Friday, I received in the mail a check for $5,000 from a bank I had never heard of before. My wife went through the mail, and when she read the fine print on this check, she discovered that it was actually a five-year loan, at 27.199% interest. In case you don’t have a financial calculator, the total cost of the loan would be $9,176.
Leaving aside the deceptive practice of disguising a contract in the form of an unsolicited check, this loan offer is a truly despicable form of usury. For some reason I don’t understand, it is no longer fashionable to call anything usury. But usury is not only immoral, it is still a crime in most states. Unfortunately, the U.S. congress gutted state laws against usury in 1980 by exempting federal banks from state usury laws. The did this under the guise of protecting banks against inflation, but it was actually a neoconservative triumph of laissez-faire economics over decency and justice.
It is amazing that Beneficial has posted a document on responsible lending practices which seems to be so much at odds with their actual practices. Just because this bank is probably not doing anything illegal does not mean that we should tolerate deceptive and usurious practices that prey on the poor, mentally retarded, and elderly. I encourage you to write to the bank and tell them what you think:HSBC – North America
2700 Sanders Road
Prospect Heights, IL 60070
I also encourage you to write to your congressman and ask them to add them to toughen U.S. usury law so that state laws apply, or at least a reasonable interest limit is applied.