Why should our Citizens pay 26%-40% Interest on Consumer Debt So Banks Can Pay Gambling Losses?

[Blackhatjack]

I am just astounded that Credit Card Issuers are getting away with these usurious practices, at a time when the American consumer is being steamrolled by plummeting real estate values, threats of foreclosure, lost jobs, etc.

Once the American consumer can no longer make purchases, there won't be any need to make new loans to businesses so they can produce additional goods that the American consumer can no longer buy.

For the good of the country, and its ultimate survival, there has to be some common sense limits on these corrupt practices.

And people are watching and listening... when the individual cannot pay the raised interest rate payments they are called deadbeats and their credit is ruined, but when Banks' gambling debts have to be paid they go to Congress with their hands out and they get their pockets stuffed full with our taxpayers' money.

This is worse than wrong....

[RB TexLa]

1. They don't have to extend consumer debt at any interest rate.

[DJ13]

3. Actually the Federal Reserve is authorized to bypass banks

& loan directly to consumers should the banks take it that far.

[Cynical Guy]

2. I am not as worried about interest rates, as I am with the initial lending.

If the interest rates are spelled out in advance, people can choose not to borrow from that location.

What I do worry about is the fact that for decades, no bank would lend to anybody that was a risk of repayment. Credit cards were difficult to get as well. Those policies have changed over the last 10 years. When the banks have a guaranteed resale of the loan, why do the due diligence to avoid making a bad loan when you can get it off your books immediately?

10 years ago, if I walked into a bank with my income at the time, they'd laugh me out of the building if I tried to borrow more than $3.50. That changed. No appraisal standards, no lending standards, changing accounting standards allowed me to go in and get a loan for a ridiculous amount to buy a house that was only expensive because everybody else said it was expensive. Demand fueled by no lending standards bid prices up, people got nervous that they'd never be able to afford a house if prices kept moving up, and the banks were happy to lend the inflated amount.

Local governments were all fine with this because of the increase in property taxes levied on the new higher priced properties.

And the cycle continued. When nobody will buy an asset, its price becomes zero. When it becomes zero, the banks have to write the loss onto their books. And overnight, everybody stopped buying homes...

And here we are.

I totally agree that usury is wrong and needs to be stopped, but when it's documented in advance, you can't exactly say it's a surprise when your rates are high.

[regnaD kciN]

5. But, of course...

...most non-mortgage debt's rates aren't "documented in advance," as banks have the right to raise their interest rate whenever they feel like it.

I can assure you that people who are now paying 30% on their Visa bills (now that Citibank or Chase has determined they can't afford to pay off their debt and walk away) would have thought twice (or three times) when they were offered that pre-approved card at "6.99%" if the offer had read "6.99% or whatever we feel like changing it to whenever we feel like changing it."

[bkkyosemite]

4. I think everyone should stop paying their bills until the interest rates are brought to a reasonable

level. Hell they are blackmailing us.

[regnaD kciN]

7. If you just "stop paying your bills"...

...they'll come after you for a court-ordered "default judgment," which is a lot worse than bankruptcy -- basically, it allows your creditors to take everything you own and garnish a portion of your wages indefinitely, until the debt is paid in full.

OTOH, I've long been advocating that everyone stuck in debt should file for bankruptcy (chapter 7 for most, chapter 13 for those who want to protect their home if they have high equity in it) the same month. Banks count on being able to gradually write off bad debt, one bankruptcy at a time. If all of them hit within a few weeks of each other, Chase, Citibank, and B of A will become instantly insolvent and need to go running to the government for a plan to help the situation. Then, and only then, will we get a fair plan to bring relief for consumer debt.

[bkkyosemite]

22. If EVERYONE did it there wouldn't be enough courts nor lawyers nor collectors...when we all scream..

we get ice cream...well not really but if all did it then they would have to change their ways or be out of business.

[scarletwoman]

6. I don't know, it seems to me there's an easy way around it -- don't use credit cards.

I've never had one, and have managed quite well. (I'll be 60 years old in a few months)

sw

[regnaD kciN]

8. As usual, the standard dumb comment...

Don't get me wrong -- going without consumer credit (or with as little as possible to demonstrate your creditworthiness for mortgage purposes) is a great idea, and one I'd advocate to anyone just starting out. But the fact is that virtually everyone in this bind already owns credit cards, and owes enough on them (not necessarily for luxuries, by the way -- think uncovered medical bills, or living expenses during an extended period of unemployment) to not be able to simply pay them off and walk away. Telling them about your "easy way" is about as useful as telling an elderly couple about to lose their home due to medical bills that they simply should have lived a healthier lifestyle when they were young, and they wouldn't have those medical bills (or, for that matter, the standard religious-right gambit of telling a pregnant teenager that if she'd merely kept her legs crossed until her wedding night, she'd never have had that problem) -- it's of no use to help the situation, but merely reeks of smug judgmentalism.

:grr:

[scarletwoman]

10. Oh well, excuse me. The wording of the OP and one of the early replies gave me the impression that

part of what was under discussion was related to people still choosing to use credit cards in the future, which I found to be a horrifying thought and to which I reacted in much the same way one might scream "stop" to someone about to step in front of a moving bus.

I only hoped to save those who might yet be saved.

[Mari333]

14. smiling

:)

[scarletwoman]

15. ...

:hug:

[terisan]

9. I think Joseph Biden should be removed from office due to his consistent voting for the

interest of the big banks while a senator.

Harry Reid and Nancy Pelosi should be instructed to prepare legislation capping interest rates at 12%, and the Obama shpuld be advised to sign it into law or present us with his resignation,

See how easy it is to get justice for the people when we have a Democratic Party government.

[Taitertots]

11. Sounds like a recipe for disaster

Capping interest rates near or below inflation sound like a good way to end lending.

[Donnachaidh]

16. the lending has ALREADY stopped

Banks are cutting people's accounts down to nothing. Refusing to lend further -- so WTF is the point of using a fearmongering talking point that has ALREADY happened?

F*CK the banks -- cap it at 9%. They do NOTHING for the working class or the lower middle class in this country, except con them into taking on more debt.

F*CK EM.

[Taitertots]

19. Unless you plan to buy a house cash the banks do quite a bit

They do plenty if you don't want to keep your money stuffed under your bed. I like to receive near inflation returns on my accounts.

[terisan]

17. Usury Laws have a long history. If you want to tie interest rates to inflation, I don;t mind.

Let 30% interest rates kick in when we have 30% inflation.

How do you feel about minimum wage laws?

[Taitertots]

21. Instead of that...

Why don't we make laws that stop creditors from changing interest rates after debt has been taken on.

[Hawkeye-X]

12. 12% is too high.

I will accept no more than 4.99%.

Period.

And a complete amnesty and wiping all credit reports and resetting everyone at 800. Give us a clean slate.

For crissake.

Hawkeye-X

[closeupready]

13. They're like parasites, feeding off the host without killing them. And worse, Congress

enables them. :mad:

[stillcool]

18. There are a couple of bills...

in Congress now...not that it matters...

Congress considers limits on credit card companies

By LAURIE KELLMAN
The Associated Press
Tuesday, March 31, 2009; 5:50 PM

WASHINGTON -- Democrats in Congress are taking a swipe at credit card issuers and their increasingly creative reasons for raising fees on strapped consumers, sparking a well-financed duel over how to crack down on alleged abuses.
----------------------
Dodd's proposal, approved by the panel 12-11 on Tuesday, would bar so-called double-cycle billing, when a card issuer computes interest charges on outstanding balances from more than one billing cycle. It also would ban "universal default," the practice of raising a cardholder's interest rates when that consumer has problems paying other creditors. And it would prevent card issuers from changing the terms of a contract as long as the card holder pays on time.
On the Net:

The Senate bill is S. 414. The House version is H.R. 627. They can be accessed at
http://thomas.loc.gov/



http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033102876_2.html

[rucky]

20. Scorched earth.

they want to be the first in line to collect.