The charity ‘Barnados’ has uncovered a worrying trend in the UK where legal loan sharks entrap the poor into a vicious cycle of debt with high interest payment schemes for basic household goods (via the Guardian):
Its report, A Vicious Cycle: The Heavy Burden of Credit on Low Income Families, highlighted one case where a Beko washing machine cost £780 more when bought through a weekly payment store than at a traditional retailer, while in another a standard fridge freezer priced at £430 on the high street cost to £1,074 through a three-year rent-to-own scheme.
Barnado’s said that while banks and standard retailers had been cutting back on the amount of credit they offered consumers in recent years, rent-to-own credit companies like Brighthouse and Buy As You View appeared to be establishing “a small, but significant position in the provision of credit to low-income households”.
It said many families it worked with felt they had no choice but to try rent-to-own providers and other alternative lenders, as they did not have access to banks which provide overdraft facilities and direct debit.
This is another example of the free market screwing the poor – with no leverage, low income families are unable to negotiate better rates or simpler payment methods – something the middle classes and rich do with ease. The end result is that the poor pay more for their goods than the rich – the hallmark of modern capitalism and another reason to rebuild our monetary system.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.