You want to watch something that should scare the hell out of you? The PBS show FRONTLINE had a episode titled "Secret History Of The Credit Card". Get yourself a nice glass of ice water, and watch this. No coffee, your blood pressure will be high enough after this; no beer or other booze, you won't believe what you hear, or blame it on the hooch.
Cold drink? Popcorn?OK, here we go!
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/
Are you good and angry? You should be.you and I have been lead, like a cow to a butcher house, to be financially dissected and sold like so many pounds of raw meat. One of the people interviewed is Andrew Kahr. Here's his biography from Wikipedia:
Andrew Seth Kahr was the founder and CEO of First Deposit Corp, which later became known as Providia, and was acquired by Washington Mutual in 2005; it is now owned by Chase Bank.
Kahr grew up in New York City, where he attended the Fieldston School of the Ethical Culture Society. He went to Harvard University in 1957 and graduated three years later, in 1960. He earned his Ph.D. in mathematics in 1962 at the Massachusetts Institute of Technology. His thesis was "A Minimal Reduction Class for the Entscheidungsproblem". Following that he attended Harvard Business School. For his role in forming the credit card business, he was interviewed by the PBS Frontline documentary "Secret History of the Credit Card."
I wonder why he doesn't doesn't consent to interviews or want anyone to know where he lives. I wouldn't want someone to know where I lived if I had done what did. He understood that if you had to make a rather low monthly payment, you'd be more inclined to have a higher balance to pay interest on. From the point of the banking industry, the man is their Einstein. He blended high-end mathematics with applied psychology to produce the perfect people trap. In actuality, he didn't do anything to us, or for us, he created the perfect storm to entice us to do it to ourselves.
In many respects, what Andrew Kahr gave us was the ability for instant gratification. Want a new watch? No prob. Fancy clothes? Did and done. Car payment? Got it. And one day you miss a payment, or it's late. Only a day or two, you say to yourself. It's only to the utilities, I won't be cut off. Guess what. You get to learn a new expression: universal default.
Have a payment listed on a credit report as being late--even if it isn't to the credit card agencies, and your interest rate goes through the roof.Too high a balance? Same thing. Fair? Who cares, you agreed to it. Send in your payment by registered or certified mail? You better read the fine print in that contract--they tell you that they will not accept registered or certified mail, and you agreed to it.
Your credit card rates are figured using the LIBOR rate as a benchmark. You don't know what that is? Most of us don't, never mattered, or so we thought. This link explains it rather well, easier that typing until my fingers fall off.
http://useconomy.about.com/od/glossary/g/LIBOR.htm
Recently, we've also seen how the banking industry has buggered the LIBOR like a Vegas hooker, and most, if not all of us none the wiser, until recently, when that house of cards fell apart! This explains it rather nicely:
http://www.dailyfinance.com/2012/07/11/the-libor-scandal-explained-in-one-simple-infographic/
The UK's Daily Mail explains some of the ramifications, both there and here in the US.
http://www.dailymail.co.uk/news/article-2172377/LIBOR-scandal-rocks-US-experts-warn-biggest-consumer-fraud-history.html
Still don't understand jack? Don't feel bad, you aren't supposed to. To quote Prof. Elizabeth Warren, a Harvard Law School professor, "I've read my credit card agreement, and I can't figure out the terms. I teach contract law, and the underlying premise of contract law is that the two parties to the contract understand what the terms are."
And with good reasons. If you understood the late fees and the like, you would have realized you signed your peace of mind away.
Now, this was produced several years ago, in 2004, and many things have changed. Federal laws have been put into place to protect the consumer, but as usual, the laws fall short. The public has wised up, too, with debit card use now exceeding credit card use.
Still, it's something to be aware of, better the devil you know then the devil you don't!
In many respects, what Andrew Kahr gave us was the ability for instant gratification. Want a new watch? No prob. Fancy clothes? Did and done. Car payment? Got it. And one day you miss a payment, or it's late. Only a day or two, you say to yourself. It's only to the utilities, I won't be cut off. Guess what. You get to learn a new expression: universal default.
Have a payment listed on a credit report as being late--even if it isn't to the credit card agencies, and your interest rate goes through the roof.Too high a balance? Same thing. Fair? Who cares, you agreed to it. Send in your payment by registered or certified mail? You better read the fine print in that contract--they tell you that they will not accept registered or certified mail, and you agreed to it.
Your credit card rates are figured using the LIBOR rate as a benchmark. You don't know what that is? Most of us don't, never mattered, or so we thought. This link explains it rather well, easier that typing until my fingers fall off.
http://useconomy.about.com/od/glossary/g/LIBOR.htm
Recently, we've also seen how the banking industry has buggered the LIBOR like a Vegas hooker, and most, if not all of us none the wiser, until recently, when that house of cards fell apart! This explains it rather nicely:
http://www.dailyfinance.com/2012/07/11/the-libor-scandal-explained-in-one-simple-infographic/
The UK's Daily Mail explains some of the ramifications, both there and here in the US.
http://www.dailymail.co.uk/news/article-2172377/LIBOR-scandal-rocks-US-experts-warn-biggest-consumer-fraud-history.html
Still don't understand jack? Don't feel bad, you aren't supposed to. To quote Prof. Elizabeth Warren, a Harvard Law School professor, "I've read my credit card agreement, and I can't figure out the terms. I teach contract law, and the underlying premise of contract law is that the two parties to the contract understand what the terms are."
And with good reasons. If you understood the late fees and the like, you would have realized you signed your peace of mind away.
Now, this was produced several years ago, in 2004, and many things have changed. Federal laws have been put into place to protect the consumer, but as usual, the laws fall short. The public has wised up, too, with debit card use now exceeding credit card use.
Still, it's something to be aware of, better the devil you know then the devil you don't!
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