Would it be good idea for those who are in credit card debt because of
the pandemic - at no fault of their own, be granted a much lower bank interest rate, say for 2 or 3 years. We know the virus will be with us for a year, and probably longer, this would ease some of the burden that many will be facing for a long period of time.
and it would be a good idea if companies weren't at all allowed to charge the incredibly high rates they do.
Pulling some data from Lending Club's website for example -
A-grade loans originating between Q1 2007 to Q3 2016 paid an average interest rate of 7.14% and the average net annualized return was 4.62% for investors. These stats were 10.6% and 5.79% for B-grade loans, 13.93% and 6.1% for C-grade, 17.42% and 5.91% for D-grade, 20.40% and 5.35% for E-grade, and 24.52% and 3.92% for FG-grade.
The difference between paying 24.52% and 7.14% on a 60 month, $10,000 loan is about $92.04 a month. I don't know how much that $92 per $10,000 borrowed difference will impact loan discharge rates, but I suspects it's not enough to go from 20-ish% to under 7%.
for credit card companies to turn a profit. As it stands, credit card debt is toxic debt. It will bury a person.
That said, if a company expects to charge off 20% of their money lent to a certain demographic, they are not going to lend to that demographic unless they can charge 25-30% interest.
The pertinent question is whether that demographic is better off locked out of the credit card market? I don't think there is a right or wrong answer to that, it's a matter of values.
Any company that does that should advertise it. Its a good selling point.
but,it ain't going to happen. Just paid off our one Son's card for him as a Covid result. His Card holder jacked the interest rate to 28% because he only made a partial payment. Plus put a demand payment of his balance with in ninety days. Got his payoff reduced to one third of the balance if paid via electronic payment within thirty minutes.
Got to love good old Wells. Still the same old POS from years gone by.
Credit Unions. Their rates are good and offer the same services as any bank. Profits are returned to us in better rates for loans, savings, mortgages..
This Covid thing has messed up millions of Households. When your hours get cut,and the same happens to your partner,it is a matter of survival mode. Once that demand notice is cut,your credit score goes sub 600 asap. Wells as well as others post to Experion before sending out their demand orders.
Yes Credit Unions are the only way to go. He has moved his direct deposit to his partners Federal Employees Credit Union.
There are thousands of parents bailing out their Adult Kids at this point.
Somebody must be on dope. You could easier convince a lion to become a vegetarian.
they are better than dope. That said, you are probably correct. I'm just sad for all those who have nowhere to go for help - losing your credit in todays environment will be devastating for them.