You have to wonder why a British/Dutch bank with little presence in New York City would pay $400 million to put it’s name on the new Nets arena in Brooklyn, when they passed up on owning Lehman Brothers. It’s hard to fathom what benefit Barclays envisions in such an immense expense over the next twenty years.
When I opened my mail today, I think I found the answer.
It’s a new concept in credit cards called the barclaycard, which formerly used to have the most vicious interest rate in the world, but now is currently redefining and re-branding with a permanent 8% rate, no balance transfer fees and no annual fee. This is better than twice as good a deal as being offered by many other credit cards today.
In 1966, when the modern credit card was born, Americans quickly ran up a billion and a half dollars in debt. Today that figure is over $1 trillion and expected to keep growing exponentially. In fact, by the time most people graduate from college these days, they’re already saddled with such a massive debt load it’s nearly impossible to save money for decades. Many will quickly fall deeply into credit card debt and spend years paying minimum payments on a constantly growing principle until they can no longer meet that minimum and go broke. It’s the closest thing to legal slavery since the Civil War.
You have to wonder how much of the trillion dollars is going to slide into the coffers of Barclays with this new strategy. It certainly looks like it should be effective considering the amount you can save from switching from a 17% interest rate (or worse). I got heavily into credit card debt seven years ago when I had to put a new roof on my house, and it took me five years to climb out of it, and by that time I’d already been forced to pay thousands in interest, even though I was constantly trying to shuffle the debt into temporarily interest-free accounts.
In a few years some of us may be wondering who really won the Revolutionary War.