Have some cookies and a 177% APR

Ramit Sethi

Angela writes:

I guessed that this was a credit card offer and opened it anyway.

As I scanned down and saw the APR, I assumed it was a misprint, so I calculated it myself. Its not a misprint, they really are charging that much. And the collection arrangements sound interesting too.

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Sigh. Yet another example of targeting poor people and stupid people. And yet this post will still get comments from people saying, “WHO ARE WE TO JUDGE?!?!?!?” and “If a company can charge it and people can pay, what’s the harm!?!?” I don’t know, I have this thing against disproportionately targeting people who don’t know any better and of prolonging financial difficulties for a short-term gain.

177% APR

(Click to see the full-size image.)

And stay tuned for another image later today that will make you a little queasy, but one that I actually think is entirely ethical. Unlike this garbage.

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  1. Enrique

    This lawful loans reminds of the poor in Bangladesh before there was micro-lending.

    The one lending the money would dictated how much money he was willing to pay for their products.

    For the people who preach personal responsability, at least you need to have been taught about money and lending practices.

  2. Jeff

    I agree that this looks ridiculous.

    However, it would seem to me that the lender may have an increased risk by lending to the type of people that would take this offer.

    If somebody is going to take out a loan for 50 or even 500 L it would appear to me that they may not be able to pay back the loan. The high interest rate would be required to cover the borrowers that don’t pay off the loan.

  3. Jonathan

    177 percent?! Wow — let me hop on that great deal!

  4. nordsieck

    Given that poor people have few assets, I doubt that a significantly lower APR is feasible.

    Even Grameen charges 50-100%, and they have all sorts of social advantages that payday loan shops are unable to bring to the table (most responsible married women are unlikely to used payday loan places in the first place).

    I’m not saying that it’s true, but if people are poor because they value wealth (things) more than money moreso than their richer neighbors, than this seems identical to pet stores marketing to pet owners.

  5. Carter

    Look on the bright side: at least they are disclosing an APR. Many companies try to get around such disclosure by charging fees. Many banks will be happy to pay an overdrawn check for you, charging you $35 or more regardless of the check amount. If the overdraft amount is small and/or is repaid quickly, this can easily equate to an APR greater than 1,000,000%!

  6. Trisha

    177% sounds like usury. I suspect, if you did take this offer and were charged the 177%, you might stand a good chance in challenging that company in court. Of course, the legal fees might just make it so that didn’t pay off. Perhaps that’s why they limit the loan amount to $500?

  7. imelda

    “people are poor because they value wealth (things) more than money moreso than their richer neighbors”

    This quote wins as the most asinine, ignorant comment made on this blog for as long as I’ve been reading it.

  8. Terry

    Heck, 177% APR is nothing com;pared with the 521% APR common on payday loans in Oregon.