Are Banks and Credit Card companies acting in "Bad Faith"?

In business, the people you work with are expected to act in "good faith". To watch your back so to speak. If you sign a deal with another company, they are expected to treat you fairly and vice versa. Contracts are there to keep things clear and defined. However... As human nature seems prone to do, these good intentions get twisted, and in the end we have contracts designed to baffle, deceive and ensnare. And we have conscienceless corporations who care nothing for you or your family, but simply want your money. (for the shareholders of course).

In my experience, most banking and credit card contracts are difficult to read, understand and evaluate. Terms are decidedly one-sided favouring the banks, and in many cases the banks represent their products (debt) as bringing freedom when really the debt in so many cases serves to ensnare and really enslave their customers to pouring their money back into these corporations.

I received a notice from a local bank that they had selected me (I had a mailing address and was not deceased) to be approved for a $5000 line of credit. The bank was nearby and I believe in giving my business to local companies (all things being equal) so I phone the number to learn more. It sounded good, until Iasked what the annual rate of interest was. 18.5% (prime was about 5%). So everything was fineas long as you didn't notice that the $5000debt would cost you $925 per year to service. I chastised the lady (who seemed to think this was a great deal) for trying to promote a really really bad deal that would hurt people financially. This same institution would give a loan to you at a much lower rate if you simply walked in the door, but here they were "fishing" (not phishing) for suckers who would take advantage of their "special offer" and expose themselves to debt.

Another example of this, is the almost monthly letters I receive from credit card companies offering me a low rate of interest for 3-6 months (4% etc) in BIG BOLD LETTERS after which the rate jumps up to 18.5% in tiny little *starred comments or something similar. So they try to reel someone in with the bait and then they switch what the person is eager to buy with something that will not work int he customers best interests. Take my advice, shred these when they arrive. (they contain your name, address, and may disclose that you have a relationship with the credit card company, worse, they may contain an account number or other such information the credit card company isn't concerned about protecting for you.)

Another example is on of my existing credit card companies from the Americas... Every couple months they send me some "credit card cheques" that I can "use like CASH". What they don't say very loudly is that the interest on these cheques starts accumulating the day they are used, not 30 days later when your statement is due, so if you were to purchase a $1000 piece of furniture on July 1, and you get your statement on July 30 and you see your statement isn't due until Aug 15, and you pay it on time, approximately 1.5 months have passed since you used your "credit card cheque" so $1000 * the annual interest rate, divided by the fraction of the year that has gone by... If you had an 18.5% card (since that number has already been made popular in this article). You would be paying (18.5%/8)*1000 = $23.1. I want to point out that this is $23.1 dollars for paying your credit card bill ON TIME. All because you used the stupid cheques that they sent you. Take my advice, shred them when they arrive. (they contain your name, address, they disclose that you have a relationship with the credit card company, and much worse, they contain an account number which means youwill be charged is someone picks them out of the garbage and uses them

(Did I mention that the credit card company isn't concerned about protecting for you or your privacy despite the glossy brochures?)

The credit card companies and banks are NOT your friends, they AREN'T doing you any favours, if they can't make money from you they aren't interested in you, and will dump you (Bizsmart offered free business chequing, and was recently discontinued.  Many suspect it was a customer fishing expedition that did not end up with a significant portion of its customer base using their "lines of credit", so the profits were lower than expected.)

Know your vocabulary. DEBT is money you owe. INTEREST is debt you incur on money you owe. Credit is when you are offered debt. ALINE OF CREDIT is an ongoing offer of debt.

How to survive.

• Pay your credit cards off (the full amount owing not the minimum) before the due date.


• Don't use credit card cheques.


• Be suspicious of any offer, confirm the terms, rates of interest, length of offer, penalties etc etc.


• Ask yourself... "How are they making money from this?"


• Ask yourself... "Where else could I find a similar offer?"


• Think of debt as days working for the bank or credit card company... If you owe them $150, then you are spending 2 days working for them. (yes 2 not 1. You pay your debts out of after tax dollars...)

What are your experiences with how banks and credit card companies treate you?  

< re-posted from my older blog at www.greentreesoftware.ca/environmental >