late payments. It does happen that a person gets a few months behind in making his or her payments. The credit card company cancels the account and sells the loan to a collection agency. The person subsequently pays the loan in full but his or her credit report shows a default from the over-zealous credit company who pre-maturely declared the account uncollectible. Credit scores are also based on the number of times a credit check is run. There is no basis for lowering a person’s credit score because of the number of credit checks done.
Credit bureaus also unjustly penalize spouses, children and others who have been given a secondary credit card on another person’s account. For example, an individual has a credit card account and wants to allow his or her daughter or son to have a credit card on this account. This card is actually a convenience card since the parent would typically allow their daughter or son to use their card. The credit account is solely the responsibility of the parent and the credit was based entirely on the parent’s creditworthiness. If the parent’s credit score decreases, the credit agencies will also decrease the credit score for the daughter or son who has the convenience card even though the daughter or son has nothing to do with the account. This makes absolutely no sense other than to the financial institution from which the son or daughter may go to some day in order to take out a loan or credit card on their own creditworthiness. This is a most unjust practice.
Credit scores are also based on past bankruptcies, foreclosures (even though there is no repossession), collections, tax liens, and periods of unemployment. These supposedly negative factors can be considered for up to seven or more years. That means that a person who has recovered financially and has paid all of his or her debts, is treated like a financial convict even though they have not defaulted on their obligations and have only paid late. Is this just? No! Is this good for the individual? No! Is this good for economy? No, because the individual is constrained financially from buying the goods and services that he or she needs and which the economy needs for stability and growth. However, this is good for financial corporations, since they can charge much higher interest rates based on these incorrect credit scores.
Finance companies use these inaccurate credit scores to increase interest rates even in the case when the poor credit score was the result of late payments to another finance company. In the event that the poor credit score was the result of late payments, there is no risk to the lender and no basis for raising the interest rate. A person with poor cash flow, who is punished by the various finance companies with higher interest rates, will experience even greater cash flow problems. Many situations of loan defaults are the direct result of these policies of increasing interest rates to the point where the borrower is ruined financially. These unfair practices need to be immediately eliminated by the government. Again, the only way to achieve independent, objective, fair and impartial credit ratings is to have the government take over the task of determining a person’s credit worthiness.
Late fees, over-limit fees, and over-draft fees represent other prices of money that are unjust and very detrimental to the economy. These are relatively recent schemes by Big Finance to maximize profits. If a person makes a payment late or after the due date, the interest is calculated up to the actual payment date. In other words, the finance company is already charging a person for paying late. Depending on the amount owed and interest rate, late fees can represent a doubling of the interest or price one is paying for borrowing money. While a late fee is a price one has to pay for the use of money just as interest is, financial institutions use the expression ‘late fee’ to avoid any possible legal restriction on the rate of interest. Over-limit fees are another price of money that is totally arbitrary. In general, a person should not be able to exceed their credit limit since the limit is monitored through electronic transactions. In the vast majority of cases a person who has reached their credit limit can exceed it when interest accrues or a late fee is assessed. Again, there is no just or moral reason to charge an over-limit fee. Often times a person is charged both a late fee and an over-limit fee. This is especially true when a person is unemployed, under-employed, not working due to health reasons or going through or having gone through a divorce. In such cases late fees, over-limit fees and interest can amount to over 100%.
The average household has over $16,000 in credit card debt. Besides bank credit cards, there are retail credit cards from clothing stores, retail credit cards from gasoline companies, credit cards from schools; almost every business wants to sell a person a credit card. The expression ‘finance company’ applies not just to corporations that engage in just finance but also to retail corporations, airlines corporations, academic institutions, and others. The basic strategy of these financial institutions is to create perpetual annuities. They want a steady, continuous stream of money coming in from debtors who will pay for the rest of their lives. From the borrower’s point of view, this is financial slavery with no opportunity of ever escaping. What is most alarming about this is the fact that this applies to the majority of the population—over fifty percent of the population. And the impact on the economy is obvious. With more than fifty percent of the population enslaved by ruthless financial institutions, these people have little to no discretionary income. They cannot buy more goods and services which they want and need because they cannot afford to. And the economy is driven by this consumption.
| Amount Borrowed | Interest Rate | Term (years) | Total Amount Paid | Total Interest | Monthly Interest |
| $2,500 | 18% | 10 | $5,406 | $2,906 | $24.21 |
| $2,500 | 22% | 10 | $6,201 | $3,7011 | $30.84 |
| $2,500 | 24% | 10 | $6,614 | $4,114 | $34.29 |
| $2,500 | 26% | 10 | $7,037 | $4,537 | $37.81 |
| $2,500 | 30% | 10 | $7,909 | $5,409 | $45.07 |
| $2,500 | 32% | 10 | $8,355 | $5,855 | $48.79 |
| $5,000 | 18% | 10 | $10,811 | $5,811 | $48.43 |
| $5,000 | 22% | 10 | $12,402 | $7,402 | $61.68 |
| $5,000 | 24% | 10 | $13,229 | $8,22 | $68.57 |
| $5,000 | 26% | 10 | $14,075 | $9,075 | $75.62 |
| $5,000 | 30% | 10 | $15,817 | $10,817 | $90.14 |
| $5,000 | 32% | 10 | $16,710 | $11,710 | $97.59 |
| $10,000 | 18% | 10 | $21,622 | $11,622 | $96.85 |
| $10,000 | 22% | 10 | $24,804 | $14,804 | $123.36 |
| $10,000 | 24% | 10 | $26,458 | $16,458 | $137.15 |
| $10,000 | 26% | 10 | $28,150 | $18,150 | $151.25 |
| $10,000 | 30% | 10 | $31,634 | $21,634 | $180.28 |
| $10,000 | 32% | 10 | $33,421 | $23,421 | $195.17 |
| $12,500 | 18% | 10 | $27,028 | $14,528 | $121.06 |
| $12,500 | 22% | 10 | $31,005 | $18,505 | $154.20 |
| $12,500 | 24% | 10 | $33,072 | $20,572 | $171.43 |
| $12,500 | 26% | 10 | $35,187 | $22,687 | $189.06 |
| $12,500 | 30% | 10 | $39,543 | $27,043 | $225.36 |
| $12,500 | 32% | 10 | $41,776 | $29,276 | $243.96 |
| $15,000 | 18% | 10 | $32,433 | $17,433 | $145.28 |
| $15,000 | 22% | 10 | $37,205 | $22,205 | $185.05 |
| $15,000 | 24% | 10 | $39,687 | $24,687 | $205.72 |
| $15,000 | 26% | 10 | $42,224 | $27,224 | $226.87 |
| $15,000 | 30% | 10 | $47,451 | $32,451 | $270.43 |
| $15,000 | 32% | 10 | $50,131 | $35,131 | $292.76 |
The prices of goods, services and money are totally out of control. Pricing needs to be fair. Radical capitalist economics ignores the principle that pricing should be fair and instead holds that prices (from the view point of the business) should be maximized. Common are the phrases ‘let the buyer beware’ and ‘whatever the market will bear’, both of which underscore the capitalist view on pricing. However, the economy consists of both buyers and sellers, and economic stability is based on the proper balance between buyer benefits and seller benefits. Fairness to both buyer and seller is essential and critical for an ordered and just economy.
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