Is there anyone but the banks who opposes cutting and capping credit card interest?

[Alan Mendelson]

I'm getting very frustrated that banks can still get away with charging 15% or 20% or even 30% on credit cards while the rest of the economy is seeing interest rates around 1-percent or even less.

I know, the banks are charging such high rates because of the risk that unsecured credit card loans present. Well, that's too bad.

There used to be usury laws that prevented such high rates, and with overall rates in the economy now so low -- with mortgages at 4% and car loans at 1% and CD rates at 1% -- credit card rates above ten or 15% are just too high.

Now, why won't the state and federal legislators deal with this? Are they getting too much campaign money from the banks? Are the banks crying that they will have to raise other rates if credit card rates are lowered? Let's find out.

Consumers with high debt loads will never be able to claw their way out of debt paying 30% interest. And high rates will prevent borrowing and new purchases.

And yes, there are small business people who do need credit card loans to start and maintain their businesses.

It's time to cut rates, and cap them at low levels. And this is the time, when the economy really needs a boost in spending and debt reduction.

[Alan Mendelson]

Am I all alone on this? Am I the only one outraged at high credit card rates that are keeping families prisoners of plastic? If someone is with me, let's come up with a plan.

---Do we have a plastic free day each week when no one uses a credit card?
---Do we cut up a credit card and send part of it (without our name or account number) back to the credit card company in an envelope without a return address to let them know we won't be using it anymore? (No ID because we don't want them to raise the interest rate as retaliation.)
---Do cut up our credit cards into pieces and send them to the governor of our state to protest the lack of usury laws?
---Do we cut up our credit cards into four pieces, one for each U.S. Senator, one for our Representative in the House and one for the White House?

[JamieV]

Unsecured credit cards are such a scam in America. I think it's 1 out 4 young adults (18-25) accrue debt they can't afford because of unsecured credit cards. What's worse, is that the credit card companies can even raise your apr and charge outrageous fees if you miss a late payment.

With how well our own country deals with debt, you'd think unsecured credit cards would be completely archaic.

[bigfoot66]

The problem with your proposal Alan is that interest rates are a price, They are the price of money today. If you mandate a lower interest rate you will not get the result you want for most people. Indeed, what will happen is the least qualified will lose access to credit entirely. There are some people out there who are so risky that it is not profitable to offer them a credit card at, say, 10% interest. If you limit the interest rate to 10% there are a lot of people who will not see their rates cut, rather they will see their credit cards canceled. You very rarely help people by outlawing their best option.

Compare this to a payday loan place that charges, say $25 to borrow $100 for a week. This is an insane interest rate, but it might be a good deal for some people. Consider that you are $80 short of the rent and have already floated a check. If the check NSF's you will pay 2 $25 NSF fees PLUS the rent is now late an you will have a $50 late fee. That very expensive loan just saved you $75. If we outlawed the payday loan places based on the [possibly accurate] assertion that the payday loan place is charging an outrageous interest rate, have we helped the person in my example or made his life that much worse?

[Alan Mendelson]

The problem with your proposal Alan is that interest rates are a price, They are the price of money today.

The price of money today? Isn't the price of money today less than 1% ??

[bigfoot66]

Yes, but only for borrowers who are close to 100% likely to repay the money (the state). Not for market you are discussing in your post.

[Alan Mendelson]

Yes, but only for borrowers who are close to 100% likely to repay the money (the state). Not for market you are discussing in your post.

So, it's okay for the near-bankrupt US Govt, not to mention the various near-bankrupt city and state governments to borrow money at around 1% but consumers who pay their bills but happen to have credit card balances can be charged 29% ??

29% is not a "default rate" on credit cards today. It is simply an interest rate that many consumers face who otherwise pay their bills, never missed a payment, but carry a balance.