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Anytime a bank wants to 'help' you out, beware

A friend of mine got quite a shock when he opened his most recent credit card bill. The minimum monthly payment had nearly doubled, which will put a serious crimp in his already less-than-lavish lifestyle.

He and his wife divorced a couple years ago, and he admits that he didn't handle it well. He ran up some nasty numbers on his credit cards, but found that as long as he made the minimum monthly payments on time, the banks were eager--hell, they were absolutely giddy--to keep raising his credit limit. One card originally had a $2,000 limit, but he now owes nearly five times that much.

Fortunately, riding to his rescue is none other than The Bank, that institution for which the very concept of altruism was coined, if you'll pardon the expression. Your best friends, the bankers, are going to continue to stab you in the eye, strip you of your dignity and paint you into a financial corner.

But now, after years have passed, if you're still alive and not in some sort of Bush-initiated debtors' prison, you'll thank them for having done so.

(And don't think Bush couldn't do it. He already has branch prisons in other countries.)

What they're doing is having each person pay down 2 percent of his principle each month. Unfortunately, that 2 percent is buried under an avalanche of interest and other finance charges, so one credit-card payment is now about as much as the rent he pays on the crappy little apartment he lives in since his ex-wife decided she liked the house. His particular annual interest rate is more than 25 percent. That used to be called usury. Now it's called a vital component of a robust Republican economy in which the wealthy few stride regally through life across the backs of the rapidly disappearing middle class.

"The debt is my fault," my friend says. He doesn't want to be identified for fear that the bank might cancel his card. "I know that sounds paranoid," he says, "but can you honestly say that you don't think a bank would do something like that?"

Hey, I remember when Dr. Johnny Fever on WKRP thought that the phone company had its own police force, and I found myself nodding in assent.

"I've been meaning to start paying it down, but I haven't gotten around to it. I'm sure that's pretty standard. But the idea of them offering me more and more credit and then forcing me to make huge payments to pay it down just doesn't seem right."

What it's reminiscent of is the not-so-long-ago $3-a-gallon gasoline prices that some economics blowhards tried to explain away with junk terms like "market forces" while the oil companies were all but drowning in profits. Some went so far as to trumpet the fact that the economic hardships were having the effect of cutting down vehicle miles driven. That's all well and good, but we as a people should be able to cut gasoline consumption by raising fuel efficiency standards or simply by driving smarter. To have things forced upon us so a few corporations can climb a couple notches on the Fortune 500 ladder is wrong.

The bank sent him a little brochure with his statement in which they laid out their plan to help him become debt free by piling ever more debt upon him. It's like that aversion therapy in A Clockwork Orange.

He says that at first, he thought that the banks were almost trying to force people to go bankrupt, which of course they can't, thanks to a new law pushed through by the Bush administration and the Republican-controlled Congress. This new law basically makes it easier for you to be bitten by a yak on Tuesday than to declare personal bankruptcy. That this new gouge rule comes along just a few months after the bankruptcy door is slammed shut is probably just a coincidence, right?

To be sure, there is way too much credit card debt out there, and people do need to start reining it in. But we shouldn't think for a second that the banks are doing this for our own good. Before we dump too much on the banks, it should be noted that they give the consumer a slight break. The brochure reads, "If you may have difficulty handling this new Minimum Payment (their caps), you may decline this change and keep your current payment terms." However, if you do, the bank will cancel your account; you'll pay off all of your debt without the use of the card anymore, and you just know that they'll put your name on some list so you won't be able to get any credit, anywhere, ever again, not even from one of those illegal-alien check-cashing places.

My friend says he's going to ask his ex if they can take out some kind of low-interest home-equity loans so he can pay off the card and then pay off the loan at better terms. I'd love to see that sales pitch. He'd probably have better luck with the bank.

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