In 1981 Mel Brooks' movie "History of the world part I" was released.
In one of the scenes, the American Roman senate voted on social priorities.
Well, it is not 70B.C., it is not even 1981A.D. It is 2010 but the war cry "Fuck the Poor!" resonates as loud as ever.
Almost exactly a year ago, om May 21st 2009 Congress passed redit Card Accountability Responsibility and Disclosure Act of 2009
The idea behind it was to at least try to regulate some elements of the sociopathic behavior of the credit cards industry.
One of the provisions was:
Sec. 104. ‘(1) IN GENERAL- Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.date.
Hey - that's good, no? After all, one method of sucking people dry was to apply the payments to the balances with the lowest rate, ensuring that the balances with the higher interest rate balloon quickly, increasing the profit of the company.
Apparently, section 104 was supposed to put an end to this predatory practice.
Great. Problem solved.
Or is it?
A quick glance at the original senate version of the bill reads as follows:
(1) apply the payment first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted; and
‘(2) after complying with paragraph (1), apply the payment in a way that minimizes the amount of any finance charge to the account.
Noticed the difference?
In the senate's version all the payment was to go first towards the high-interest balances.
In the final version only amounts in excess of the minimum payment amount will go towards the higher interest balances.
And here come the lawyers. The Credit card companies have no problem hiring the best legal minds money can buy and they were asked the question - What happens if only the minimum payment is received (i.e. no "excess").
The New York Times reports their answer:
This means that credit card companies can apply minimum payments to balances with the lowest interest rates first, which many are doing. Discover and Bank of America, for instance, told Jen Stryker at Bankoholic that they are doing precisely this. The upshot for consumers, especially those who can make only minimum payments, is that it’s still hard to get rid of their most expensive debt.
So if you are doing ok, and you can pay more than the minimum payment - good for you. Not all the payment will go towards paying the higher interest balance, but at least some will and you will be able to see the light at the end of the tunnel
If you are poor and barely makes ends meat, but still can somehow manage to pay the minimum payment required (because, say, you do have this antiquated silly notion that loans should be paid - obviously you are not a Wall Street executive and with this attitude never will be), you are, to put it nicely, fucked.
The light at the end of the tunnel? It's a locomotive coming right at you.
Not only that, by law now the credit card companies have to disclose on the monthly statement how long it will take you to pay down the balance if you only making the minimum payment.
In the words of miracle Max:
and thank you so much for bringing up such a painful subject. While you're at it, why don't you give me a nice paper cut and pour lemon juice on it?
Another great day to be poor in America.
And let me dedicate the next song to all those fat cats running one of the greatest legal RICO business known to man:
Note:
I have tried to search other diaries pertaining to this subject but could not find them. If pointed to me I will gladly take this diary down.
I post this diary since I know that unfortunately a lot of people around here are in this boat of being able to pay only minimum payment so I thought bringing this up will be something like a "public service announcement".