Chase bank, one of the three or four largest credit card banks in the country, has seemingly been on a mission to screw its cardholders recently. First, it raised its default APR 5% to 32.4%. Now, Chase has decided to continue billing overlimit fees on accounts more htan 180 days past due.
Previously, Chase extended amnesty of sorts to such delinquent accounts, on the grounds that such cardholders were having enough trouble repaying their cards anyway. Why make it even more difficult by charging them a $39 late fee and a $39 overlimit fee every month? We have our theories, which start with this: an account 180 days past due is already destined for collections. The more the amount to be collected, the more the account sells to a debt buyer for. Might as well jack up the amount due and get more back from the debt buying industry, right?
Right, and give debt collectors even more incentive to abuse debtors.
One has the sense that most people read about the booming foreclosure rates across the country and sees a flashing “THEM” in their mind. As in THEM, not US. The suburbs, middle-class enclaves that they are, have largely avoided news reporters interested in reporting on foreclosures. No longer. According to the St. Paul Pioneer Press, many suburban families are living just as close to the line between property and poverty. Precise numbers are hard to come by, but according to the article “foreclosures are now cutting across income groups.”
Shockingly, the average payday borrower spends $793 on a $325 loan. Dear. God.
“Contrary to [the Center for Responsible Lending]’s spin, responsible uses of the payday product provides consumers firm footing to overcome unexpected financial circumstances,” said Ken Compton, chief executive of Advance America, in a press release.” Spin? It is no spin to say that payday loans are loansharking. Being technically legal doesn’t excuse that.
I mean, payday loans are so bad that consumer advocates recommend consumers in a pinch take out a cash advance on a credit card, even a high-interest card. That’s because a credit card with a 40% APR is a steal compared to payday loans, which usually have APRs far above 100% (usually more like 300-1000% APR).
Do the undead even have a right to free speech?
Articles no longer available at KSTP.com or StarTribune.com.
Tonight I caught a Fox investigative report on Jim Eischens, owner of Twin Cities Housing & Realty, LLC, who sounds like he may be one of the worst landlords in Minnesota. (Although we have reservations about that, since we are currently suing two landlords who may be far worse.)
Eischens apparently owns about 80 properties in the Twin Cities, mostly in student neighborhoods. He has had nearly 1,500 code violations in the last ten years. His attorney, Patrick Burns, was remarkably evasive, and pled ignorance at every opportunity. But we suppose there isn’t much else he could do, since the proof is a matter of public record.
More after the jump.
I didn’t realize how many people really use payday loans until I stumbled across the Debt Consolidation Care forums. I don’t know much about the affiliated debt counseling service, yesdebtfree.org, but from what I can tell from the internet facade, they are are on the up-and-up. It seems like nearly all the forum members, though, are drowning in payday loans (called “PDLs” in internet shorthand). Before I ran across the forums, I also did not know about the prevalence of internet payday loan web sites.
Let’s take a look at one of them, PayDayOne. The front page, as you can see, advertises “low rates” with pictures of their friendly employees who obviously just want to help you succeed. How will they help you succeed? By lending you very small sums to “cover unexpected expenses or pay bills.”
And how fast will the interest on that “low rate” loan accumulate. Read the fine print: “$1 per day per $100 which is equivalent to an APR of 365%.” Wait, 365%?!? Yup.
So even assuming there are no late fees for not paying in full by payday, a $100 loan will cost $365/year, plus you have to pay back that $100. Um, yeah. Good deal. Payday loans make credit cards look like a wise spending decision. After all, most credit cards have an APR in the teens. Or maybe around 30%. Which is a steal compared to a payday loan.
So what is the solution to unexpected expenses? A savings account with a few hundred dollars in it, saved bit by bit by cutting unnecessary spending. Or, barring that, a credit card. Payday loans are like buying a one-way ticket to insurmountable debt. Buyer beware, indeed!
Credit Slips, and NACA general counsel Ira Rheingold point out that Senator Tim Johnson of South Dakota wants to roll back the recent legislation limiting interest rates on loans to service members. This was a landmark piece of legislation, although we would rather see it applied to the entire lending industry. Who really needs more than 36% interest, anyway?
Apparently, Senator Johnson thinks that the law “may have a lot of unintended consequences that will go far beyond just the payday industry” and says that “[w]e are going to have to revisit that issue and make sure that the end result of this legislation isn’t to deny military members and their families access to banking services that they’ve always assumed would be there.” Somehow that just doesn’t square.
Here’s what we think is going on. Under federal law, the interest rates a lender may charge are governed by the laws of the state in which the lender is incorporated. Take a look at the information for your credit card when you get a chance. There is a 100% chance (well, maybe there’s a rogue, but I don’t see how they would stay in business) your credit card company is incorporated in either Delaware or South Dakota. Your payday lender? Same thing.
Wonder why that is? Guess which states have no usury law. Yup. Delaware and South Dakota.
Wait, where was Senator Johnson from again? Oh yeah, South Dakota. It all makes sense now.
Just goes to show you, it doesn’t matter who is in Congress; few politicians are on the side of consumers.
Article no longer available at CreditSlips.org.
DRM, or digital rights management, is the term applied to the media industries feeble and damaging attempts to limit your idea to use the music and movies that you buy. I’m sure everyone has heard that the RIAA (Recording Industry Association of America, or of A-holes, or something) is suing everyone whose address they can find, regardless whether they even have a computer, are dead, or don’t even know what a computer is.
And now, in a great test of consumers’ rights to fairly use the media they buy, Paramount and the MPAA (Motion Picture Association of America/A-holes) have sued Load ‘N Go, a company who sells iPods and DVDs, and if you buy the two together, rips the DVDs you buy to the iPod. One would think there is no problem here, but the MPAA argues that the very act of ripping the DVD is a violation of its copyright. Does that make sense to anyone else?
The main problem here is that judges and legislatures seem so out of touch with technology that this sort of fair use seems somehow sinister. It isn’t. Let’s hope that Load ‘N Go has the means to challenge the lawsuit, and that the courts give them a full and fair hearing. And that Congress sits up and takes notice of the absurdity of the situation made possible (or at least conceivable), apparently, under current copyright laws.
I’m sure by now everyone has heard of the UCLA student, Mostafa Tabatabainejad, who chose to leave the library rather than show his ID. The police apparently stopped him on his way out and started tasering the hell out of him. This is apparently the third in a string of incidents caught on video recently in LA. ACSBlog linked to this YouTube video of the event.
It is hard to see how the officers could justify their actions, especially as multiple witnesses reported that Tabatabainejad was heading for the door when they started to work him over. As you can see, their treatment of him seems uncalled-for and sadistic. I admire the restraint of the onlookers, actually. Police behavior like this was just asking for a mob reaction.