Sanders, Ocasio-Cortez propose limit on credit card interest rates

RNG

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Apr 2013
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WASHINGTON (Reuters) - A pair of leading liberal Democrats proposed legislation on Thursday that would cap interest rates on credit cards and other consumer loans at 15 percent to help consumers grappling with growing credit card debt.
IMO another example of the road to hell is paved with good intentions.

I predict that this, if passed will make it much more difficult to qualify for a credit card and thus many people in the lower economic strata will be left without that service.

And payday loan companies, if they have any legitimate reason to exist at all would be even more selective.

We'd be back to the old joke, they only lend money to people who don't need it.

Sanders, Ocasio-Cortez propose limit on credit card interest rates - Reuters and many more.
 
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Capping the amount you can borrow would be more fruitful I think. Not so sure if either idea is all that good though
 
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Apr 2015
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The right wing Conservative government in the UK has already regulated the maximum amount payday loans can charge.
For example, someone taking out a loan for 30 days will pay no more than £24 in fees and charges per £100 borrowed, and if you don’t repay on time, the most you can be charged in default fees is £15 plus interest on the amount you borrowed.
The leaches are still making a fat profit, but just not a much
 
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RNG

Forum Staff
Apr 2013
39,812
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La La Land North
The right wing Conservative government in the UK has already regulated the maximum amount payday loans can charge.
For example, someone taking out a loan for 30 days will pay no more than £24 in fees and charges per £100 borrowed, and if you don’t repay on time, the most you can be charged in default fees is £15 plus interest on the amount you borrowed.
The leaches are still making a fat profit, but just not a much
I would love to see data on the rate of failure to repay in the UK and the US. I have done a superficial google search and couldn't find any.
 
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Don't worry, this bill will get absolutely zero consideration in the Senate. I won't insult anyone's intelligence by explaining why, but it has everything to do with campaign contributions from Wall Street.
 
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IMO another example of the road to hell is paved with good intentions.

I predict that this, if passed will make it much more difficult to qualify for a credit card and thus many people in the lower economic strata will be left without that service.

And payday loan companies, if they have any legitimate reason to exist at all would be even more selective.

We'd be back to the old joke, they only lend money to people who don't need it.

Sanders, Ocasio-Cortez propose limit on credit card interest rates - Reuters and many more.
This is all very interesting. However, how do you make the calculation that lower rates will necessarily mean fewer credit card users?
I understand the market forces idea and that some level of interest rate justifies the greater risk, but translating that into real numbers is difficult.

It also does not factor in the damage caused by high interest rates (vicious cycle of poverty etc.).
This all smells like a libertarian fantasy complaint. Interest rates are like rules of the road such as speed limits that establish a certain boundaries to the process.

I am not enamored by the idea that the marketplace will necessarily choose the "best" interest rate. What if credit card companies have a "gentleman's agreement" to set the rates higher than the truly free market would tend to produce?
 
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I am not enamored by the idea that the marketplace will necessarily choose the "best" interest rate. What if credit card companies have a "gentleman's agreement" to set the rates higher than the truly free market would tend to produce?
That’s why the UK government set limits on payday loans, they found evidence that is exactly what they were doing.
 
Dec 2018
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Don't worry, this bill will get absolutely zero consideration in the Senate. I won't insult anyone's intelligence by explaining why, but it has everything to do with campaign contributions from Wall Street.
To my fellow DTT contributors, raise your hand if having this explained would insult your intelligence.