Re: Credit Card Companies That Plan on Finding New Ways to Rip-Off Consumer Should Remember There Might be Competitors Waiting in the Wings

On May 24, 3:00 pm, Rita <R...@xxxxxxxxxxx> wrote:
On Sun, 24 May 2009 13:22:25 -0700 (PDT), mg <mgkel...@xxxxxxxxx>
wrote:



On May 24, 11:01 am, Rita <R...@xxxxxxxxxxx> wrote:
On Sun, 24 May 2009 09:12:08 -0700 (PDT), freeisbest

<demeter547op...@xxxxxxxxx> wrote:
On May 24, 10:09 am, mg <mgkel...@xxxxxxxxx> wrote:
    > With the new credit card law curtailing some devious lending
practices, credit card companies will undoubtedly be looking for new
ways to rip-off the consumer. They might want to keep in mind, though,
that there might be some competition waiting in the wings: <

 > National Bank of Wal-Mart?
Wal-Mart already offers money-transfer and check-cashing services. The next step is full-on banking. The financial services industry is terrified, but consumers might benefit.
 By Liz Pulliam Weston
-SNIP-
   > A different customer base
   > They also don't cater to quite the same population. Wal-Mart
customer's average incomes are below the national average, while
Target's are above -- and Nordstrom's, well above. Some analysts
estimate that more than one-fifth of Wal-Mart's customers have no bank
accounts, which would be about twice the national rate, according to
the Federal Reserve. "Wal-Mart National Bank" could bring these
customers into the banking fold, offering them affordable bank
accounts, credit cards and mortgage loans. "It could turn out to be a
good thing for consumers," said consumer advocate Linda Sherry,
editorial director for Consumer Action, "especially the unbanked or
those who are suspicious of banks." It's a pretty big market and one
that Wal-Mart has already started to tap. . . ."
http://moneycentral.msn.com/content/Banking/Betterbanking/P109171.asp
<

   This is the biggest real news in months.  It will be interesting
to see the effect of this stupendous project on small-time banks in
this country, and big-time banks in China.

It is interesting that it used to be only the poor who were subject
to outlandishly high interest charges on borrowed money.  Loan
companies like Beneficial Finance and many others were willing to
make loans to people with no resources to speak of and prospered
because bank lenders wouldn't touch them.  They had perfected the
ability to collect on the loans and still get their customers to
come back for more.  No loan was too small for them to make.  Many
very low income folks kept afloat through these loans although the
interest they paid was outrageous.

Then the credit card companies upped their rates and found all sorts
of ways to add charges here and there.

And the middle class was no better off than the customers of these
consumer loan companies.

In the all the years we were married, I remember my wife and I got in
a little pinch once and had to borrow money from a finance company.
That was in the days before credit cards, of course. We didn't borrow
too much and we paid it off promptly. I don't remember what the
interest rate was, but I doubt if it was anywhere near the 30% the
credit card companies can charge now days. I'm also quite sure that
the rate was fixed by the terms of the contract and that the finance
company didn't have the right to arbitrarily raise it

Finance company rates are regulated by the states. And rates do
approach 30% on some loans. Customers are constantly advertised
to -- by mail and phone calls -- to encourage them to add on
to a loan they presently have.   These firms definitely do not
want the loans paid off.

On the other hand unless these folks were lucky enough to have
a credit union banks wouldn't look twice at them as borrowers.

I am not sure how prevalent these lenders are today.  What with
credit card companies offering cards to almost everyone.

These finance companies chose not to operate in states where
interest rates were kept low by state law.

One thing they did in training branch employees was to emphasize
treating their customers as "valued customers" .. that went a long
way with this demographic not to be looked down upon when applying
for a loan.  Often the customer had to provide security for the
loans -- household goods, etc.  The possiblity of repossession
did encourage repayment although the stuff repossessed was seldom
of any value and was only resorted to if all else failed.

I think it might have been in the late 60s or early 70s when I
borrowed the money. I can't remember the details, but I would guess
the amount maybe a few hundred and I probably put up a used car as
collateral. It's kind of fun and interesting to "reminisce" sometimes,
even about the days when I was broke and young and stupid.



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