4 said:

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Never understood why credit card companies seemed to be immune to usury laws...

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My effective tax rate is 24% and my highest marginal is 35%. Never understood why the government is immune to usury laws

Kenneth_2003 said:

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Rossticus said:

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Kenneth_2003 said:

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Rossticus said:

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This could potentially result in additional business from people with good credit and assets who need a quick $10,000 - $20,000 of credit for something. Why take out a private loan or less flexible HELOC at 7%+, plus fees, when you can put it on a card for a guaranteed 10% over 5 years?

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Are you implying that the fees are >3%?

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Average of 2-5% of the amount borrowed. Plus there's a minimum draw when you take out funds against it. It's bit less convenient than just putting it on a card. Some people would choose that convenience if they planned to pay off the amount quickly.

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Never had reason to explore that route.
Thanks for the info!

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No problem. I keep a running HELOC just for convenience sake. They're variable rate, which isn't great, but still capped below most credit cards. Was awesome back when interest on it was only 3%. Less so now at 7% but still convenient if you need a moderate chunk of change on short notice that's not quite large enough to justify a dedicated loan but too large to pay back within one billing cycle..

No problem with individuals making voluntary choices.

However...
the govt is supposed to ensure a free market.

I can't just go start my own credit card company or bank or mortgage company. I can't even lend money and be paid for it.

Credit card companies get these high rates because they have a market where they are protected from real competition.

InfantryAg said:

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No problem with individuals making voluntary choices.

However,
the govt is supposed to ensure a free market.

I can't just go start mt own credit card company or bank or mortgage company. I can't even lend money and be paid for it.

Credit card companies get these high rates because the have a market where the are protected from real competition.

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Not true. You can purchase a bank charter, and get regulatory approval. Do I think the industry should be less regulated? Of course. But telling private businesses how to operate is a bridge too far to a capitalist like myself.

Also, your premise is wrong on its face. Most regionals and community banks don't offer consumer credit cards like the money center banks - primarily because there is no market for credit cards at a lower rate. Why? Because they're risky and cumbersome to manage. If a community bank wanted to offer 12% CC, they would EAT market share, so why aren't they doing it?

Aggies1322 said:

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InfantryAg said:

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No problem with individuals making voluntary choices.

However,
the govt is supposed to ensure a free market.

I can't just go start mt own credit card company or bank or mortgage company. I can't even lend money and be paid for it.

Credit card companies get these high rates because the have a market where the are protected from real competition.

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Not true. You can purchase a bank charter, and get regulatory approval. Do I think the industry should be less regulated? Of course. But telling private businesses how to operate is a bridge too far to a capitalist like myself.

Also, your premise is wrong on its face. Most regionals and community banks don't offer consumer credit cards like the money center banks - primarily because there is no market for credit cards at a lower rate. Why? Because they're risky and cumbersome to manage. If a community bank wanted to offer 12% CC, they would EAT market share, so why aren't they doing it?

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That's my point. I can't just open shop and start making these loans without being regulated by the govt.

These private businesses are already being told how to operate.

The chinese are also capitalists. Enron was a capitalist company. There's a pretty big gap between leftist capitalism and free market capitalism. I would like to see us move more towards free market capitalism and that should be the govts goal.

I'll gladly take my TSP and be the lender for someone's house. 7+% interest on an amortized loan sounds like a good return. Let me just advertise that on facebook marketplace.

Good point on the CCs. CC's may not be great for local / regional banks, but how much of that is because of over regulation vs scales of economy the big CC companies have? The regulation has to make some difference that affects smaller companies, maybe not enough to make a difference. But my 800+ credit score isn't getting me a smoking good interest rate even though there's minuscule, if any, risk with me.

The govt has also created much of this market by "educating" people without a focus on real life skills, such as personal finance or a real job skill.

edit to add: not saying I agree with the cap, or with what you're saying, more saying the regulations in general and barriers to entry need adjustment.

fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

InfantryAg said:

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Aggies1322 said:

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InfantryAg said:

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No problem with individuals making voluntary choices.

However,
the govt is supposed to ensure a free market.

I can't just go start mt own credit card company or bank or mortgage company. I can't even lend money and be paid for it.

Credit card companies get these high rates because the have a market where the are protected from real competition.

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Not true. You can purchase a bank charter, and get regulatory approval. Do I think the industry should be less regulated? Of course. But telling private businesses how to operate is a bridge too far to a capitalist like myself.

Also, your premise is wrong on its face. Most regionals and community banks don't offer consumer credit cards like the money center banks - primarily because there is no market for credit cards at a lower rate. Why? Because they're risky and cumbersome to manage. If a community bank wanted to offer 12% CC, they would EAT market share, so why aren't they doing it?

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That's my point. I can't just open shop and start making these loans without being regulated by the govt.

These private businesses are already being told how to operate.

The chinese are also capitalists. Enron was a capitalist company. There's a pretty big gap between leftist capitalism and free market capitalism. I would like to see us move more towards free market capitalism and that should be the govts goal.

I'll gladly take my TSP and be the lender for someone's house. 7+% interest on an amortized loan sounds like a good return. Let me just advertise that on facebook marketplace.

Good point on the CCs. CC's may not be great for local / regional banks, but how much of that is because of over regulation vs scales of economy the big CC companies have? The regulation has to make some difference that affects smaller companies, maybe not enough to make a difference. But my 800+ credit score isn't getting me a smoking good interest rate even though there's minuscule, if any, risk with me.

The govt has also created much of this market by "educating" people without a focus on real life skills, such as personal finance or a real job skill.

edit to add: not saying I agree with the cap, or with what you're saying, more saying the regulations in general and barriers to entry need adjustment.

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I agree it's over regulated.. also, what is keeping you from taking your cash and lending it to someone? That shouldn't be an issue at all. It only becomes an issue when you are using someone else's money.

Captain Pablo said:

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Price caps create shortages

Always

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With the default rates of some Americans, should we be rooting for a "shortage" of easy credit to people?

Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

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Yes. And the banks don't have a net profit margin like that.

I'd bet real money this like terms limits is talked about but they can't manage to get the bill agreed to and passed

Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

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Yes. And the banks don't have a net profit margin like that.

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JPM has 33% net margin and BAC 25%

Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

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Yes. And the banks don't have a net profit margin like that.

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JPM has 33% net margin and BAC 25%

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Sure.. you named the two that have enormous lift from their investment banking arm. I can assure you that NPM is not from consumer cards.

Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

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Yes. And the banks don't have a net profit margin like that.

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JPM has 33% net margin and BAC 25%

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Sure.. you named the two that have enormous lift from their investment banking arm. I can assure you that NPM is not from consumer cards.

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AXP is 14%
DFS is 25%
COF is 12%

Sq 17 said:

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I'd bet real money this like terms limits is talked about but they can't manage to get the bill agreed to and passed

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Agree. Vote for me blah blah blah blah … blame others … blah blah blah …. Get obesely wealthy on just salary income

Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Aggies1322 said:

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Dan Scott said:

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Logos Stick said:

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fc2112 said:

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CC companies must be highly profitable. The handful of times my number got stolen, and a few thousand dollars of stuff got bought, they just wrote it off as "no problem".

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Yes and the reason they can do that is the extremely high interest rates they charge. They make up the loss with their interest money.

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Visa has a 55% net profit margin

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Visa doesn't charge interest. Hth.

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You're right they don't. The banks are charging the interest

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Yes. And the banks don't have a net profit margin like that.

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JPM has 33% net margin and BAC 25%

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Sure.. you named the two that have enormous lift from their investment banking arm. I can assure you that NPM is not from consumer cards.

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AXP is 14%
DFS is 25%
COF is 12%

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You can't seriously act like those NPM are in the same ballpark as visa.

10% max rate for a credit card will be a minimum 780 fico.

fixer said:

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10% max rate for a credit card will be a minimum 780 fico.

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Higher. And collateral.

And forget about lounge access and other perks

aggie93 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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This. Credit cards and interest rates are based on risk. The higher the risk, the higher the interest. If you cap the interest you simply make it where a lot of people won't be able to get credit. Next you will have Gen Z/Millennials freaking out about Boomers/Gen X who have credit cards and they don't and how unfair life is. I guess we should just tell them to listen to Dave Ramsey.

In the meantime I don't GAF about what interest rates are for CC because I just use them for points. I put everything I can on them and have used that for free travel for decades and it's great. I don't know that I have ever paid interest on a credit card in spite of having very fat and very lean times in my life because I am smart and disciplined with my money and always make sure I have reserves to make sure I won't.

Living below your means is one of the greatest keys to happiness.

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Interest rate on CC is the same for everyone.

agracer said:

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aggie93 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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This. Credit cards and interest rates are based on risk. The higher the risk, the higher the interest. If you cap the interest you simply make it where a lot of people won't be able to get credit. Next you will have Gen Z/Millennials freaking out about Boomers/Gen X who have credit cards and they don't and how unfair life is. I guess we should just tell them to listen to Dave Ramsey.

In the meantime I don't GAF about what interest rates are for CC because I just use them for points. I put everything I can on them and have used that for free travel for decades and it's great. I don't know that I have ever paid interest on a credit card in spite of having very fat and very lean times in my life because I am smart and disciplined with my money and always make sure I have reserves to make sure I won't.

Living below your means is one of the greatest keys to happiness.

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Interest rate on CC is the same for everyone.

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Nah…

agracer said:

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aggie93 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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This. Credit cards and interest rates are based on risk. The higher the risk, the higher the interest. If you cap the interest you simply make it where a lot of people won't be able to get credit. Next you will have Gen Z/Millennials freaking out about Boomers/Gen X who have credit cards and they don't and how unfair life is. I guess we should just tell them to listen to Dave Ramsey.

In the meantime I don't GAF about what interest rates are for CC because I just use them for points. I put everything I can on them and have used that for free travel for decades and it's great. I don't know that I have ever paid interest on a credit card in spite of having very fat and very lean times in my life because I am smart and disciplined with my money and always make sure I have reserves to make sure I won't.

Living below your means is one of the greatest keys to happiness.

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Interest rate on CC is the same for everyone.

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No it's not. Have you ever gotten a 0% offer in the mail? That doesn't mean everybody has 0% interest cards.

agracer said:

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aggie93 said:

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aTmAg said:

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A bunch of people will simply not be able to get credit cards anymore.

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This. Credit cards and interest rates are based on risk. The higher the risk, the higher the interest. If you cap the interest you simply make it where a lot of people won't be able to get credit. Next you will have Gen Z/Millennials freaking out about Boomers/Gen X who have credit cards and they don't and how unfair life is. I guess we should just tell them to listen to Dave Ramsey.

In the meantime I don't GAF about what interest rates are for CC because I just use them for points. I put everything I can on them and have used that for free travel for decades and it's great. I don't know that I have ever paid interest on a credit card in spite of having very fat and very lean times in my life because I am smart and disciplined with my money and always make sure I have reserves to make sure I won't.

Living below your means is one of the greatest keys to happiness.

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Interest rate on CC is the same for everyone.

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Not at all, you have wildly varying levels of interest rates with different credit cards and wildly varying abilities to get approved.