
Back when I was a student, I had a credit card.
Making sure to pay off the 50p I spent on it each month, I never wasted any money on interest. To me, wasting money on interest was a repulsive idea. Why should a student give parts of his loan meant for education, to the mega rich banking industry?
In 2003 my card only had a £500 limit so even if I wanted to buy a helicopter, I couldn’t.
Alas, that shiny £200 TV though was one temptation too many and the bank knew it, like a magician playing a card trick with me.
Slowly I began to use it more and more, but not in the way you might think.
I made around £600 a month in profit from buying and selling items on eBay, and the card’s spending power was essential for buying bargains to sell for a profit.
But the fact remains that I was a student with £8,000 worth of student loans to pay off, yet unasked HSBC automatically increased my credit limit on the card to £4000.
Maybe they wanted to support my eBay business, but I doubt it.
That, as we now know, is how they make their huge profits: to get people into debt and make a profit off the extortionate interest rates, which are well above the base lending rate. It should be illegal but it isn’t. Basically, it has now fucked up the world.
Back when the base rate of interest was a huge 6%, during boom time (it was high to prevent inflation) credit cards were charging up to 28%. That’s how much customers were being ripped off…its still not illegal though, it’s called the Financial Services Industry.
Now the interest rate is close to zero, they’re still creaming it off. I get charged around 18% APR.
Later, shortly after finishing university I had a job with a modest salary, I couldn’t afford to pay off a £4000 credit card bill let alone the interest on top of that, but the banks know that people spend what they have available to them. My debt hovered around a manageable £1000, but they still kept upped the limit to £7000 like a carrot. Why?
I had letters through the post offering me personal loans and mortgages. I, a student!
Shortly afterwards as my pay and prospects rose so did my spending power, and the bank knew that by spying on my statements.
And so they got their loot, they stole from me over the years, roughly to the tune of £3000 in interest over 7 years, but it gets worse…
The credit card was always a useful tool and an indispensible asset to my eBay business, which was doing well but this regular outgoing and incoming effected my daily balance so I never knew what the true cost of living was. It had the effect of hiding from me the truth. How much I spent on food, how much on bills, how much on direct debits per month during the boom times - I had only a very vague idea and my estimate was much lower than it actually was.
Soon the bank had increased my credit limit to £8500, without even consulting me. They knew I had no chance of paying off such a rediculous sum of money, the interest on which would be roughly £400 a month, and yet they were prepared to let me spend that much. They had other tricks up their sleeves as well, which were written in the reams of small print which nobody reads.
Article 48.9: Credit card cash withdrawals in German zoos: I have £200 of cash costing me £7 a month in interest for 2 years sat at the bottom of my credit card balance, untouchable. I had expected to pay it off the next month, when I paid £1000 off my balance, but no it ‘remains until my full balance is paid off’, which isn’t much good to me because there’s now 5 grand sitting on top of it like an elephant.
Well, as all of us have now discovered, what the banks have done amounts to a genocide on our livlihoods, a noose on our dreams, a choke on our long term prospects.
It doesn’t matter if you’ve been careful with your money or not, we all have to suffer the consequences of the global economic collapse.
Someone you know has probably lost their job this week. If not, then they will.
Slowly, like a magic trick unfolding, like an impossible knot forming in a rope, somehow - I still don’t know how, I had a £5000 debt on my credit card and nothing left to sell, even though I had a decent wage and had made a profit of between £50 and £700 on 90% of my eBay sales. I had worked hard for this.
And now the economy as a whole has well and truly crunched, I can’t even buy and sell my way out of it. It’s as well I still have my job as a web designer.
I know it sounds rediculous, I know it sounds stupid that anyone can build up a debt like this on a credit card over 2 years, but I’m not alone it seems.
It’s not as if the weight or urgency of the debt is crippling me or endagering my lifestyle, but that’s exactly how the banks get you to use the credit card in the first place. Slowly but surely, they’ll catch you like small fish in a huge trawler net, and your money becomes theirs. Credit cards are a con trick, an imaginary loan, which have ruined the world economy.
Rather than being in a minority, I find I’m in a huge majority. Nearly everyone of my generation has some kind of massive debt around their neck.
The plan is to give the banks yet more money so that they start lending money to each other again.
I fail to see how this helps us.
When society as a whole is bankrupt, how does it help to give the thieves who took it all in the first place yet more of the public’s money, in the form of a bail out by the tax payer?
Why isn’t the common good being used to pay off the debts of me and you? Why is it being pumped into a failing, faulty and corrupt system, which will fail again and lead to another period of economic woe?
To make matters worse, even in this crippling recession the banks are still creaming it off. It would help for them to pass down the government help, they haven’t. It would help for them to charge a more reasonable rate of credit card interest, to help me pay off my debt. But they’re determined to get as much profit as possible from my woes.
What’s also astonishing is that they now have the benefit of hindsight in seeing the damage they’ve done not only to themselves but to the entire world by pursuing this strategy, yet they don’t change.
As for us, mere citizens, we got a token 2.5% cut in VAT which amounted to absolutely fuck all but had the physcological effect of making us spend our ways even further into debt, at Christmas.
That’s the idiotic Gormless Brown’s idea of ‘kick starting the UK economy’.
The fact remains, that the banks have taken advantage of basic human nature and used it against us for their short term gains. It’s greed of the highest order, psychopathic behaviour from an essential institution, once trusted and valued.
It should never have been allowed to happen.
PS
I often wonder why our pound dropped from being worth 2 dollars in the pound, and 1.4 euros, in the space of just a few months. Now I know the terrible answer:
UK consumer debt as a percentage of GDP: 110%
The next highest in Europe is France at 70%
In short - we’re fucked.
As a collective nation, we owe more on our credit cards than we actually earn and export in entirety. I am not sure how we’ll pay it off, and it’s only going to get worse until the banks are lynched in riots.