Because we've been working on improving our overall financial situation, and hereunder improving our credit scores (that infamous thing people in the United States worry about!), we are now getting the expected deluge of credit card and personal loan offers that seems to be part and parcel of the process of becoming more of a Responsible Adult™.
Of course when you've had shitty credit — or no credit — you are considered an extremely high risk by lenders and so it seems like most of the offers we get in the mail are based on the automatic assumption that you're going to default on the loan and not pay it back.
It would be tempting to just throw away the flood of credit solicitations, but I dutifully go through all of them because occasionally there is an offer or two worth using as part of the credit building process.
Most of the time, however, I just get a good laugh!
Anyway, back to the main event. The interest rates, processing fees and monthly charges on "poor credit services" seem almost like they were borrowed out of a bad science fiction novel, or certainly something like a mobster story!
Sometimes I wonder how these organizations are even allowed to make offers and extend credit with such usary terms. Aren't there some kind of laws governing just how much you can charge somebody for borrowing money? Evidently not…
A few days ago, I got a credit card offer from a bank (Boooo! Hisss!) offering me a ”pre-approved” card with a $500 limit, BUT with a 36 percent interest rate, a $75 *”application fee,” a $100 annual fee and $150 annual ”maintenance fee” charged monthly as $12.50.
Wowser! That means that's for the simple privilege of having a little piece of plastic with the VISA logo on it, I would start by being $186.50 in debt before I even bought anything for myself!
The "unsecured loans" are even worse than the credit card offers; many of them putting so-called "payday loans" and pawn shops to shame!
And the "Winner" Is....
However, the outright ”winner” arrived in the mail yesterday afternoon. It was an offer for a pre-approved and ”guaranteed” unsecured personal loan for $1000, and then in ”very very very small print it outlined that the loan was repayable in 30 convenient bi-weekly installments of $140.38! Stated a little differently, that works out too approximately a 342% APR!
I have no idea who these people think they're kidding, but ultimately the really scary thing is that there must be people out there who are accepting these offers or they wouldn't keep sending them.
Needless to say, I am not in the market for any of these offers.
However, they definitely serve as a technicolor illustration of how desperate people get ensnared into the debt trap. And once you get in, there's no escape! And the really bothersome thing is that these offers are going out to the people who can least afford to spend ever increasing amounts of money on servicing their debt.
And yes, these particular examples are extreme but not completely unrepresentative of the sort of loan offers people get... when your life is less than financially perfect, at least here in the USA.
The deeper problem here, is of course that once you get started down this road of taking out debt in order to fund your living, it is all but impossible to come back.
The Danger of the "Debt Trap"
You end up becoming a slave to your debt, spending the rest of your life paying interest rather than making investments and building wealth. Unfortunately, there are quite a few people out there who are so close to destitution that they feel they have no option but to borrow money on such terms and conditions, in order to just live. Alas, when they do so they only very rarely end up bettering their lives, and are instead more likely to find themselves living in a cardboard box under an overpass within a relatively short time.
The most likely scenario is that someone takes a loan because they believe they are going to get a "better job," but what actually happens is that they end up with just another mediocre low-paying job, and now they have a load of debt!
All I can suggest, is to avoid the ”debt trap,” or if you must — as Mrs. Denmarkguy and I are doing — get the credit, charge very small amounts on a regular basis, and then pay off the balance in full every month. The plastic is just there to provide the illusion that we're part of the system... so we can use the system to become NOT part of the system.
Sad fact: stuff and services are cheaper when you have good credit, because you're seen as "responsible."
Thanks for reading, then have a great remainder of your week!
How about YOU? Do you have any debt? If so, do you feel "trapped" by that debt? Is borrowing ALWAYS a bad idea, in your opinion? What's the solution for people who just don't have any money and no good job prospects? Comments, feedback and other interaction is invited and welcomed! Because — after all — SOCIAL content is about interacting, right? Leave a comment — share your experiences — be part of the conversation!
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Created at 20210707 14:12 PDT
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