Interest Rates/Refinance

[2manyrocks]

Lenders love true home equity loans because they know they are going to collect monthly finance charges until the thing matures and then its the homeowners' problem to refi or pay it off. If the homeowner doesn't pay, then the bank can foreclose and collect. It's like a secured credit card except that they've got a lien on the house to collect against and the rate is a lot less than a credit card rate.

Another trick to pass one--if you've got to hang onto a card for emergency use, freeze it in a tub of butter in the freezer. Tends to slow down impulse spending.

Years ago when state legislatures took usury limitations seriously, there were some limits on how far a credit card company could jack someone's rate. Now some states go out of their way to pass laws to allow them to jack up the rates without any usury concerns. The "sweet spot" for credit card companies is when somebody gets in a position where they keep paying the monthly finance charges at a high rate month after month and never are able to pay back the balance on the card.

Years ago, I met with a bunch of college students and did about an hour's presentation on the in's and out's of credit cards and credit, and I hope they have saved a ton of money in the years since then.