Soliciting indentured servants

This is probably an American-centric rant, so feel free to ignore.

In January I started getting credit card applications in the mail. They weren’t from my bank** nor from stores from which I’ve made purchases.  These are strictly third-party creditors who have no relationship to me.

The amounts are staggering! A ten thousand dollar credit line?!?  Worse, most of these applications offered a balance transfer with a limited-time low interest rate before bouncing up to 13.99% APR.

So let’s say that the new chump cardholder (NOT me) transfers the debt and during the grace period gets the principal down to $6000 (rounding up the average debt in my state). Thereafter he or she sets $200 as the monthly payment. Using a debt calculator, I figured that it takes 38 months to pay off the debt. So the cardholder paid $7,600 overall.

It’s worse for someone who maxes out the card. For a $10K debt at the same payment schedule, the poor sap is in debt for more than six years and pays $5,200 in interest.

Related links

  • Federal Trade Commission information on opting out. Unfortunately, the permanent opt-out process takes one to a non-government secure site and requires one’s personal info including Social Security number.
  • The American Center for Credit Information’s advice if a unsolicited card (not just application) arrives in your mailbox.
  • Feed the Pig’s 4-Week Financial Fitness Challenge

**I cancelled its card after it was compromised and the thief racked up $250 in make-up in Ann Arbor by an international student. Probably the same one who stole my friend’s card information, as she had a similar problem with repeated cash withdrawals in Turkey – with her bank’s permission, despite her noticing the first withdrawal and asking for a hold on her account.