Final Word from Thursday, June 14, 2018

Couched between a prime-time government-paid commercial for New Green Savings energy-conservation subsidies and a spot for Bayer's Canespor antifungal cream is an enticing offer from Provident to get one loan payment back if you make the first three payments on time. "Licensed by the Czech National Bank," says Provident proudly as it displays the terms and conditions of the loan in such small print that almost no one can read it. What the fine print says is that to get a Kč 20,000 cash loan, you must pay fees of 48.9% of the loan amount, which comes to Kč 9,788. This increases the interest rate from 29.00% per annum to an effective annual percentage rate (RPSN, in Czech) of 173.15%, including that free payment. Wait a minute. Isn't this what the tightening of consumer lending by the central bank was supposed to prevent? No, in fact it is what the tightening of consumer lending by the central bank was designed to achieve. Instead of a multitude of lenders that could be kept in check by the police and the courts, we now have a handful of them that can charge 200% with the CNB's seal of approval. [Czech Republic nonbank advertisement]