Editor’s note: This article was first published in September 2010, during Spain’s financial crisis. The insurance cost of 120-270 euros and the practice described refer to that time.
Having looked at banks’ strategies for boosting their profits, I notice that in some cases they border on illegality, and I’ll never understand how a government can allow this kind of abuse, because make no mistake, it is outright ABUSE. As you’ll understand, I can’t name the banks carrying out this initiative, to avoid future problems, but you’ll soon be able to see it for yourselves.
A couple of people have told me about this, and both of them happen to be unemployed, with their credit cards maxed out, struggling to make it to the end of the month. Well, the bank hands you the rope so you can put an end to the agony.
They are calling customers with this profile and giving them two options. Either they take away your credit card, even if it’s one you pay off monthly or weekly, or, if you decide to keep it, you have to take out an insurance policy costing between €120 and €270 (though, mind you, they make it easy for you to pay it month by month). The curious thing is that these are conventional life or accident policies, and nowhere does the contract say that if you lose your income they might extend your repayment terms or release you from liability for “x” amount of time.
That’s when the customer can’t make sense of anything and says something like: “If you’re taking my card away because you’re not sure I’ll be able to pay it given my precarious financial situation, why are you letting me keep it and also raising my monthly payment with an insurance policy?” And there’s no answer to that, because it comes down to one word: abuse.
For this and many other reasons, we should get rid of our credit cards as soon as possible if we want reasonably healthy finances. Otherwise, when you do the sums at the end of the year, it turns out you’re working solely and exclusively for the bank.
Featured image: Nenad Stojkovic, CC BY 2.0, via Wikimedia Commons.
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