Why capping APRs at 16% will hurt us

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Mogul of Pineapples
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Why capping APRs at 16% will hurt us

Postby Mogul of Pineapples » Sun Dec 27, 2009 7:32 pm

Recently, some members of congress have explored the possibility of capping credit card interest rates at 16% and late fees at $15. This is a horrible idea.

There are some customers - but not all - that are complete credit delinquents and are chronically late with paying their bills. If $39 isn't an incentive enough to pay on time, then $15 will only make matters worse. Why shouldn't serial offenders have to pay for their late payments, when there are people like me who are diligent and responsible with our bills?

The same goes for interest rates. There are many with high APRs that certainly don't deserve them. But at the same time there are many that are extremely risky borrowers - why shouldn't they pay a premium?

Not to mention the above are what pays for those 0% balance transfer offers and low interest rates on other cards. If credit card companies aren't can't make much money with their riskiest borrowers, you can bet they will make the money elsewhere.
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jeffysdad
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Agreed.

Postby jeffysdad » Mon Dec 28, 2009 2:24 pm

completely.
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DoingHomework
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Postby DoingHomework » Tue Dec 29, 2009 1:41 pm

Those people should not have credit!

I don't think capping rates at 16% is unreasonable.

But more fundamentally, I do not think adjusting the rate on money already owed should ever be allowed again.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Sat Jan 02, 2010 5:32 pm

But don't you think for the most risky customers, they should be able to charge a bit more than 16%? I mean I know some of those types personally and trust me they are risky to lend money to. Charging them 22% seems reasonable to me as long as they agree to it in advance.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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DoingHomework
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Postby DoingHomework » Sun Jan 03, 2010 2:53 pm

I just wouldn't lend them money if they are so risky that 16% is not enough

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fffresh
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Postby fffresh » Sat Jan 09, 2010 8:41 pm

A solid argument could be made for both sides.

Unsecured lending is high risk business. What is of greater concern in my opinion is usury for loans collateralized by a house or car.

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Postby alsteig » Tue Jun 01, 2010 3:18 pm

I think that there should be no cap what so ever on interest rates, over limit fees or overdrafts. Make it 150 dollars, really make it hurt. I am tired of the crybabies that chronically seem to overdraft or NSF. As far as APR goes I am for giving people choices. Would you like a loan for 40% interest or would you like no loan it is your choice. Nobody is making these people spend or take out loans. If you pose a greater risk you should pay a higher premium. Maybe make people take tests to show they understand wtf they are doing. Then they would complain that they cant get a good loan because they cant pass the test. How should we regulate stupidity.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Thu Jun 03, 2010 7:38 pm

Alsteig makes some excellent points. Long story short, those that are responsible with their credit shouldn't have to subsidize those that are reckless with it.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred



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