Bone In The Throat

Lately I’ve noticed that the APRs and most especially the Penalty APRs on credit cards have been rising. 

The next time you get a statement from your credit card issuer take a good hard look at the fees and the penalties.

What caught my attention was that many of those penalty APRs are damn close to 30%

The credit reporting agencies and the banks consistently tell us that closing credit card accounts is bad for our credit rating.

I think losing your job and being late on a credit card is a lot worse for your overall quality of life (screw the credit rating) because at 30% penalties you’re quickly thrown into bankruptcy. Even a relative low 10,000 combined balance on various cards could screw you six ways from Sunday.

Think about it, that’s 3000 a month the banks are going to increase your debt by, every month, because you’re being punished by a shitty economy.

The way the text reads, the banks can increase the interest on the entire balance to 30% regardless of whether you return to making payments on time or not.

$3000 is a house payment in some places. For other folks, that’s their entire monthly take home pay.

It makes me think that I don’t want that kind of exposure. Even though I pay the bills, and have been paying the bills like clockwork, I’m uncomfortable with that kind of exposure should I fall on harder times than I’ve already fallen on.

BUT the banks and credit agencies keep scaring us about damaging our credit scores. So we keep on using credit cards and our balances keep creeping up and we all know in the back of our minds that it’s an addiction.

I find myself wondering if the damage done to my credit rating by closing accounts would be worse than missing a payment.

Then you look at the way the banks calculate your credit worthiness and you realize it really is a scam designed to feed an addiction.

Banks and credit reporting agencies say you have a better credit score if you’re using less than 30% of your available credit. 

You can do this by having a single card where you don’t use more than 25% to 30% of the available credit, or you can have multiple cards where you use less than 30% of the combined available credit.

This incentivizes you to get more cards with higher limits, increasing your exposure to major problems if you lose your job.

Most Americans are living from paycheck to paycheck and are less than one month from late payments on a variety of debt. Even if they’re eligible for unemployment benefits, they still won’t be able to pay for necessities much less credit card bills.

So in less than 2 months, someone can fall from the middle class to homelessness and have debt accruing that will in many cases destroy them even when they’re lucky enough to get a job again.

What about the case where you have NO credit cards, a house, and money in the bank?  Guess what? You any not have a credit rating, or if you do, it’s a poor one. 

You’ve opted out of the addiction cycle therefore you must be punished with a shitty credit rating.

It’s even possible that you could have a couple hundred thousand in liquid assets BUT you might not be able to get a cable TV account, because you don’t pass credit muster.

This, in my humble opinion, is a seriously screwed up way of living.

I’m planning to un-addict myself as soon as possible. I realize that switching to a cash economy will also mean that the government will be taking a closer interest in my banking.

After all If I’m using cash… It follows that I must be a criminal doesn’t it?

I was thinking about the way I used to live before I had credit cards and bills and all the rest of it. I’ve realized that I’m over the credit economy. I really prefer spending real cash, knowing where I stand, and not worrying about credit scores and all that crap.  

I guess I’ve reached the point where I’m willing to opt out of continuously being terrorized by an arbitrary numerical rating of what is essentially measuring my honorability and honesty.

I find it doubly ironic we’re all held hostage to these numbers, especially when you consider that the housing bubble and financial implosion of 2008 was caused by people with stellar credit ratings, who were inherently dishonest as hell.

I guess I’m feeling like the mouse flipping off the eagle (or cat) in a last act of defiance.