What’s in Your Wallet?

Capitol One Financial Corporation coined the advertising phrase, “What’s in your wallet?” and parlayed the question into a multi-billion dollar empire. For the average person, the answer to the question could very well be, “nothing.” 

Bloomberg news reported June 17, 2011, how Capital One Financial Corporation is currently expanding their financial empire with the purchase of ING Direct USA. The purchase makes Capital One the sixth largest bank by deposit in the United States. They paid $9 billion for ING after having recently acquired North Fork Bancorp and the Hibernia Corporation. 

Ironically, the move to buy ING resulted in the purchase of a credit card company which averaged only 5.8 percent APR on the use of their cards compared to an industry wide APR of 16.2 percent. Capital One is currently offering credit cards with an APR between 11.9 and 22.9 percent. 

In 1980, the federal government passed a special law which allowed national banks to ignore state usury limits and peg the rate of interest at a certain number of points above the Federal Reserve discount rate. 

The federal usury rate maximum currently has an APR of 24 percent. New banking laws that went into effect last year now require a notice of 15 days before banking institutions, like a credit card company, can raise interest rates. Prior to the law changes, many banks raised interest rates higher than 30 percent. 

If you have a credit card with an APR of 24 percent or more, and you put $10,000 on your credit card and make 2% minimum payments, your minimum payment will never reduce your debt. If you pay $200 a month for the rest of your life, at our current federal maximum rate legally allowed, you will never pay off the $10,000 of debt, and you may actually owe more than the day you began making the payments. 

Laws in most states do not adequately regulate credit card debt, and it may be easy for many consumers to acquire too much debt. If you have excessive debt and you are unable to pay your bills, you may be bankrupt. 

How do you know if you are bankrupt? Generally if your current sustainable income plus any cash reserves will not pay all of your living expenses, pay interest on outstanding loans, and reduce some of your principal on those loans while paying on them for five years. 

If there is nothing in your wallet, you may be a bankruptcy candidate, but you need to talk to a bankruptcy lawyer for more information. If you need relief from the stress of debt and you live in or around the metropolitan area of Ann Arbor, Michigan, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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