Tuesday, June 2, 2009

Credit Cards, Anyone?

I just got an offer for a new credit card, something I was never offered in the United States. This card didn't sound too bad in that there was no annual fee. When I asked them what the interest rates were, she put me on hold. This was actually the second time she did this, I talked to the same woman yesterday and she didn't give me a real answer. You would think that if someone was cold-calling to offer someone a credit card, they'd know what the interest rates would be. When she came back on the phone, she told me it would be 16.9 percent. Does that seem high to you? Well, yes. But lots of cards are 20%, right? Even more these days I hear. At least for an annual rate. This percentage is monthly. That's right, I would pay almost 17 percent of any outstanding balance every month. That works out, if I'm doing my math right, to over a two hundred percent APR. How do you say 'usury' in Portuguese?

I told her I wasn't interested at that rate. I already have a card with a 12% MPR, and another that's over 13%. I don't need any more of this kind of credit. She tried to explain to me, several times, that I wouldn't pay any interest if I paid off my balance every month. I already knew that. The way they make these cards work here is by letting you pay in installments: buy something for 900 reis, make ten payments of 90 reis each so you don't get killed by the insurance payments. But what happens if you fall behind for some reason? You are screwed. What's really scary is that there are thousands, if not millions, of cards like this here in Brazil. What happens if the Global Economic Crisis gets worse, and suddenly there are thousands or millions of people with precarious financial situations who suddenly fall behind on the flat screen TV?

I don't know. I try to change the mental channel when I start thinking things like that.

I had to tell her several times that I didn't want the card if the interest rate was that high, thanks anyway.

She hung up on me.