stopsign

Hack the Banks – Chapter 4: Tune In, Drop Out

I stopped paying all my credit cards and not a thing happened. Or at least nothing happened right away.

This is partially because this financial move coincided with a physical move on my part with a new address, new phone number, and new surgically-altered face. Ok, the last detail I stole from a Bond movie but the first part is the truth — I did move right about the time I stopped paying.

There were a few increasingly frantic “you missed a payment or six!” notices on increasingly brighter colored pieces of paper but other than that the world kept turning more or less like always. Eventually the notices stopped coming and my accounts started being closed one by one.

With each new account that closed I could almost hear the wheels on the debt train screeching to a stop. The last interest was added. The last fees were included. The total number was tallied up and then written off in some accounting software somewhere in the world. At last there was just one number to deal with and it wasn’t going to get any bigger.

This is a big deal. According to creditcards.com the average interest rate on a consumer credit card is 15%. When I missed a few payments due to sudden expenses the rate on some of my cards ballooned up to almost 30%. At minimum payments it would have taken years to pay off those cards and in the process I would have ended up paying well over double the original value of the money I borrowed.

I encourage you to run your own credit cards through a time and interest calculator. It’s sobering to say the least.

How many hours would I have to spend at the office to make 10 years of interest payments to high-powered bankers? My palms are sweating just thinking about it.

Humans are notoriously bad at thinking about purchases in terms of interest over time. When I opened those accounts at 20 years old the only numbers I saw were the limit and the monthly payment. Like a lot of other people in their 20’s I was stupid and I believed that I was going to make a lot more money after college than I did in reality. The notion that I’d end up giving years of my life to a modern serfdom, working multiple jobs just to pay the interest never entered my mind.

Naturally, once I stopped paying my credit score dropped like the proverbial rock. That’s ok. The process of converting my currency of credit score into the currency of cash had begun.

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Darrell

I've written a few blogs here and there full of the things I thought people might want to read. This blog is the one I'm writing for me.

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