Wednesday, March 11, 2009

Just doesn't seem right

Yesterday I received one of those periodic notices from my bank credit card company. I have two credit cards; one for business and the other for personal use. The notice was for my personal credit card.

Reading the fine print of this notice, I learned that a variable delinquency rate that applies to purchases, advances and balance transfers is subject to a minimum DPR (daily periodic rate) of .07942%. A bunch of numbers to the right of the decimal point hardly means much to me until I do the math and discover that it translates to an annual percentage rate of 28.99%. Before dismissing this as a felonious commission of highway robbery by my bank acting as a mob loan shark, I found relief in knowing that it’s really a deal compared to pawn shop loans.

What’s interesting is that my bank has received about $45 billion of federal government bail-out assistance under the Trouble Asset Relief Program (TARP). Since there’s no such thing as a free lunch, I think it would be a good idea for taxpayers to charge my bank a similar interest rate on this $45 billion. That would earn taxpayers over $13 billion plus some change per year. What’s good for the goose is good for the gander.

Numbers crunching gymnastics aside, there’s something about a bank charging an annual percentage rate of 28.99% that just doesn’t seem right.

Pax Domini sit semper vobiscum


Charles Long said...

You're right. It just isn't right. But what can we do about it?

pierini said...

Charles, my solution is to pay off the card each month, using it as a convenience alternative to cash. I haven't paid interest in years. A couple of times they tried to hit me with a late fee when I missed a date, but I called and barked and they quickly reversed the charges.