By Ambassador Iliana
The moment you turn eighteen, you should expect to be bombarded by every credit card known to man. Your mailbox will be full of random credit cards from places you didn’t even know had them, and your email will be nothing but “approvals” for credit cards claiming to be the mother-of-all cards. You could also experience this if you are a brand-new U.S citizen or you have low credit. Some of these credit cards are legitimate options, but others can end up being a scam.
Unfortunately, many people may act on this flood of offers and max out thirteen different credit cards without knowing better. Consequently, this may cause horrible impacts on the consumer due to a concept called predatory lending. Predatory lending is defined as any lending practice that uses misleading or unethical tactics to persuade borrowers to take out loans that aren’t in their best interest. Predatory lending includes payday loans, car title loans, and disreputable credit cards.
I have watched my mother struggle with bankruptcy because of credit card debt she accumulated due to the exorbitantly high interest rate she received with her first credit card. This can ruin lives, relationships, and opportunities for people to better their lives - things I saw first-hand with my mother.
How do predator lenders get away with this?
Simply put, there aren’t a ton of laws regulating these predatory practices. There is lots of wiggle room with how honest these different credit predators must be with you. You need to dig, and dig, and dig to find these hidden fees they hide and the outrageous interest they bury in their fine print.
In Washington State, payday lenders in can charge up to 390% interest on a payday loan. Canopy offer’s payday alternative loans allow existing credit union members to borrow small amounts of money at a lower cost than payday loans and replay the loan over a longer period.
Education keeps consumers safe
You must be educated to know the different avenues predator lenders take. Understanding the signs of credit card predatory lending including crazy high interest rates, ridiculous fees, short grace and payment periods and confusing terms is essential to recognize bad deals.
Financial literacy is important to protect consumers and enable them to make inform decisions. We need widespread education when it comes to management of credit here in the U.S, and even in our own high schools here in the Pacific Northwest. Everyone deserves to learn how to prosper in their own economy.