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supermike80

Now this is interesting. Cap on cc interest

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So weird when politicians seem to actually care about the citizens. 

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Usury laws have existed for millennia.  A series of Supreme Court cases effectively dismantled those laws in the US at the end of the 20th century.

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16 minutes ago, Ilov80s said:

Great idea to me. Does anyone have an argument against it?

Well if we expect consistency any of the "they knew what they were doing when they took out the loan" guys would be against this right?

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4 minutes ago, Don't Noonan said:

My first thought is that folks with bad credit scores would likely not be given credit cards by banks which is probably a good thing

Or there would be security deposits combined with lower limits. Then there would be more processing fees for them as well. There would also be some people laid off by the banks and of course new apps and other mechanisms would be designed that skirt the laws.

 

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57 minutes ago, Ilov80s said:

Great idea to me. Does anyone have an argument against it?

I do. I don't know how old you are or where your political/economic memory begins. There hasn't been really high inflation for decades, but I'm old enough to remember when there was. If you had this type of law if higher inflation returned it would force jjust about all credit card companies to cut off credit.  Maybe there's some maximum interest rate compared to inflation rate  formula that's optimal but I doubt anybody knows what it is or can figure it out.

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1 hour ago, Don't Noonan said:

My first thought is that folks with bad credit scores would likely not be given credit cards by banks which is probably a good thing

Even people with mediocre scores and a lack of substantial history would get hit.

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OMG!!! The socialists are taking over.  Please get rid of them and allow our beloved big banking institutions to charge consumers as much as they want.  The free market will totally correct itself (even though apparently it hasn't already). 

 

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1 hour ago, Insomniac said:

I do. I don't know how old you are or where your political/economic memory begins. There hasn't been really high inflation for decades, but I'm old enough to remember when there was. If you had this type of law if higher inflation returned it would force jjust about all credit card companies to cut off credit.  Maybe there's some maximum interest rate compared to inflation rate  formula that's optimal but I doubt anybody knows what it is or can figure it out.

Things are indexed to inflation all the time. It wouldn't be complicated. 

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11 hours ago, Captain Cranks said:

Things are indexed to inflation all the time. It wouldn't be complicated. 

That doesn't appear to be the proposal from the headlines I've read.  I would agree it would be an improvement.  

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I'm all for regulating credit cards, giving them to young people is just asking them to screw up their credit scores. 

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On 5/9/2019 at 7:31 PM, Ilov80s said:

Great idea to me. Does anyone have an argument against it?

Selfishly, I wouldn't like it. I get about $1500 a year back in cash back from using credit cards (without doing any real work or churning to maximize rewards). If banks took a hit on the more profitable customers, they wouldn't be able to be as generous for us "dead beat" customers that they don't make as much money off of.

But just generally, I don't like it. If we're going to regulate lenders, I think CC's should be far from the first target. It's a very risky business they are in, offering revolving unsecured loans. When times get bad, it's the CC's people stop paying first, and of course, going to go away in bankruptcy.  Even title loans have some kind of collateral, and of course, charge far more than 15-20%.

As long as they are clear about the fees (some subprime cards aren't), I say let CC companies do their business the way they see fit.

And frankly, if the states are going to keep sponsoring lotteries, then just stop pretending to care about other companies preying on broke people making bad decisions.

Now, as I mentioned in the student loan thread, I'm not sure that 18 year olds should be allowed to take on debt, and that would affect CC's, of course.

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5 minutes ago, pollardsvision said:

if the states are going to keep sponsoring lotteries, then just stop pretending to care about other companies preying on broke people making bad decisions.

Does that mean the free market will be allowed to run their own lotteries?

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3 minutes ago, The Z Machine said:

Does that mean the free market will be allowed to run their own lotteries?

I'm not suggesting that would ever happen, mostly because there's no chance in hell states will ever give up that revenue stream. 

But now that you mention it, if there was a free market on lotteries, it would be great for the people. The house edge would be reduced drastically from the absurdity that it's at now, if there were competition.

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I think first they should go after payday lenders and title lenders. Their rates make CCs look like pikers. I like that they want to get the post office back into the basic banking business. Let them offer checking, savings and debit cards but not credit cards or loans. I think letting them offer basic services is an easier start. If they offer small loans at low interest the payday loans industry would go bust and they will spend a ton fighting that. But the big banks aren't interested in the unbanked and underbanked anyway so probably less uphill there. Once up and running then we'll see. 

Thought I'd add we are one of the few countries that don't offer some level of postal banking.

Edited by NCCommish

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1 hour ago, The Z Machine said:

Does that mean the free market will be allowed to run their own lotteries?

Well, we kind of have that now.  Most states allow for some form of legal gambling.

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4 hours ago, IvanKaramazov said:

Well, we kind of have that now.  Most states allow for some form of legal gambling.

I'm ignorant on the issue, so I have no idea what's preventing real lottery competition. I just assume something is because there's so much money being made that competition would've moved in if it could.

Gambling is a competitor to the lotto, but I wouldn't call it a strong competitor. The accessibility of being in every gas station and corner store, along with ability to use cash makes it perfectly ripe to feast on poor people in a way most legal gambling is not (tmk).

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On 5/9/2019 at 8:26 PM, jonessed said:

There would be a hell of a lot less people with credit cards.

This bill would hurt the people its attempting to help the most.

 

 

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On 5/9/2019 at 6:55 PM, supermike80 said:

Now this might like

Bernie Sanders, AOC unveil legislation to cap credit card interest at 15% https://a.msn.com/r/2/AAB8HaD?m=en-us&a=0

It is about time Loan Sharking becomes illegal.  There is no reason to charge such high interests when everyone is not earning any for deposits.

Edited by bradyfan

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1 hour ago, Wrigley said:

This bill would hurt the people its attempting to help the most.

 

 

Back in my youth if you had a credit card it meant something. You were financially stable, had a good job, and was doing the right things with your money. Maybe we need to get back there. An economy built on easy credit isn't really a good thing.

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4 minutes ago, NCCommish said:

Back in my youth if you had a credit card it meant something. You were financially stable, had a good job, and was doing the right things with your money. Maybe we need to get back there. An economy built on easy credit isn't really a good thing.

Ripoffs! Good times.

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1 hour ago, pollardsvision said:
6 hours ago, IvanKaramazov said:

Well, we kind of have that now.  Most states allow for some form of legal gambling.

I'm ignorant on the issue, so I have no idea what's preventing real lottery competition. I just assume something is because there's so much money being made that competition would've moved in if it could.

Gambling is a competitor to the lotto, but I wouldn't call it a strong competitor. The accessibility of being in every gas station and corner store, along with ability to use cash makes it perfectly ripe to feast on poor people in a way most legal gambling is not (tmk).

Part of the reason why gambling is not a strong competitor to the lottery is because the people regulating the lottery (the state) also get to regulate many aspects of gambling (location, form, etc.). But imagine if there was a mini-casino next to every gas station and corner store, and those mini-casinos offered activities which mimicked scratch-off tickets and lotto games...

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2 minutes ago, [scooter] said:

Part of the reason why gambling is not a strong competitor to the lottery is because the people regulating the lottery (the state) also get to regulate many aspects of gambling (location, form, etc.). But imagine if there was a mini-casino next to every gas station and corner store, and those mini-casinos offered activities which mimicked scratch-off tickets and lotto games...

We have something kind of like this in NC. They are called game rooms and the gambling is disguised as skill based video games. It's a loophole the legislature hasn't been to in a hurry to fix. My guess is lobbying money helps there.

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7 hours ago, NCCommish said:

I think first they should go after payday lenders and title lenders. Their rates make CCs look like pikers. I like that they want to get the post office back into the basic banking business. Let them offer checking, savings and debit cards but not credit cards or loans. I think letting them offer basic services is an easier start. If they offer small loans at low interest the payday loans industry would go bust and they will spend a ton fighting that. But the big banks aren't interested in the unbanked and underbanked anyway so probably less uphill there. Once up and running then we'll see. 

Thought I'd add we are one of the few countries that don't offer some level of postal banking.

one of my first thoughts was that mulvaney and the payday lender crews would probably love this, as it would drive more business to them.

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On 5/9/2019 at 3:55 PM, supermike80 said:

Now this might like

Bernie Sanders, AOC unveil legislation to cap credit card interest at 15% https://a.msn.com/r/2/AAB8HaD?m=en-us&a=0

Several posts in this thread are correct.  Banks will stop issuing credit cards if they will not get the returns they need to hit their earnings expectations or credit cards for the lower/middle class will take the form of prepaid cards.  Banks are in business to make money, they are not in the business of being nice.

Of course, the taqueria waitress/bartender doesn't think to look two steps ahead.

Edited by TripItUp

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7 hours ago, NCCommish said:

 I like that they want to get the post office back into the basic banking business. Let them offer checking, savings and debit cards but not credit cards or loans. I think letting them offer basic services is an easier start.

Where is the revenue going to come from?  I assume these accounts would be low on fees. Underserved and previously unbanked customers are going to be high transactional, low balance accounts on average.  There would also be a lot to build out on electronic services, debit card processing, etc. or outsource those things at a significant cost.  At least with lending, the revenues are obvious.

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38 minutes ago, Juxtatarot said:

Where is the revenue going to come from?  I assume these accounts would be low on fees. Underserved and previously unbanked customers are going to be high transactional, low balance accounts on average.  There would also be a lot to build out on electronic services, debit card processing, etc. or outsource those things at a significant cost.  At least with lending, the revenues are obvious.

Obviously there would be some fees involved the object would be break even not make a profit. And the government already does a debit card for payments so that infrastructure is in place.  I would think you could adapt it.

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8 hours ago, TripItUp said:

Several posts in this thread are correct.  Banks will stop issuing credit cards if they will not get the returns they need to hit their earnings expectations or credit cards for the lower/middle class will take the form of prepaid cards.  Banks are in business to make money, they are not in the business of being nice.

Of course, the taqueria waitress/bartender doesn't think to look two steps ahead.

Yes, clearly we must make sure that banks can maximize profits.  I don't want to live in a world where banks can't squeeze every penny out of us, especially all the lousy taqueria waitresses and bartenders.  Screw those losers.  

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17 hours ago, NCCommish said:

I think first they should go after payday lenders and title lenders. Their rates make CCs look like pikers. I like that they want to get the post office back into the basic banking business. Let them offer checking, savings and debit cards but not credit cards or loans. I think letting them offer basic services is an easier start. If they offer small loans at low interest the payday loans industry would go bust and they will spend a ton fighting that. But the big banks aren't interested in the unbanked and underbanked anyway so probably less uphill there. Once up and running then we'll see. 

Thought I'd add we are one of the few countries that don't offer some level of postal banking.

I had no idea what postal banking even was. Fascinating.

Postal Banking

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16 hours ago, TripItUp said:

Several posts in this thread are correct.  Banks will stop issuing credit cards if they will not get the returns they need to hit their earnings expectations or credit cards for the lower/middle class will take the form of prepaid cards.  Banks are in business to make money, they are not in the business of being nice.

Of course, the taqueria waitress/bartender doesn't think to look two steps ahead.

Maybe they need to stop expecting their earnings to increase forever. It isn't sustainable. This is the problem with Wall Street running things. At some point being profitable should be enough. Being more profitable every year is a recipe for the issues we have today.

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3 hours ago, NCCommish said:

Maybe they need to stop expecting their earnings to increase forever. It isn't sustainable. This is the problem with Wall Street running things. At some point being profitable should be enough. Being more profitable every year is a recipe for the issues we have today.

Add to this that someone else will step in.  The bank doesn't think 1billion in profit enough but many in this country will

 

It's such a false argument for these things when people say 'they will just stop'.  That's the point of the market and capitalism, someone will fill that spot

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On 5/9/2019 at 8:38 PM, Insomniac said:

I do. I don't know how old you are or where your political/economic memory begins. There hasn't been really high inflation for decades, but I'm old enough to remember when there was. If you had this type of law if higher inflation returned it would force jjust about all credit card companies to cut off credit.  Maybe there's some maximum interest rate compared to inflation rate  formula that's optimal but I doubt anybody knows what it is or can figure it out.

Prime + 10

 

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On 5/12/2019 at 3:34 PM, TripItUp said:

Several posts in this thread are correct.  Banks will stop issuing credit cards if they will not get the returns they need to hit their earnings expectations or credit cards for the lower/middle class will take the form of prepaid cards.  Banks are in business to make money, they are not in the business of being nice.

Of course, the taqueria waitress/bartender doesn't think to look two steps ahead.

What about the other part of the proposal which was the option to do low cost banking at local post offices? 

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my hot take:

in principle,

-they are right.  CC rates and late fees are simply outrageous.  The banks have become modern day loan sharks.

on the flip side

- One of the reasons the rates are so high is because a lot of people end up not being able to pay and the CC companies eat the loss

- we have a CC based economy and making high risk borrowers not able to obtain credit, might deprive some of the poorest people the ability to obtain basic goods and services

We should head in this direction, but we should tread carefully....

 

 

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3 hours ago, Jackstraw said:

What about the other part of the proposal which was the option to do low cost banking at local post offices? 

The post office is the epitome of financial stability.  I'm sure this will go swimmingly.

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5 minutes ago, Sand said:

The post office is the epitome of financial stability.  I'm sure this will go swimmingly.

Of all the errands I have to run around here, our post office is the one I dread most.  It's a time commitment.

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why not cap it at 5% ?

what about pawn shops - cap that rate? auto or home loans? 

 

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7 minutes ago, Stealthycat said:

why not cap it at 5% ?

what about pawn shops - cap that rate? auto or home loans? 

 

Now you're getting it. Make credit boring again. 

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4 minutes ago, Ramblin Wreck said:

LOL at making the post office a bank.  What's next?  They going to run health insurance?

Groceries of course. Kill two deserts with one post. 

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2 hours ago, Jackstraw said:

Now you're getting it. Make credit boring again. 

I'm assuming this is sarcasm, even considering the source. There is no way you can think this is the outcome.

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2 hours ago, Sand said:

The post office is the epitome of financial stability.  I'm sure this will go swimmingly.

The post office handled basic banking for a long time. In fact in today dollars they had over 50 billion is assets in the program. The advent of the FDIC and the interest rate being capped at PO banks they lost out to banks and they were ended in 1969. But no one pays much interest these days and the unbanked need an option.

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6 hours ago, Jackstraw said:

What about the other part of the proposal which was the option to do low cost banking at local post offices? 

I'm hesitant of any process ran by the US govt., but it is intriguing.  The devil would be in the details.

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Really, if we want to help this problem, a better solution that this post office thing is to eliminate or loosen the field of membership requirements of credit unions.  We already have thousands of not-for-profit financial cooperatives with volunteer member boards already existing but we legally restrict them in growing by restricting who can join.  Sometimes these restrictions are very constricting.  

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