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That's their decision to make and their risk to manage, not yours.
As much as I want to agree with you, the subprime meltdown's effects on the economy, deficit, and huge unemployment numbers make me think that we do need to regulate lending better than we have been doing.
A cap might be a little severe, but I'm sure that we could find other ways to discourage predatory lending without prohibiting it. Tying bank tax rates to their average interest rates charged would be one way to do it.
The subprime meltdown had nothing at all to do with credit card lending. And the way you discourage predatory lending is with a competitive marketplace that assesses credit risks and assigns interest rates accordingly. If you're a higher risk you pay a higher rate. If you're not, you don't.
The subprime meltdown had nothing at all to do with credit card lending. And the way you discourage predatory lending is with a competitive marketplace that assesses credit risks and assigns interest rates accordingly. If you're a higher risk you pay a higher rate. If you're not, you don't.
Are you kidding me? 125% LTV HELOCS with drive by appraisals are what allowed everybody to get so upside down in the first place. When you combine that with artificially pulling auto demand forward with 0% 72 month loans and letting people roll over old car debt into their new car, it's pretty easy to see what destroyed the car manufacturers.
We'd all be a little better off with stricter underwriting standards...even if they have to be federally enforced.
Are you kidding me? 125% LTV HELOCS with drive by appraisals are what allowed everybody to get so upside down in the first place. When you combine that with artificially pulling auto demand forward with 0% 72 month loans and letting people roll over old car debt into their new car, it's pretty easy to see what destroyed the car manufacturers.
What destroyed the car manufacturers -- or more specifically, two of the world's numerous car manufacturers -- was flat-out bad management. What the hell does any of this have to do with credit card debt?
Quote:
Originally Posted by sterlinggirl
We'd all be a little better off with stricter underwriting standards...even if they have to be federally enforced.
Do you have any evidence that the current criteria for issuing credit cards poses any risk to the stability of the nation's banking system?
No, there should be no cap. People are grownups and should take responsibility for what they're getting into.
However, the amount owed should not be subject to new/higher rates at the whim of the credit cards. Only newly incurred balances should be and the borrower should be forewarned prior to those purchases being made with the onus on the credit card company to prove they have alerted the borrower in a timely manner.
If I remember correctly, companies can no longer apply new rates to existing balances under the new regulations.
That is sufficient enough protection to me.
We're learning now the effects of overdosing on easy credit.
No, there should be no cap. People are grownups and should take responsibility for what they're getting into.
However, the amount owed should not be subject to new/higher rates at the whim of the credit cards. Only newly incurred balances should be and the borrower should be forewarned prior to those purchases being made with the onus on the credit card company to prove they have alerted the borrower in a timely manner.
i agree with no cap in theory but, in actual practice, we have a government which is willing to guarantee that everyone has to underwrite the risk by deeming the major players "too big to fail".
since the government has stepped in and made that guarantee, i think that there needs to be a fixed rate that borrowers pay for credit card usage. in a free market system, the bank would be taking the risk (which would be okay with me) but now we have the government declaring that the taxpayers have to take that risk and that is not okay with me. take away the government guarantee of "too big to fail" and then i would say no cap to interest rates.
i also do think that people need to be more proactive when they borrow since there is plenty of comparative information available on the internet. if they are paying too much they need to opt out and get a better rate somewhere else. unfortunately, the kind of people who get into this credit card trouble are often not the same people who would make the effort to compare rates.
What destroyed the car manufacturers -- or more specifically, two of the world's numerous car manufacturers -- was flat-out bad management. What the hell does any of this have to do with credit card debt?
Let's take GMAC (as a subsidiary of GM) as an example. The bad management of the car manufacturer decided to order the lending arm of the organization to offer 0% deals with 72 month terms while absorbing upside down trade-ins to increase sales. This, of course, was to increase short term sales at the expense of long term viability in order to increase management bonuses.
When the short term profit plan blew up, we bailed GM out with the TARP, spun off a new "bank" known as Ally, and we paid for the TARP with an inflated supply of Dollars which were created out of thin air, thus diluting the purchasing power of your savings and earning potential.
What this has to do with CC rates is a little more of an advanced subject that you won't be able to understand until you've wrapped your head around the fact that poor lending practices in one area of the economy can cause problems in other areas.
First of all, GM divested itself of a majority of GMAC almost 4 years ago so it's inaccurate to say it's a subsidiary of GM. Second, a major part of GMAC's problems stem not from car loans but from its mortgage holdings. That said, one problem GM faced is that Cerberus was the majority stakeholder of GMAC. And when Cerberus acquired Chrysler, suddenly they thought it would be a really cool idea to starve GM of customers (GMAC was still the primary source of loans for GM cars) by raising loan approval requirements so high that almost nobody could get financing.
Now I ask again, 1) what does any of this have to do with credit card lending, and 2) do you have any evidence that the current criteria for issuing credit cards poses any risk to the stability of the nation's banking system?
would you agree that the concept of "too big to fail" endangers the whole economic system? if government guarantees all losses by the taxpayers, aren't banks likely to become greedy since there would be no negative repercussions to their greed?
would you also agree that the FDIC is now making guarantees that it is in no position to be able to honor if push came to shove?
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