15% Cap on Credit Card Interest Rates

[AlaskanAssassin]

So Bernie and AOC have introduced legislation to cap credit card interest rates at 15%.

https://www.usatoday.com/story/mone...-want-cap-credit-card-interest-15/1150746001/

Wanted to see what people's thoughts on this are. I'm personally not a fan of this idea, but I can see the perspective from some that think this is a good thing. I'm not sure exactly what the impact would be (Will lenders continue to issue credit to those deemed high-risk for default? Will people that experience lower rates borrow more? Will this encourage more use of other types of credit, such as pay-day loans?).

I'm rarely in favor of the government getting involved in "issues" such as this. I would much prefer the government spend time and effort educating people on personal finance, debt management, etc. Seems to me like that would provide more benefit to citizens.

Also, are we going to apply the same logic to other types of credit? Mortgages, car loans, etc? People that are more likely to default are always issued higher interest rates. It's not a tactic by the wealthy to impoverish the poor. It's just economics.

Finally, what is to stop the U.S. government from just taking over all lending in the country? They have already taken over student loans, and look what happened there! Terribly high default rates, over lending to those that can't repay, and skyrocketing tuition due to the enormous supply of funds available to pay tuition.

If there is an upside to this, I would love to hear the argument.

 

[Zombie]

So Bernie and AOC have introduced legislation to cap credit card interest rates at 15%.

https://www.usatoday.com/story/mone...-want-cap-credit-card-interest-15/1150746001/

Wanted to see what people's thoughts on this are. I'm personally not a fan of this idea, but I can see the perspective from some that think this is a good thing. I'm not sure exactly what the impact would be (Will lenders continue to issue credit to those deemed high-risk for default? Will people that experience lower rates borrow more? Will this encourage more use of other types of credit, such as pay-day loans?).

I'm rarely in favor of the government getting involved in "issues" such as this. I would much prefer the government spend time and effort educating people on personal finance, debt management, etc. Seems to me like that would provide more benefit to citizens.

Also, are we going to apply the same logic to other types of credit? Mortgages, car loans, etc? People that are more likely to default are always issued higher interest rates. It's not a tactic by the wealthy to impoverish the poor. It's just economics.

Finally, what is to stop the U.S. government from just taking over all lending in the country? They have already taken over student loans, and look what happened there! Terribly high default rates, over lending to those that can't repay, and skyrocketing tuition due to the enormous supply of funds available to pay tuition.

If there is an upside to this, I would love to hear the argument.

I am not knowledgeable enough about this to have a solid opinion one way or the other. It seems apparent that this would lead to fewer people being able to get lines of credit, so I think that's a valid argument against. As for the pay day loans, this bill would place similar limits on their ability to charge exorbitant interest rates as well.

I understand why they feel the need to try to tackle the debt problem many Americans face, but to my mind this is treating the symptom rather than the cause, which is that wages are not high enough in this country to support the lifestyles we have become accustomed to. Not to mention skyrocketing medical debt.

My understanding is that we had similar usury laws in this country until about 40 years ago or so and it was fine, but again wages were higher then compared to the cost of living, so I'm not sure what conclusions can be drawn from that.

 

[One Brow]

It's not a tactic by the wealthy to impoverish the poor. It's just economics.

It's both, actually.

 

[idestroyedthetoilet]

So Bernie and AOC have introduced legislation to cap credit card interest rates at 15%.

https://www.usatoday.com/story/mone...-want-cap-credit-card-interest-15/1150746001/

Wanted to see what people's thoughts on this are. I'm personally not a fan of this idea, but I can see the perspective from some that think this is a good thing. I'm not sure exactly what the impact would be (Will lenders continue to issue credit to those deemed high-risk for default? Will people that experience lower rates borrow more? Will this encourage more use of other types of credit, such as pay-day loans?).

I'm rarely in favor of the government getting involved in "issues" such as this. I would much prefer the government spend time and effort educating people on personal finance, debt management, etc. Seems to me like that would provide more benefit to citizens.

Also, are we going to apply the same logic to other types of credit? Mortgages, car loans, etc? People that are more likely to default are always issued higher interest rates. It's not a tactic by the wealthy to impoverish the poor. It's just economics.

Finally, what is to stop the U.S. government from just taking over all lending in the country? They have already taken over student loans, and look what happened there! Terribly high default rates, over lending to those that can't repay, and skyrocketing tuition due to the enormous supply of funds available to pay tuition.

If there is an upside to this, I would love to hear the argument.

I'd love to read your argument that usury should be legal and is not the business of the government. It will make for good example of when the capitalist mentality goes too far into libertarianism.

 

[The Thriller]

If 2008 proved anything it’s that credit should be as easy as possible to get, no matter how stupid it might be...

Honestly? I think the “advancement” of easy credit as led to more cons than pros.

I’d support helping consumers by limiting these interest rates. But I also feel like there are far too many people with credit cards.

I don’t favor going back to the 1930s, when opening up a line of credit first evolved and opened the door for our consumer economy. But from what I’ve read, we need stronger regulation and limits to protect both consumers and lenders.

 

[The Thriller]

What effect (if any) might limiting interest rates on cards and limiting (constraining) who can get credit have on both spending in the economy and wage growth?

On one hand it might discourage spending since people no longer can just pay for their 5 year old child’s monthly new iPhone on credit. However, It might encourage wage growth because because salaries would need to compensate for loss of easy credit.

I tried looking to see if there’s an historic record for retracting credit and increasing salary as usually credit refractions happen under tough economic times. I couldn’t find much date on this. However, I wonder if there’s an argument to be made that easy credit has led to salary stagnation? And by cutting down on easy credit, that it might force employers to actually compensate workers with better pay?

 

[Hotdog]

I am not knowledgeable enough about this to have a solid opinion one way or the other. It seems apparent that this would lead to fewer people being able to get lines of credit, so I think that's a valid argument against. As for the pay day loans, this bill would place similar limits on their ability to charge exorbitant interest rates as well.

I understand why they feel the need to try to tackle the debt problem many Americans face, but to my mind this is treating the symptom rather than the cause, which is that wages are not high enough in this country to support the lifestyles we have become accustomed to. Not to mention skyrocketing medical debt.

My understanding is that we had similar usury laws in this country until about 40 years ago or so and it was fine, but again wages were higher then compared to the cost of living, so I'm not sure what conclusions can be drawn from that.

What good does it do to demand higher wages when business owners will just be forced to raises prices? Meaning, your wages still wont buy you what you think you deserve.

The problem with the liberal Utopian idea that people have the "right" earn a livable wage is just a fallacy. You have that "right" as much as I have the "right" to have magic powers.

"Free" healthcare. Nah, its not free. Someone has to work their *** off to know how to heal you. On top of that, you want a house, a "free" education. Tv's, couches, 40 years of other people taking care of you when you retire. All for what? You putting in minimal effort and producing 1/50th of what you think you deserve.

Tell me. How does flipping burgers equal out to someone building a house, a car, furniture, and many other things for you? There is a reason why you desperately want to make that trade. Its because you know its a great trade for you. But its not a great trade for the other guys.

 

[Keefe]

As someone who was in cc debt for a quite a long time with interest rates in the high 20’s for much of that time, I think this is a dumb idea.

Not surprised though. Bernie lives in fantasy land.

 

[idestroyedthetoilet]

What good does it do to demand higher wages when business owners will just be forced to raises prices? Meaning, your wages still wont buy you what you think you deserve.

The problem with the liberal Utopian idea that people have the "right" earn a livable wage is just a fallacy. You have that "right" as much as I have the "right" to have magic powers.

"Free" healthcare. Nah, its not free. Someone has to work their *** off to know how to heal you. On top of that, you want a house, a "free" education. Tv's, couches, 40 years of other people taking care of you when you retire. All for what? You putting in minimal effort and producing 1/50th of what you think you deserve.

Tell me. How does flipping burgers equal out to someone building a house, a car, furniture, and many other things for you? There is a reason why you desperately want to make that trade. Its because you know its a great trade for you. But its not a great trade for the other guys.

Can you use your magic powers to make your capitalist utopia work perfectly? We'd all love that, snap your fingers please.

 

[Hotdog]

Can you use your magic powers to make your capitalist utopia work perfectly? We'd all love that, snap your fingers please.

Done. Now look outside

 

[LogGrad98]

Done. Now look outside

I saw my neighbor who has 3 generations living in the same 1400 square foot house because it is going for 400k on this housing market. So far so good, amirite?

 

[Hotdog]

I saw my neighbor who has 3 generations living in the same 1400 square foot house because it is going for 400k on this housing market. So far so good, amirite?

1st world problems

 

[candrew]

Credit card interest rates caps were based on state law up until the late 70's. I'd much rather go back to that than have a federally mandated cap.

Obama's 2009 Credit Card Act was the common sense legislation we needed that did away with the hidden fees and fine print ******** credit card companies used to pull to generate revenue.

 

[LogGrad98]

1st world problems

Yes lack of affordable housing is a 1st world problem. Mmhmm.

 

[Hotdog]

Yes lack of affordable housing is a 1st world problem. Mmhmm.

Whats wrong with buying a mobile home trailer and living in that?

 

[framer]

Yes lack of affordable housing is a 1st world problem. Mmhmm.

*Lack of affordable housing in the exact place I desire to live. There is plenty of affordable housing in places that might not be as convenient or popular. There is always West Valley City, Ogden, or Santaquin.

 

[LogGrad98]

*Lack of affordable housing in the exact place I desire to live. There is plenty of affordable housing in places that might not be as convenient or popular. There is always West Valley City, Ogden, or Santaquin.

Come to the LA area and the inland empire. Rent is out of control. Housing prices are bubbling but this time there are no signs of a burst in the wings. Not good here right now. Someone recently moved into our Ward, they rented a 2 bedroom 900 sq ft apartment and moved in with 2 generations (3 families essentially) because the rent was 2100. As I said, my neighbor lives with 3 generations of family because the rent on their house is 2800. It's crazy.

 

[Hotdog]

Come to the LA area and the inland empire. Rent is out of control. Housing prices are bubbling but this time there are no signs of a burst in the wings. Not good here right now. Someone recently moved into our Ward, they rented a 2 bedroom 900 sq ft apartment and moved in with 2 generations (3 families essentially) because the rent was 2100. As I said, my neighbor lives with 3 generations of family because the rent on their house is 2800. It's crazy.

How about. Dont live in LA if you cant afford it. There are other places to live with far cheaper housing, more job opportunities, and basically a cheaper economy.

I really dont understand this argument that people feel its their right to live in a 4500 square foot home in LA on the beach working some low skilled labor job, 30 hours a week, and have free health care, free education, a nice car, etc..

The **** is a pipe dream. That utopian scenario is not coming in our lifetimes. The only way that ever happens is when the robots are doing practically everything. Even then, you still wont have the right to live wherever you want. You will have to pay for it.

Get the hell out of LA. Its overcrowded and its a liberal nightmare with ridiculous property taxes. I dont feel sorry for morons complaining about LA's economy.

You have choices.

 

[framer]

Come to the LA area and the inland empire. Rent is out of control. Housing prices are bubbling but this time there are no signs of a burst in the wings. Not good here right now. Someone recently moved into our Ward, they rented a 2 bedroom 900 sq ft apartment and moved in with 2 generations (3 families essentially) because the rent was 2100. As I said, my neighbor lives with 3 generations of family because the rent on their house is 2800. It's crazy.

Ahh, you are speaking of California. You cannot ascribe the economic behavior of the real estate market there with naked capitalism as there are many, many facets of government intervention that have led to where you are at.

Isn't property tax locked in to whatever value the property had the last time it was sold? That being the case, THAT would be the reason why the house is staying in the same family, even though it is small. Upgrading to a new house would cost a fortune just on the extra taxes.

 

[One Brow]

You cannot ascribe the economic behavior of the real estate market there with naked capitalism as there are many, many facets of government intervention that have led to where you are at.

That's true for pretty much every speck of land in the US.