The jaw-dropping rates of credit cards

  • Today I received an invitation through the post which made my jaw drop. CapitalOne offered me a credit card with a whopping 39.9% APR. To my financially untrained eye, this is obviously and mind-boggling-ly high. After a quick search I found that a lovely company called Vanquis will offer cards even at 59.9%. With the huge issues we have as a society, offering people further debt at this extortionate rate, can’t be right. Rates like this seem to fall under that rather old-fashioned label of ‘usury’. The cards claim that they are doing the recipients a favour, but that can never be right. These are sharks in legal guise, burying further those in the most vulnerable of all positions – poverty.

4 Comments

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  • Cameron

    January 12, 2008

    But there’s more….

    You may have seen the many credit adverts on TV as well, one of which particularly surprised me. It was one of those ‘consolidate all your existing debts into one easy monthly payment’ type adverts, which ultimately meant a similar debt but payable over a longer period, this would result in a larger overall amount of money being paid in interest. But at the end of the advert, one of the characters stated “this would leave us with £x to spend on other things”, in otherwords, incouraging those with debt to get into even more debt.

    The surprising thing about your blog entry is the fact that you did not take the opportunity to tell us a little about how banks in Muslim countries deal with loans. I have heard about an Islamic system where a lender shares the liability for the end result, so a bank that lends money for a business, would share the risk, and would suffer a loss if the business failed, rather than the borrower suffering the entire loss. I know very little about this other than what I have read somewhere in mists of the thounsands of things I have read about over the years, perhaps you can enlighten us on this, or invite an ‘expert’ on this to post a reply.

  • Cameron

    January 12, 2008

    But there’s more….

    You may have seen the many credit adverts on TV as well, one of which particularly surprised me. It was one of those ‘consolidate all your existing debts into one easy monthly payment’ type adverts, which ultimately meant a similar debt but payable over a longer period, this would result in a larger overall amount of money being paid in interest. But at the end of the advert, one of the characters stated “this would leave us with £x to spend on other things”, in otherwords, incouraging those with debt to get into even more debt.

    The surprising thing about your blog entry is the fact that you did not take the opportunity to tell us a little about how banks in Muslim countries deal with loans. I have heard about an Islamic system where a lender shares the liability for the end result, so a bank that lends money for a business, would share the risk, and would suffer a loss if the business failed, rather than the borrower suffering the entire loss. I know very little about this other than what I have read somewhere in mists of the thounsands of things I have read about over the years, perhaps you can enlighten us on this, or invite an ‘expert’ on this to post a reply.

  • Baraka

    January 17, 2008

    Salaam,

    It is usury and it is jaw-dropping.

    I saw a documentary last year called “Maxed Out” about how much the business has changed in the last 50 years – to the point where it actually preys upon the poorest members of society.

    Fascinating, heartbreaking stuff.

    Warmly,
    Baraka
    http://rickshawdiaries.wordpress.com/

  • Baraka

    January 17, 2008

    Salaam,

    It is usury and it is jaw-dropping.

    I saw a documentary last year called “Maxed Out” about how much the business has changed in the last 50 years – to the point where it actually preys upon the poorest members of society.

    Fascinating, heartbreaking stuff.

    Warmly,
    Baraka
    http://rickshawdiaries.wordpress.com/