Tuesday, January 19, 2010

The Sears MasterCard -- Disconnect

Most of us have charge cards. I do. Several of them. I use them sparingly and pay them off each month. If I know I won't have the money in the bank when the credit statement arrives, I don't buy the product. Since I rarely carry balances, I rarely look at the interest rates on them.

I follow the economic conditions of our country and have been aware that credit card companies (Banks) have been raising their interest rates at breakneck speeds. I've read that some banks have raised their interest rates to well over 30%. Huffington Post recently reported that one bank raised their rates to 70%! Accordingly, the mainstream, once trusted banks have gone into the 'lone shark' business and our government seems to be okay with the fleecing of the citizens.

Case in point: Last month I needed a set of new tires. I've always been treated well at Sears and decided to purchase the tires there. $757.25. I had not used my Sears Card in several years and decided to use it as they were 'special order' tires and placed the order by phone. Several days later the tires were on the car and I'm happy with them.

A few days ago my Sears credit statement arrived. I paid the debt and also looked at the statement with considerable scrutiny. If I was not financially able to pay off 'the card' here's the news---My Sears MasterCard interest rate on unpaid balances are at a 25.24% annual rate representing a .06915% daily rate. The minimum payment amount was $12.00. Given a $759.25 balance and the 25.24% interest rate, a quick and dirty calculation finds the annual interest on the debt at about $191.00, which is almost $16.00 a month thereby adding about $4.00 to the principal balance each month.

Given today's economy and jobless rate, many people find themselves in desparate financial conditions. Many people may only be able to pay the 'minimum' amounts on their credit cards. At the same time some people need to replace certain neccessary items.

Here's an idea. One will probably find better deals on tires, appliances and most needed things at the LOCAL unaffiliated business down the street. One may pay a bit more for the product. Maybe not. One thing for sure is that a better payment plan can be negotiated with the 'locals' outside the mainstream 'lone sharks' from Wall Street. And the overall out of pocket costs will be less in the long run. Try it. You may be surprised.


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