How do Banks and Credit Card Companies beat Usury Laws in America?

There is a good documentary movie that came out a few years ago before the housing bust happened. It is called In Debt We Trust and you can watch the whole thing online.

In Debt We Trust (Full)

A few things that catch my attention is that the usury laws we once had were repealed by banking lobbyists. That is why loan sharking by credit card companies, payday loan companies, and other types of finance companies can charge over 100%. Chances are you are a victim of this and don’t know it. All fees that are charged on a credit card is a form of interest that raises your annual percentage rate up.

For instance, if you have a $50 balance and you pay it late, you are probably charged at least $29 for late fee. That is over 50% in one month. Let’s say you only charge $50 max each month and pay the balance in full every month, but for whatever reason you missed the deadline because of mail delays by one day 6 times in a year. That means you are penalized 6x$29 which equals $174 a year. Even though these are called fees, this is just a different name for interest charges. That means you would have paid over 300% annually.

There are other fees you get charged but whatever the fee is called, they are all just forms of interest fees paid (annual fee, over the limit fee, check by phone fee, debit fee, statement fee, and whatever else they can nickel and dime you to death).

In the video embed at the 21 minute mark, two guys get a title loan against their vehicle, and the interest comes out over 371% for an auto loan! You have to wonder, “how is this legal in America?”

Another interesting thing this video points out is that the banks and credit card companies push their products and services knowing that the person can not afford it or qualify for it. They just wanted to get the consumer hooked on just enough to become debt slaves. In one part of the movie, a couple talks about the credit card companies sending a pre-approved credit card applications to their deceased dog.

Anyways, enjoy the movie and feel free to post your comments. Cheers!

4 Comments

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Paul Wynn, January 12, 2010:

It’s just sad that these companies take advantage of people who are desperate in getting something they want instead of need. So many get worked up in thinking that paying over time will benefit them because all they have to do is pay the minimum but fail to acknowledge that they have eventually pay for it in full. Much less acknowledge the interests
Paul Wynn, January 12, 2010:
Paul Wynn, January 12, 2010:

It’s sad that these companies take advantage of people who buy things they want instead of what they really need. Some only imagine that they just have to pay the minimum and fail to realize that they must eventually pay the whole thing off much less acknowledge the interests ..
bikky, February 3, 2010:

Whats messed up is thpe banks say consumers will be harmed if we try to pass laws to protect ourselves. Im sorry. Your problems are way worse if you go under because y ou cant have a credit card that offers you rates at 30% or higher. How many people do you know live off the high hog while borrowing at 30% and not go into debt?