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Wed, Feb 14 2007

Banking, credit cards and Social Security numbers

Things like credit can bring out strong opinions in people. USAToday and other outlets recently reported on Bank of America creating a pilot program to issue credit cards to people without Social Security numbers. NPR says that the rate of some of these cards can be more than 21 percent. You can see state usury limits at Lectlaw, but you'll also be reminded there that banks operate under different rules. In spite of the cards being issued with high interest rates and requiring some form of photo ID (perhaps one of those driver's licenses we keep hearing may soon be issued to illegal immigrants) plus a prior checking account with Bank of America, the move to offer the cards has brought out some real snarling.

If Bank of America makes this gesture, can other banks be far behind? As noted by Edmund Mierzwinski in a PBS interview, getting angry at Bank of America and switching your account to a small bank might make you feel better, but the truth is that, regardless of what bank or charity name is on your credit card, a few large companies actually own all the underlying business of credit cards.

I suppose one good thing about all this (besides the fact that people wouldn't have to steal Social Security numbers to get a credit card) is that people who are here illegally and are expected to get many of these accounts from Bank of America would at least be leaving some sort of record in the event that they use their card to further any illegal activities or engage in acts of terrorism. But the whole issue has really gotten heated on the part of many citizens and legal residents who have worked hard to qualify for a card. Some people are also concerned that their own good credit may be affected by folks who have a poor or sketchy credit rating and who are statistically more likely to default on their card bill. And you know that low interest rate on your own card that you enjoy now? Even if you have a great credit rating and you're faithful to pay what you owe each month you should remember that other things can raise your currently low percentage.

The only way to really be able to afford a credit card is to take responsibility to know exactly how your bank is treating your card account, month after month. Banks can change things in a big hurry and they may change things based on behavior other than your good credit history. I just wonder whether any higher defaults on these new card accounts will result in banks justifying higher interest rates for the rest of us. And will unscrupulous international thieves or terrorists eventually set up checking accounts, get that credit card, run it up and then just skip the country? Or worse yet, will terrorists leave their credit card bill behind by commiting suicide in a terror attack? Even one incident of that nature could put banks right under a Homeland Security magnifying glass and might even end their ability to lobby for all those special regulations they now enjoy.

posted at: 09:40 | category: /Miscellaneous | link to this entry

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Stealin' copy is as bad as horse-thievin'
and cattle rustlin'! Lightning may strike
such varmints when they least expect it!