Tuesday, February 22, 2005
Credit Cards for the poor: 70% interest rates. posted by Richard Seymour
Loan sharks wish they had this much sophistication. A company called Vanquis has launched a new financial service for the poor :A new credit card aimed at millions of low-income families is to charge interest at up to 70% - the highest ever charged by a credit card company.
Marketed under the slogan: "Stay in control of your budgeting", the typical interest rate on the new Vanquis card will be 49.9%, but for some customers the company judge as high risk, it will be 69.5%. MPs and debt campaigners yesterday condemned the rate, which is 15 times the Bank of England base rate and triple the standard rate on other cards. The card also has an annual fee of £19.
Norman Lamb, Liberal Democrat MP for North Norfolk, who recently completed a Treasury select committee investigation into credit cards, called the rate "staggeringly high". He added: "People on a low income tempted by it need to be given a clear financial health warning." Debt on our Doorstep, an umbrella group that includes Oxfam, credit unions and Church Action on Poverty, said: "It's an absolute disgrace that Vanquis should even be suggesting people borrow money on a credit card at that rate."
I've been in dire enough straits to get cheques cashed at those dodgy shops which charge exorbitant rates and seem to take an overwhelming interest in any jewellery you might have. I have even sold household goods down the Woolwich flea market (the traders love that: "oh, back again are we? Let's see what I wanna give yer for this loada crap here."). But you'd have to be thicker than shit to take a card that charged this much interest. Loan sharks can charge up to 150% interest (its three per cent a week, so its about 150% 'vig' per annum) on the illegal side. Vanquis can, at the moment, quite legally extract almost half that amount without breaking any legs or 'reposessing' any videos or wedding rings.
As Brecht once remarked, "what is robbing a bank compared to founding one?"