Predatory Financing
Predator is one that preys, destroys or devours, relating to, or practicing plunder, pillage or rapine, showing disposition to injure or exploit others for personal gain. Prey is one that is helpless or unable to resist attack.
Millions of credit card holders became innocent victims of credit card companies. Slick advertising lead applicants to believe they were applying and pre-approved for a zero or a low fixed interest loan but soon to learned that was not necessarily the case. They learned that Interest rates are set on a “risk based” interest level which is predetermined by the loan company. So, much to their surprise their account interest was not zero but some level above zero and subject to increase under certain circumstances. Those who questioned this change learned that provisions hidden in fine print in their application gave the company permission to adjust their interest rate based on their credit score again determined by the credit card company.
Predator financing became legal and lucrative when our legislators lifted the usury rate for credit card companies and giving them authority to add late fees for late payments, overdrawn accounts, non sufficient funds checks and even if the company learns that their debtor violated any of those sins with any other creditor. Lending agencies trade information with our national credit reporting agencies on a monthly basis leaving very little chance that they would not learn of any of these rules were violated with other creditors.
When Senator Biden was campaigning for Vice President he was interviewed by Tom Brokaw. Mr. Brokaw asked the Senator about his voting record regarding credit card legislation that would regulate interest rates and other fees. BNA, a large company in the credit card industry, was strongly lobbying for legislation that would lift the usury rate for them and others in the same business which was just one of several favors they were asking for through new legislation. Tom Brokaw told Senator Biden that he knew the Senator voted three or four time against proposed legislation that would have much more favorable for credit card customers. Senator Biden did not deny his votes and agreed that he knew BNA wanted these changes. Mr. Brokaw stated he knew that the Senator received favorable donations from BNA. When asked if the fact the Senator’s son was working for BNA had any influence on his votes, Senator Biden denied that his son working for BNA had anything to do with his votes on this legislation in fact they never talked about it.
Some states have usury laws on record but they do not have authority over credit cards interest with most large banks. The state banking commission in Nebraska states that in the case of credit cards if both sides agree the interest rates are not regulated. Most if not all Large banks have a federal charter which serves as an immunity from state banking laws. There are some recently passed limited regulations in regard to credit card financing which prompted the banks to quickly raise interest rates, cut card limits before the new legislation became law. However, these new regulations are not apt to make any significant favorable changes for the creditors.
