Just in time for the festive season, a truly dispiriting development. Ads have started to appear on local TV and radio stations advising us that Wonga.com, which describes itself as "Britain's most innovative short-term lender", has set up shop in Canada. The ads feature puppets and a bloke talking in an impenetrably thick, fake Cockney accent, so I can't be sure whether they actually mention the most innovative aspect of Wonga's offering: interest rates that can soar far in excess of 1000 percent per annum. It used to be you had to know a sweaty guy with a toothpick and a cauliflower ear to borrow money at rates like that, but now you can do it with a quick phone call or the click of a mouse.
There's a certain inevitability to Wonga's arrival on this side of the Atlantic. Canadian household debts are at record levels in relation to income, and banks are pulling back from mortgage lending; this is exactly the combination of factors that opened the door for Wonga and its competitors in the UK. (One difference, though: Canadian banks are tightening lending at the behest of the Government, which is fearful of a sudden fall in house prices. The arrival of Wonga can be seen as an unintended consequence of that well-intentioned policy initiative). There's nothing illegal about it, but it's depressing to think that some Canadians will now be falling into Wonga's clutches as they struggle to meet the financial strains of the holiday season.
Meanwhile, at the other end of the credit spectrum, my bank credit card bill this morning solemnly warned me that if I make only the minimum allowed payment each month, it will take me 47 years and 6 months to pay off the outstanding balance! That would take me well into my second century. Well, if that's OK with them....
No comments:
Post a Comment