“‘Linda’ is one of Douglas County’s new poor. She grew up in Castle Rock. Just two years ago, her life was stable. But then Linda was laid off just as her husband’s computer business began to slip. Meanwhile, the interest-only, adjustable rate mortgage on the family’s two-bedroom duplex swelled from $750 to $1,550 a month.”
SellyCat said:You may choose to cynically blame these people for the decisions that were induced by an absolutely relentless media campaign by creditors designed to trigger every conceivable IRRATIONAL process leading them to refinance their homes.
SellyCat said:You are free to do that, and uninfluenced by such a marketing campaign...but for the sake of intellectual integrity and your own personal credibility, I would resist such simplistic and predictable establishmentarian reflexes.
Buyer definitely beware, obviously. However when one is constantly inundated with a deluge of communications whose overall meaning is "comsume, sonsume, consume! You are nothing without material possessions!", one is destined to be manipulated.
Some people call it "propaganda", and for a hundred years psychologists have known that propaganda can--and certainly does--negatively impact peoples' so-called "freedom of choice".
Considering that fact of science, it seems logically erronious to state that people were, in fact, "free" when they made those choices. To argue to the contrary is to accept an ideological framework whose hallmark is that of wrapping naked exploitation in the veil of personal freedom. And that would be most irrational of you.
SellyCat said:I fundamentally disagree with your approach to this subject.
Like, on a very basic level.
Meanwhile, the interest-only, adjustable rate mortgage on the family’s two-bedroom duplex swelled from $750 to $1,550
atbell said:It was still hard for me to gain a good understanding of what I was getting into.
I would say the biggest problem was that the bankers just plain didn't care. They would banter away about things that didn't matter and would try and change the subject when I asked what they should have been asked ALL the time "...yes that's all nice and it sounds like a good plan .... buuut how much is it going to cost per month!!"
SellyCat said:This is par for the course; it's delibeate and well thought out.
Lobbyists for creditors in America went to INCREDIBLE lengths to prevent a law from being passed that REQUIRED every credit agency to notify customers of how many months they would be paying and how much they would be paying.
This was faught tooth and nail because of psychology. The credit industry--and yes they do collude, as I will prove in a moment--hired marketing psychologists and determined that if you told people how long it would take them to pay, they would repay the loan back faster. This is a NIGHTMARE for creditors, because it limits the amount of usury they can commit. The worst customers are those who pay off their entire card every month.
Another example of psychology being waged as a weapon in this industry. This time, bait and switch. The idea of offering ridiculously low interest rates was invented and sold to the industry by some douche genius. The reason is simple: research showed that people were *much* more likely to get into more debt AND be less responsible about paying it back PRECISELY because of low interest. THE CATCH: *every creditor* will instantly revoke your low interest loan as soon as you miss ONE payment on ANY card! You miss your VISA payment by one day and bam, ALL of your credit cards automatically default to 25% with no notice.
judge wopner said:this is an interesting point.
i worked for visa for a few years as collections and credit analyst.
even after 2 years there i couldnt fully explain the details of credit card contracts.
that being said i think a few htings are clear:
there is a common fallacy about interest rates being high as the source of revenue for credit card companies.
the majority of earnings from any major credit card compay comes from the point of sale terminal. the merchant pays a premium (anywhere from 1-4% in canada) for every purchase to the credit card company of the purchaser.
visa encourages people using their card so they get commisions, the merchant pays the premium because a visa charge is essentially a gaurnteed payment, and they neednt deal with the security issues and accounting mis-steps of handling cash.
the reason interest rates are so high on credit cards is becasue its cost prohibitive for credit card companies to collect and chase after people.
i was working in a department of 50 people all being paid 28-40,000 annually who's job was only to chase after delinquent accoutns. often the amonts of delinquency are under $5,000 making it too expensive to pursue serios litigation and difficult to dediacate too much time to finding. better to simply cut them off, call in a 3rd party agency who takes a cut and end up getting back half several years later at a heavy loss in interest potential had that credit been used for a non-delinquent account.
selly cat, you seem quite well read, im surpriised you too particiapte in this widely held fallacy.
credit card companies offer low interst in order to attract people over. they do not want your debt so much as they want your purchasing power and hope that with a low interest rate you will endeavour to pay it back and begin the cycle of credit.
trust me when i say that a credit card company (at least the major ones, cant speak for teh small BS outfits in the US) is most profitable when people pay back their balances. its easier for all involved, a customer in bad debt is a loss of potential purchasing power, all it take is a few phone calls to get your interest reduced if your account is delinquent.
and no they dont spoon feed you these kinds of details to save you money but i dont recall girls telling me exactly what to do to pick them up with success, seems like the veil of secrecy runs deeper than mere capitalism.
SellyCat said:I got this info from watching a series of interviews with credit card executives. That includes the specific, very powerful, individual who talks about coming up with the 0.9% interest thing.
What you said doesn't make sense...creditors don't make money when people pay their bills on time--they are borrowing money for free then! If they make a 1-4% premius off the retailer, but 25% interest on peoples' accounts..........how can you say they make more from POP!? That seems to be blatant fallacy!
After they "cut someone off"...that person continues to recieve credit card offers from the same company! These people WANT you to go into debt so they can collect interest--I'm not talking about people who go bankrupt, that's another issue entirely. There are WAAAY more people who don't go bankrupt, but instead fork over huge sums of interest over the long term even if they pay, let's say even double their monthly minimum. That's why the companies were so desperate to prevent people from knowing how long they'd be paying off their credit cards for.
Also...it's just plain disgusting that these same institutions make unspeakable amount of profit off YOUR MONEY via currency transactions (banks) and they have the fucking nerve to pay 1% interest and hit you with retarded fees. It's a scam above and beyond any other. They make BILLIONS every year off of YOUR money and they also make profit off of you GIVING them your money to make profit off of.
The whole industry deserves universal contempt for their behaviour and attitudes toward the individual.