Friday, October 10, 2008

Why the Rich Get Richer--Yet One More Reason

I don't know what loan contracts look like that the wealthy sign when they need to borrow money; chances are their contracts are every bit as difficult to read as the ones those of us in the middle and lower classes sign. The difference is, the wealthy can afford to have an attorney and/or accountant look over the contract before they sign on the dotted line.

I wonder how it is legal for loan companies, banks, and credit card companies to boost their interest rates to nearly 33%. If you or I tried to charge that rate to another individual, a judge would throw it out of court as being excessive.

And isn't it amazing that these high interest rates are attached to the accounts of the people in the worst financial shape? Your credit card may have been charging you a "modest" 19%, but miss a payment or sometimes just be late with a payment, and you're likely to find your next account statement has a higher interest rate attached.

Did you know that many lenders will charge you interest not only on the principle that you borrowed, but also on any late fees they attach? Does this sound like it makes common sense--or that it could even be legal?

What about the fees the banks charge now for an overdrawn checking account? What used to be a $5 or $10 fee is now $25-$35--again, charged when you are already at a low financial point. Why else would your account be overdrawn? No one in their right mind would withhold money from their checking, realizing what the overdraw fee is.

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