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The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
bysmooth wombat ( 796938 ) writes:
It should read, JPMorgan Warns 10% Credit Card Rate Cap Would Hit Profits. That's what this is about. After reading the article, the only thing mentioned about how this cap would hurt consumers is banks make a lot of money on these interest charges. Nowhere did anyone say how this would hurt consumers except for the warning that consumer credit would be curtailed. Without an explanation why this would be.
In short, not having a 25% interest rate would hurt banks beause they wouldn't generate the billions in income from people who don't pay their balance off each month.
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byjacks smirking reven ( 909048 ) writes:
If it's so obviously good and so supported he should be able to make the case and pass a law which even if the companies didn't like it would be clear cut and predictable for businesses and consumers moving forward.
I mean his party controls both chambers why can't this be done legislatively?
byndsurvivor ( 891239 ) writes:
Trump should be doing things by the legislature. I'm not sure anymore what laws he actually passed, and what he does by fiat. Anyway, insightful +1.
byjacks smirking reven ( 909048 ) writes:
Trump is a terrible negotiator and barely even acknowledges Congress exists, I mean he puts Mike Johnson through a humiliation ritual every week [youtube.com] and the GOP just takes it. That's the part the Founders did not expect, both Houses having zero self respect for their positions and roles.
byndsurvivor ( 891239 ) writes:
to me this is a text book case example of how money should be kept out of politics. Trump just says: "I'm going to primary you", to a House Representative. and... Ya, he can take away their job. If the money was not their, perhaps a Representative may vote in their districts best interest, and not in Trumps best interest.
byjacks smirking reven ( 909048 ) writes:
I would think they should be aware that in all of the elections where Trump's name isn't on the ballot candidates he endorses and the Republican's in general do pretty terribly. His endorsements have a pretty sparse success rate and that makes sense, he barely does any groundwork, he doesn't actually care about the party. They're just cowards.
byspacepimp ( 664856 ) writes:
Yes, People were fine when other politicians on both sides of the aisle proposed this.
byDamnOregonian ( 963763 ) writes:
Credit card lenders are not raking in cash on a credit card. Profitability studies show them to usually be ~2-3%.
Will they lose the money they're making by increasing the money supply for people who need it by billions of dollars? Yes. They don't want that.
But do you know why they'll lose that money? It's not because they'll be charging less interest. It's because they will be charging no interest, because they will no longer extend that credit to those people.
You should shorten your sig to "We will ban
bysmooth wombat ( 796938 ) writes:
Credit card lenders are not raking in cash on a credit card. Profitability studies show them to usually be ~2-3%.
From the story:
If implemented, âa 10% interest rate cap would hit a major âdriver of industry profits. The business generates âstrong returns as banks charge high interest rates to compensate for the greater risk of default associated with card loans, which are unsecured.
byDamnOregonian ( 963763 ) writes:
That's correct.
Nearly 60% of the revenue of a card lender is interest.
Nearly 100% of the cost is defaults.
The overall profitability, is ~3%.
Now, let's say we cut that 60% revenue down to 50% of what it was. So a 30% drop in revenue.
How do we balance the equation?
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byMightyMartian ( 840721 ) writes:
In the short term it would most certainly hit profits, not merely because of lower revenues from interest, but because credit card is unsecured, bad debts taking a bigger bite out of profits. The ultimate result would be that it would become much harder to get a credit card. In the end consumers would effectively have their short-term lending capacity reduced.
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bynealric ( 3647765 ) writes:
It's both. JP Morgan is saying that it would not be profitable to issue credit cards with a 10% rate cap. What do you think happens when a business finds an activity is no longer profitable? Easy: they stop doing it.
So what would happen is that only people with the best credit scores (those who might actually get unsecured credit at under 10% and don't pay credit card interest anyways) would have access to credit cards. That hurts JPM, who loses a profitable business line, but it also hurts anybody who want
byedi_guy ( 2225738 ) writes:
Credit cards are a very competitive, liquid market. If someone, anyone could make money on a avg rate of 10% it would already happen and people would flock to that bank.
bynealric ( 3647765 ) writes:
There are low interest credit cards that exist, but people don't flock to them because the people who qualify for those cards typically don't carry a balance anyways because they have access to cheaper credit like home equity loans. I don't even know or care what my credit card interest rate is because I never pay it.
byDeanonymizedCoward ( 7230266 ) writes:
The people who are actually paying 20%+ interest on credit cards who get their accounts closed will simply go to the lenders of last resort: payday lenders with even higher interest rates. Close down the payday lenders and they go to organized crime and we are back to Fat Tony breaking kneecaps for repayment.
Or, preferably, they're all members of the "own-nothing-and-like-it" club that's all the rage lately, and they can file Chapter 7 en masse without losing much. That's pretty much what I'd do if I had no assets and a huge pile of credit card debt, had been making all my payments on time, and they say "oops, your account's closed, too bad."
Looks to me like this isn't really a thing that's intended to work, more of a thin bribe to the voters. "We're trying to help you, but the Deep State and Big Banks are fi
byleonbev ( 111395 ) writes:
If there was really a 10% interest rate cap on credit cards, I'd imagine that most people with lower credit scores who have a high risk of default would just have their accounts frozen. Allowing them to increase their balances would be considered to be too risky for the banks issuing the credit.
I guess that you could argue that you are doing those people a favor by limiting their additional debt, but they probably aren't going to see it that way when their card gets declined at a restaurant or hotel while t
byedi_guy ( 2225738 ) writes:
Why are the credit card rates set to what they are? If someone claiming there is collusion or other illegal price-fixing activity, then I wholeheartedly agree that should be investigated and swiftly remedied. Absent any such claim there seems to be a competitive market for credit cards, 100's (1000's ?) of banks issue cards, and they all determine the rate at which they think they can make a business. While I agree that avg CC interest rates are very high at around 22%, that seems to be the consensus
bySirSpanksALot ( 7630868 ) writes:
Consumer credit will be curtailed, people that are higher risks for default will lose credit because that group is not profitable at 10% interest.
People with high credit scores will be unaffected (and are mostly unaffected anyway because they pay off their balance monthly and pay zero interest as a result)
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