The Massachusetts state government will soon start moving its money out of accounts it has on deposit in Citi, Bank of America, and Wells Fargo because those giant banks have refused to cap their interest rates at 18 percent.
Many more people in Massachusetts have been forced to consider bankruptcy recently, because many banks have suddenly raised their interest rates in to the 30% neighborhood.
Massachusetts state law has capped rates at 18 percent, but out of state banks doing business nationally are not mandated to follow that law.
According to the Boston Globe, “many banks chartered in Massachusetts partner with out-of-state institutions that charge interest rates greater than allowed under Massachusetts law. When a customer applies for a Danversbank credit card online, for example, the site takes them to website offering cash advances with a 23.99 percent interest rate. Eastern Bank offers a link to credit card sites offering rates as high as 30 percent.”
The money to be pulled constitutes the Massachusetts rainy day fund, and is held in trust by the state treasury and Fidelity Investments.
Consumers who have no means to make the monthly payments on a credit card with a 30 percent interest rate may find bankruptcy a viable solution; a Chapter 7 bankruptcy case often can eliminate those type of debts in their entirety.
By Doug Beaton