I didn't catch this right away, but in looking back over the past year, I can see, a "kahootzing" unfolding. Clearly, the banks knew quantitative easing was coming to an end and interest rates would no longer be stagnate at ZERO. Was this conjecture based upon past trends? I don't think so, since this economic disaster, compared to the Great Depression and there is now a global economy. This is no conspiracy theory, and no history that is comparative. This is simply the way an economy of perpetual motion operates.
Since the interest rates plunged and remained at basically 0%, literally flat-lined for five years, banks have had to get creative to make money and keep folks interested in letting them "hold" their money. In this time of low interest rates and job insecurity, the average folks don't have so much money to hold. Once the Big Banks were bailed out, they could start making some interesting credit offers to get the perpetual motion rolling again. Credit offers are not always made based upon a good credit history, but increased expenses, times of struggle, or even poor money management can be part of the equation.
I knew when the last long term CD matured, I would not renew it. It wasn't a great rate, but it was by far better than 0.5% for 5 years. Interestingly at that same time, I heard Abba speak of enlarging the tent, so a sizeable expense was about to take place. As it turns out, two additions were added for about the same cost as the value of the CD. Abba is so economical. Now, here is how I got into the world of credit offers . . . The retailer of the building supplies offered a discount if one used their credit card. Rather than just pay cash, I would actually be saving money to use their card with a discount, provided I paid the balance in full when the bill arrived. The mature CD made that a simple task, but, it got my name in some sort of active credit card offer pool.
Suddenly, the bank that carries the one credit card I have had for over twenty years, offered balance transfers at 0% interest for a year, but there was a 4% transaction fee, up front. The bank, which could borrow money at 0% interest could pass that savings on to me, but actually make 4% interest by calling it a fee. The fine print was really great. If I'd taken them up on this wonderful offer but didn't get it all paid back in the 0% time frame, the interest rates would soar on the remaining balance and my old card would then have a brand new interest rate. The new credit card with sizeable charges had placed me in database with a presumed balance. When these opening discounts or special rates are offered, the lender is planning on a balance to be carried, which is backed with statistics.
When I started my business, which had very minimal start up costs, the credit offers came pouring in. All I had done was register my business name with the state. I had credit offers before I had a bank account, which made me wonder . . . The line of credit I was offered was enormous and clearly not commensurate with the possible, potential profit of a new business. I was immediately offended. I felt like they wanted to own my new business and me!
I could go on and on . . . but the point is, with every credit offer, came the reality of potential bondage. Paying my monthly balance on a single card didn't bring new credit offers from every direction. Signing up for a new line of credit and starting a business opened the door to an avalanche of offers, which for many, literally results in an economic avalanche. These banks and credit companies know that! They bank on it.
