"So welcome back baby to the poor side of town." - Johnny Rivers

Technology has made it easier for some businesses to take advantage of the poor. This is especially true of bank credit cards.

I know someone who has a credit card with a $650 credit limit with Orchard Credit Cards, which is owned by Household Finance, which is owned by Household International, which is owned by HSBC Holdings, a huge company based in England . 

This is his only credit card and he has been paying the minimum payment each month. He has not been late with a payment in over a year. 

His credit card statement showed the annual interest rate on the card is 18.90%. This means the bank is making about 16% in interest over what they pay for money deposited in their bank That is a very high rate but Household makes it worse by assessing a number of fees. 

He ran the card to the limit last Christmas but has been trying to pay it down since then. After several months, he got his debt down to about $600. In May, Household charged him an $89 annual "membership" fee to renew his card. 

$89 equals 14% of his credit line just to have the credit card available to him. To make matters worse, Household slapped on a $28.70 fee (about 4% of his credit line) because the $89 "membership" fee caused him to go over the $650 limit. 

Even though he has been a good customer, Household wants to take advantage of him by charging 18% of his total credit line just to keep the card open. They did not increase his credit limit so he can't use the card to buy things. Household targeted this card to people trying to improve their credit history but now his credit report is damaged because the excessive fee put him over his credit limit. 

The fee is too small to get an attorney to help him fight it. He tried writing Household but they have outsourced customer service to people who don't respond to letters. He called and talked to a woman who said she would waive his fees if he cancelled his card which would leave him with no credit card. When he asked to speak to someone about waiving the fees and keeping the card, she said she was transferring him to another department and then hung up on him. 

If he gets mad and refuses to make his credit card payments, it will completely destroy the credit history that he is trying to rebuild. 

One of my favorite books is Joseph Nocera's 1994, "A Piece of the Action." Nocera touched on many subjects, including banks that used computers to target credit card customers. They were looking for hard working people who make their payments on time but keep high balances on their credit cards. 

Now that technology is better, it is easier for computers to pinpoint people who fit the bank's model. Technology has also made it possible for bill collectors to get more aggressive in their collection practices when people are late on payments. 

I hear horror stories of collectors calling long lost family members and neighbors and using those people to put pressure on debtors. It is illegal but the agencies that regulate banks aren't doing much to help poor people and the collectors know it. Even when regulators want to help, most poor people don't know the law or who to call. 

In looking at their recent financial statements, it seems that Household International has been involved in litigation regarding consumer lending. I am not sure how this has turned out but you would think that a company that has recently been sued would be smart enough not to charge 18% as its annual fee. 

The card holder is paying at least 18% in fees and then 18.90% in interest on top of that. With the balance increasing at that rate, the debt will never go away and he will never get a good credit history. 

Companies like Household International will make sure that he never gets away from the Poor Side of Town. 

Don McNay is the President of McNay Settlement Group which wants their clients to get away from the Poor Side of Town. . He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it '; document.write( '' ); document.write( addy_text91288 ); document.write( '<\/a>' ); //-->\n This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or you can read other things he has written at www.donmcnay.com