Saturday, January 1, 2011
How a Credit Card Interest Rate Cap Can Make Things Even Worse
2:09 PM | 
Posted by
RamaP |
Recently, a bill prepared by Mr. Maurice Henry, was approved in the United States Congress. He wants to cap interest rates charged by credit card companies, in what he calls "legalized usury." Henry wants to limit interest rates in April did not exceed 15 percent, almost half of the maximum rate at which banks lend at present.
Henry said he wants to impose a limit, because many Americans are now caught in a quagmire of debt such as credit card balances out of control. By putting a limit, say, the average American will be better able to pay back loans.
However ...
financial liability of the company establishes the fees.
Credit card companies are not arbitrarily set interest rates.
It is true that most Americans today rely heavily on credit cards to buy their daily needs. However, we must never forget that these financial instruments are plastic forms of debt. That is, each time you use a card, spend the money we still have to win. To earn money for work is a right, but not to borrow money. Joe must learn to spend within their means and not resort to conspicuous consumption.
The bottom cover means fewer people have access to credit cards.
Ok, so I guess it was ratified by law, and the large multinational banks like Citibank and Bank of America to smaller credit unions to start cutting rates too.
Existing card holders will probably have their cards invalidated, simply because banks can not wait to lend money to someone who can not win anything. Banks are businesses and not charitable foundations.
From the technical point of view, suppose the lowest FICO score to the approval of the card layer is lower today than, say, 450. Due to the PAC, the minimum score inevitably going to rise on both sides of the balance credit risk and profitability.
Henry said he wants to impose a limit, because many Americans are now caught in a quagmire of debt such as credit card balances out of control. By putting a limit, say, the average American will be better able to pay back loans.
However ...
financial liability of the company establishes the fees.
Credit card companies are not arbitrarily set interest rates.
It is true that most Americans today rely heavily on credit cards to buy their daily needs. However, we must never forget that these financial instruments are plastic forms of debt. That is, each time you use a card, spend the money we still have to win. To earn money for work is a right, but not to borrow money. Joe must learn to spend within their means and not resort to conspicuous consumption.
The bottom cover means fewer people have access to credit cards.
Ok, so I guess it was ratified by law, and the large multinational banks like Citibank and Bank of America to smaller credit unions to start cutting rates too.
Existing card holders will probably have their cards invalidated, simply because banks can not wait to lend money to someone who can not win anything. Banks are businesses and not charitable foundations.
From the technical point of view, suppose the lowest FICO score to the approval of the card layer is lower today than, say, 450. Due to the PAC, the minimum score inevitably going to rise on both sides of the balance credit risk and profitability.
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