Thoughts on Debt

I recently saw an infomercial on TV about debt.  I thought it had some very interesting information about how credit card companies prey on the weak.  This interview was with someone who had written a book about resolving your debt, I am not sure that I really want to plug this book, hence I am deliberately omitting the name of it from my article.

The author had some interesting thoughts that I want to share with you.  He said that credit card companies specifically target people who are low income, students, uneducated, and minorities for the sole purpose of getting them in over their heads.  Counting on the fact that it is the people without money who will max out their credit cards the quickest.  Now you may ask yourself how this serves them.  Well, let’s say for instance that you charge $1000.00 on a card that’s limit is $1000.00.  You start out making the minimum payments, but the account keeps growing and with interest your account goes over the limit and that costs you an additional $45.00 per month, and then you send in a late payment and that costs you another $45.00 and before you know it your balance when it goes to collection is about $5000.00.  Figuring that you made $600.00 worth of payments while paying the minimum and you only borrowed $1000.00 in reality then you would owe about $400.00 to the credit card company, but now they are saying you owe $5000.00 now many people actually do at least begin paying towards that $5000.00 and many actually pay it off.  If you don’t however, the company is really only out about $400.00 and they get a tax break on that money from the government and then turn around and sell the $5000.00 debt to a collection agency.  This process can be seen by many as legalized loan sharking, in the fact that with interest and charges your balance can go from $400 to $5000 in almost the blink of an eye.

People who pay their credit cards every month, provide very little income to the credit card companies and therefore they want nothing more than to see you overspend and fall flat on your face.  The problem that most people with debt face, is even after they realize their mistakes, stop spending and try to pay down their bills, they are too late because the charges are rolling in and the debt keeps increasing, even though they are not spending at all.

This book claimed to have answers and debt solutions, however, after looking into it, this particular author has tried several different avenues of scamming the public through the years, and therefore, I would not recommend his book to anyone, however, I did think that the information about the credit card companies and how they make money on you even when you don’t pay was extremely informative and worth sharing.

Tags: collection agency, credit card companies, credit cards, Debt, debt solutions