Capital One Bank—best known for those credit card commercials with the tagline “What’s in your wallet?”—was one of those financial institutions that received federal bailout assistance to save it from itself, as one of many financial institutions involved in the home mortgage bumble. The federal government “purchased” $3.5 billion in Capital One stocks, which the bank “bought” back with remarkable haste, apparently with profits that makes one wonder why they needed bailout money to begin with. One thing for certain was that they continued to milk little people like me who honored their debts as a reliable “cash cows.”
It goes something like this: What they mean by what’s-in-your-wallet is a line of credit that represents money borrowed by the holder from the bank, usually at a higher interest rate than a normal bank loan. Since a normal bank loan requires that the borrower provide sufficient equity that can used as collateral in case the borrower defaults, there are checks and balances to the process; potential borrowers who do not have sufficient assets are (supposedly) prevented from making decisions they will regret later. Holders of credit cards, however, have only credit limits standing in the way of their own foolishness. Banks are at least partially protected from foolish lending by often exorbitant finance charges; if a borrower pays only the finance charge on a balance, it may take only a few years to pay off the amount of the original “loan,” but the original amount will still exist as a base, and continue to generate finance charges, which essentially become an indefinite source “profit” for the lender, unless the latter eventually declares bankruptcy—in which case the bank really hasn’t lost anything.
Over the past decade I held three Capital One cards and three others; being of very modest means to begin with, I fell into the trap, and one day I found myself unemployed. I could have filed for bankruptcy, but instead I contacted a debt consolidation intermediary, which was probably a mistake because the banks kept ignoring their “proposals” over a six-month period, allowing for the accumulation of late fees and over-limit charges. I finally sent a barrage of letters and e-mails threatening bankruptcy or payment refusals. Capital One eventually sent me a letter announcing that they had agreed to my “terms.” Three weeks later, the debt consolidation company sent me a self-congratulatory message alleging that the banks had accepted “their” proposals. I did some belated studying-up, and discovered that the financial experts council against dealing with debt consolidation firms, since they are little more than tools of credit card companies, to get them the best “deal”—such as allowing for the inflation of as much debt as credit card companies can create before letting their foot off the gas. The debt consolidation company who “worked” with me charged $40 a month as a fee for their “service,” which amounted to little more than facilitating an electronic transfer, which I could have used my own bank for a fee of $5.
It took me 50 months to pay off the Capital One cards, which constituted ¾ of my debt load—which in total ate-up forty percent of my take home pay. The credit limit of the COB cards totaled $11,700—upon which I paid $6,000 in finance charges to these pirates. Since I wasn’t making much to begin with, obviously I had to make some rather considerable compromises in my living arrangements. There was, however, some positives to glean from this experience: I learn to live within my meager means without resort to credit at all. I didn’t contribute much to the economy as a consumer because of my rather slim bottom line, but the fact that I learned a valuable life lesson while at the same allowing me to save money in the future without even thinking about it. Taking responsibility for paying my debts somehow moved my Fox News-fan dad (because it’s “fair and balanced”) to send me money to soften the landing in the past year. Although it is difficult for me to mentally accept help after all these decades of going it alone, I must accept it in the spirit it was given.
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It retrospect, my situation could have been much worse. In 2002, I was hired by this sports apparel company (that has since gone mostly broke); but before my health insurance kicked in there developed a swelling under the left side of my jaw. It kept grower bigger and bigger, but I thought that I’d wait a week until I the insurance kicked-in. Unfortunately, it became harder and harder for me to open my mouth, and finally I couldn’t even fit a straw in it. I found myself sitting in the emergency room of Harborview, waiting for an hour before the check-in nurse called my number. She looked at me with disgust, asked me if someone had slugged me, and sent me sitting in the lobby again for another hour before I was called into a cubicle. The first doctor who looked at me was completely befuddled, but a second doctor looked into the narrow slit where my mouth used to be and determined that I had a very serious cavity, and had developed an abscess of rather considerable size. To make a short story shorter, I was operated on the next morning to remove the abscess, and spent the next four days hooked-up to a steady flow of antibiotics. When I was told I could leave, I discovered that an orderly had mislaid my shoes. I ended up scrounging around the hallways for a plastic garbage bag and cardboard to wrap around my feet. A couple weeks later I received the bill: $11,000—which of course the insurance company was not going to pay one penny, because it was a “pre-existing” condition. Because my income and expenses would not immediately cover that bill, the payment processors actually expected me to put its entirety on my credit cards, which of course was impossible. After some wrangling over a few weeks, my bill was reduced to 10 percent of the total, probably because the length of time it would take to complete the payments would not be worth the time and expense of keeping track of it; as a payment processor told me, getting something was better than nothing at all.
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