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with all these corporations who lend people money and give credit. how are they failing when they make millions probably even billions off of late fees. hidden fees overages and interest/ sneaky interest practices(changing your rates w/o telling you.? from people who pay on time and those who try to pay from behind!
with all these corporations who lend people money and give credit. how are they failing when they make millions probably even billions off of late fees. hidden fees overages and interest/ sneaky interest practices(changing your rates w/o telling you.? from people who pay on time and those who try to pay from behind!
Good question, I have no idea. I know I've been bitten in the ass by those late fees & overage fees.
Like any business, they have structured their input and outgo in such a way that there will be a reasonable return on their investment. And ike any business that deals directly with the consumer, they have discovered that lowball and bait/switch are effective selling tools. So they offer you low introductory intrest rates, and as long as you play by their rules, you do fine. If nobody ever defaulted, they would lose money, but they know that most people are gullible morons, so they have the expectation that their main source, only source, of income is exploding interest rates and late fees. People who carry a balance are subsidizing me, as I am getting a very convenient service and not paying a cent for it. The cost of doing business with people like me is paid for by people who pay late fees and interest.
However, their best calculations failed to adequately take their own greed into account, and failed to consider that if they gouged enough people deeply enough, they would default in sufficient numbers that the income would begin to fall short of the output.
By the way, I read today that 21% of all people making over 100K are living from paycheck to paycheck. What does that tell you about the reliability of the American people to keep their financial house in order? (45% of all Americans at all income levels live from payday to payday.) It really IS amazing that people are so incredibly stupid, and the credit industry still cannot make money off them.
Location: The Chatterdome in La La Land, CaliFUNia
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Quote:
Originally Posted by city414
with all these corporations who lend people money and give credit. how are they failing when they make millions probably even billions off of late fees. hidden fees overages and interest/ sneaky interest practices(changing your rates w/o telling you.? from people who pay on time and those who try to pay from behind!
They fail when people default on their loans, mortgages and credit card payments. I'm not feeling too sorry for those financial companies as they brought this on themselves through greed.
Say they charge a $35 late fee. If one person defaults on one $5000 debt, they have to collect 143 late fees just to recover that debt. That doesn't recover the $5k they should/would have made on the fees, either - that's just to break even.
Then they still have to pay for their employees, rent, utilities, supplies, insurance, communications, postage, benefits, etc.
I'm not making excuses for these companies - they voluntarily took on the risk, and they should be held responsible for it. I'm just saying that there's more to running a business than some people seem to think.
By the way, nobody's changing interest rates without informing their customers. If it happens, it's a gross violation of the credit laws, and the fines are steep. People need to learn that they're supposed to read the inserts that come with the statement, and read the contract they're agreeing to when they apply for that credit. It's all covered in those documents.
People need to learn that they're supposed to read the inserts that come with the statement, and read the contract they're agreeing to when they apply for that credit. It's all covered in those documents.
Yeah, but I think it's good to have some rules that are easy to understand, or at least a summary of the rules at the top of the contract. We do have a basic summary (thanks to Chuck Schumer), but if the banks had their way, they would disclose as little as possible.
Yeah, but I think it's good to have some rules that are easy to understand, or at least a summary of the rules at the top of the contract. We do have a basic summary (thanks to Chuck Schumer), but if the banks had their way, they would disclose as little as possible.
If you pay your bills in-full and on-time, you don't have to worry about all of that legal stuff.
Yeah, but I think it's good to have some rules that are easy to understand, or at least a summary of the rules at the top of the contract. We do have a basic summary (thanks to Chuck Schumer), but if the banks had their way, they would disclose as little as possible.
Wait, so you want them to blithely lend you the money, but you can't be bothered to read the agreement b/c it's just too hard or tedious for you?
Wait, so you want them to blithely lend you the money, but you can't be bothered to read the agreement b/c it's just too hard or tedious for you?
It's not too hard or too tedious for me at all. You jumped too quickly to your conclusion.
I do think there should be, as I said, a brief summary of the rules at the top of a credit card contract. It's nothing new - the banks have been required to provide that summary for at least the last decade, and I think it's a good thing. I doubt that it's much of a burden for a bank to provide that.
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