect of your credit score. If you make an error anywhere to any other creditor, it could get negative changes applied to the account. It is in the contract, it is part of the conditions, creditors definitely make a practice of it and higher rates make it more difficult to keep up with debt.
Why do people take out and use these cards? There are some sweet rewards and special offers which are inviting people to get into debt. Do cash advance lenders send out invitations to people’s homes suggesting that doing business with them will be a great financial solution? No, they do not. The credit cards will do these things. Sign up and get your rewards, the more you spend the greater the reward; earn free plane tickets, get funds back for purchases, transfer debt.
We people are consumers and will consume as long as there is a method of doing so. Multiple card holders do just that. For those who pay off their credit card bills each month and carry no balance get charged no interest and are not profitable to the company. Since credit card companies earn billions of dollars each year, we find that the majority of consumers who end up “borrowing” money from credit cards are the same ones beefing up the profits from monthly income. Debt can rise dramatically while monthly income remains the same.
Credit card companies offer low monthly payments to attract users to spend more. Most people can afford to pay 2% of the balance each month and will make that payment over a very long period of time. These people feel good that all the extra purchases are “affordable”. Hence the negativity towards a cash advance which will charge a fee for using the money, set up a payoff in a few weeks and charge high interest if a person does not pay in full on the original due date. A change in interest reflects the current balance, no matter how long ago it was that you made your purchase.
A cash advance lender may charge more and make that payoff plan difficult, but they do not lure people in under uncontrolled variables as credit card companies will do.
