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How Financial Companies Prey On the Poor

The Shaft: How Financial Companies Prey on the Poor Payday Loans The lending of payday loans or paycheck advance loans has been deemed to be loan sharking in 13 states. Here's how it works. You are short with your rent by $200. If you have a job you can borrow against your next paycheck as a payday loan. Or government and other guaranteed checks. If you can cover the check when it comes due, then you have paid off the loan with 30% interest. A payday lender will give you a 15 day $200 loan for a $60 fee. You must write a post dated check for the total. You now owe $260. You now owe $345. As the loan increases, your chances of paying it back decrease. If you can't cover the loan, it will roll over for another 14 day period and another $60 fee. There may also be a $25 fee if the check bounces. taNANO AANEICA CASH ADVANCE After 6 months, you will owe $720 in fees plus the original $200. That's 360% interest. ADVAN If you can't escape the cycle, what happens? The company can send it to a collections agency. Or you can be sued, property seized, or wages garnished if you end up on the wrong side of a court judgement. Some companies will even report you to the police for writing bad checks. 543 Bad Credit Cards D.HHOT So if you have ever been in the previous situation, your credit rating is probably pretty bad. Not all credit cards are created equal. When seeking the convenience of plastic, know what you are signing up for. PREMIE Bark 5433 5678 9123 PREMIER CARDHOLDER People with bad credit will be offered two types of "repair" cards. You can get a secured card, which means you have to first pay $500 to have $500 in credit available. You can get an unsecured card for 'high risk' individuals. The typical starting limit is $250. That comes with a You are basically lending money to yourself, but... program fee of $95. And an annual fee of $48. There is also an annual fee, around $69. An account set up fee of $29. And an APR in the 20% range. And a $7 monthly service fee. And late payment and over limit fees around $30. So you get your new card in the mail with a $250 limit but it only has $71 available. Basically, you assume all the risks and are charged fees for doing so. Or to put it another way; you lend money to yourself, and if you don't pay yourself back, you get charged a fee by some company in Delaware. You gas up your car and buy a burrito and you are over your limit already. There is a $29 fee for that too. The next thing you know, the card that was supposed to help you build credit becomes a $200 dead weight. Rent-to-Own (Rent-A-Center) Some stuff isn't cheap, and it can be hard to pay upfront for a high cost item if credit is scarce and saving is difficult. Well there is a scam just for you. It's called rent-to-own. So you need to buy a mattress but they are too expensive, so you walk into a Rent-A-Center. Rent-A-Center will buy a mattress for $500 and sell for $1,000 retail. You can purchase the mattress for $1,000 any time in the first 90 days. Since you can't afford that they will rent you the mattress for $19.95 per week. 5? After that you are locked into the monthly contract which is 104 otener That's $2,075. n more get tod Weeks, or 2 years. You also have to pay sales tax on the higher price, so that's another $100 or so. And don't forget the insurance on your pricey mattress. It's $2 per week, or $208. If you rented a computer or other consumer electron- ics, it's likely obsolete and near worthless. After 2 years, your afford- able mattress is now $2,383. That's several times what it's currently worth. ASHLEY Don't worry if you can't come up with your payments. Rent-A-Center will give you a payday loan with a 531% APR. "If you've ever thought about trying Rent-A-Center, now is the time!"

How Financial Companies Prey On the Poor

shared by jess on Apr 18
1 comment
Finance is big business and there is money to be made into tricking undereducated folk into frittering away their few hard-earned dollars. Bad credit cards, rent-to-own, and payday loans are some of ...



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