I left a comment for Curtis Arnold in his article titled, “Why Capping Credit Card Rates at 16% is Bad for Consumers“.
I’ll make my point first. Everyone in the financial industry should acknowledge the reality that no one knows the 100% best way. We can agree that the market will give us a better indication of what can and can not be done, rather than some politician.
He makes this hypocritical comment:
“Why not focus on payday lending, pawn loans, title loans or tax rebate anticipation loans? Some payday loans charge annual rates as high as 400%. That’s right, four hundred percent! Makes a 30% credit card look like a saint, huh?”
Here’s the comment I left:
“Curtis, you contradict yourself. You do not want rate caps on credit cards, but you do want the government to go after payday and pawn lenders.
Lending money is lending money. They have the same basic principles. The good customers pay for the bad customers.
I agree w/ the point you make about capping fees, but if you think credit cards are the lesser of two evils; compare the amount of credit card debt to other types of unsecured lending. Credit Cards probably are the biggest contributing factor in bankruptcies.
Besides, many people who do not qualify for credit cards, use payday loans. If you’re for more credit available to more people, then you should not take a shot at these loan products.”
Comments
One response to “Credit card rate caps”
Unfortunately, I think many people make gross assumptions without educating themselves fully on a product and Curtis is no different. Those who oppose payday lending don't consider the conditions in which the annual percentage rate is possible and don't consider the already existing maximum amounts and fees placed on payday loans by the lenders state. I completely agree that credit cards can be more dangerous than payday loans. Unless there is extreme abuse of payday loans in which individuals don't use them as recommended, it is difficult for the debt to get out of hand.