This is the true story of how Big Bank Bully (BBB) and Fit Financial Firm (FFF) tried to screw me over and how, after a long struggle, I beat them.
The names of the banks have been changed, not to protect the guilty, but to ensure that they can’t sue me. Both BBB and FFF are major banks with credit cards you probably have in your wallet right now.
I owed several thousand dollars on my BBB credit card. I always paid at least the minimum payment on time. One month I had some extra cash and sent in an extra payment for about ten times the minimum. Since that second, large payment was near the end of the month, I did not send in another payment the beginning of the following month.
My next statement had a charge for a late payment. I called BBB and they agreed to remove the late charge. About six months later, I again sent in a second very large payment near the end of the month. Once again we went through the dance of them charging me a late fee and then, when I complained, they rescinded the late fee.
Shortly thereafter they jumped my interest rate from 9.9% to just under 30%. When I complained they informed me that I had two late payments within the last year and that triggered an automatic change in my interest rate to the ridiculous 30%. Both of these “late payments” were because I made two payments in one month and no payments the following month.
I went a little ballistic. The customer service rep was very sympathetic but claimed their hands were tied: the computer did it and they could do nothing about it.
I told them I was walking away from the entire debt. I would never pay them another dime.
They sorrowfully told me in that case they would have to report me to the credit unions and my credit would be destroyed.
I told them I didn’t care – go ahead and report me, I wasn’t paying.
The next six months were interesting. I paid nothing during that six months. At first the phone calls I got were from BBB. The BBB reps on the other line always had a deal for me. The details kept changing but the constant refrain was that we can’t do anything about the 30% interest rate. I simply repeated “I’m not paying until you put my interest rate back to the original 9.9%”.
Eventually BBB stopped calling and the calls came from a collection agency. After a bit I stopped taking their calls. This went on, with roughly one call a week from them, for about six months.
VOILA! VICTORY! A statement arrived from BBB that showed 0% interest. I started paying the minimum allowed. This went on for a year … I very carefully made sure I was never late on a payment.
One day I got a call from BBB’s collection agency. They had some complicated story about my account still being in collections and that since I had been paying for a year, it was time to renegotiate it. I hung up on them.
The collection agency proceeded to call me every couple of days. I hung up on them every time. After a week or two it hit me that hanging up was the wrong tactic … as soon as they identified themselves I put the phone down and let them talk to themselves for as long as they wanted. The calls soon stopped.
I had essentially the same experience with a credit card from FFF. The only real difference is that when FFF finally caved and rescinded the 30% interest rate they went back to the original 9.9% instead of going to 0%.
LESSONS LEARNED
1. The banks lie like crazy. Both of these banks repeatedly told me they had no discretion in dealing with me and my account. The fact of the matter is that they can do any thing they want to, for example they eventually set my interest rate to zero.
2. The credit card contracts include fine print designed to screw us over. Nobody ever reads all this lawyerly gobbledygook, so we are always going to be caught by it.
3. Neither of these major banks reported me to the credit agencies so these episodes didn’t seem to damage my credit ratings.
4. It takes a considerable amount of energy and an “I don’t care about your threats” attitude to beat them.
5. The banks don’t play fair with us so there is no reason we should play fair in dealing with them.
One more thing. The banks are never going to get that 30% interest that was piling up during our six months battle. I’m going to pay off the principle and then walk away from those unreasonable interest charges. I suspect the banks will bluster and threaten a bit but, frankly, I won’t give a damn.
REFLECTIONS
Every major religion prohibits interest on loans. Until recently, I never really thought about this or understood why an interest-based economy was a bad idea. Then, in the middle of my battle with the banks, I decided to explore a little.
I built a simulation model to explore an economy that includes interest rates. The initial condition I set up was perfect equality, i.e, everyone on average had the same income but there were small random annual variations.
Here is the interesting thing. One year Mr. Smith, from a random bit of good luck, has a small surplus in income. He loans that to a neighbor who, from a random bit of bad luck, was a little short that year. If Smith charges interest on the loan he is on the road to eventually getting essentially all of the wealth from the entire community.
Hard to believe, isn’t it. If you have a spread sheet you can try this out yourself.
Here’s how it works. The interest on the original loan provides Smith with a little more money to loan which then generates more money to loan. The more money Smith has, the faster he accumulates more. This is an exponential process, which means essentially that the longer it goes on the more it speeds up.
In the simulation, Smith ends up with all the money in the entire community. The real world of course doesn’t work quite like this, mainly because 1) the real world continually generates new sources of wealth and 2) there are some real world constraints on one person having all the money.
What the simulation does show is that interest based economies are inherently unfair and inherently unstable. Apparently God understands this and that must be why He prohibited interest on loans.
Contact me: I love to hear from readers. Email me at cyberneticapress at gmail dot com. Thanks, Barry Clemson