Why are credit card companies allowed to charge loan sharking rates?
If you or I made a personal load to someone at these rates we’d probably be jailed. Why hasn’t the federal law makers did something to protect the wary consumers against these scumbags. I know that these exorbitant charges can be alleviated by paying off the balance on time each month, but what about people who find themselves in a bind when some unforeseen tragedy happens, or people who just can’t control there spending. Should these scalpers be allowed to take advantage of them ? A $40 late fees is almost the same thing as robbery without a gun.
Isn’t the huge late fees, and over limit fees akin to breaking knee caps. There’s no way these fees can be justified even if your a financial expert like bdance2 .What’s to stop them from increasing it to $100 ? Remember at one time late fees were $3.00 .
You are right and the previous answer says it all. We need to get the law changed. It’s all perfectly legal and they are taking advantage of it.
Actually, US credit card companied make more on fees then on interest rates. Sometimes people owe more on fees and interest then on the original charges and have no way of getting out of it. Did you know the average balance on credit cards is between 9,000 and 10,000?
Now’s the time to write your legislators.
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The short answer to our question is because the credit card companies have powerful lobbyists who make sure the laws are written in favor of the credit card companies.
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You are right and the previous answer says it all. We need to get the law changed. It’s all perfectly legal and they are taking advantage of it.
Actually, US credit card companied make more on fees then on interest rates. Sometimes people owe more on fees and interest then on the original charges and have no way of getting out of it. Did you know the average balance on credit cards is between 9,000 and 10,000?
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Credit card charges are high because there is a lot of risk involved. They are also high because credit card issuers have powerful lobbies that have convinced Congress that they shoul be allowed to charge usurious interest rates. Not only are the intereset rates very high, but banks also make money by charging late payment penalties, overcharge penalties, etc. These penalties have grown out of proportion, but since banks can get them, they do. If peaple can’t control their spending they are stuck. Too bad. There is no requirement for anyone to get a credit card or use it unwisely.
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The question is. Why do people play the credit card game knowing this?
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I agree with Serge. I think that the problem is that most people live beyond their means. Credit cards are a business, not a charity. They can’t and generally don’t charge usurious rates (loan sharking). They do charge the highest amount allowed by law though and that is perfectly legal.
No one goes to go to jail for the sole reason of charging a high interest rate. Usually, there are civil remedies where the loan could be forgiven or punitive damages are assessed against the lender if the loan is actually usurious (usually in excess of 25% but depends on the state).
Normally, your lender will accomodate you if you politely ask a representative to decrease your interest rate. Just call and ask and tell them you’re thinking of doing a credit consolidation with another company and your company will usually want to keep your business and will help you out. If you’re late once then the credit card company will usually waive it but if you are repeatedly late then they won’t. Those fees are what you signed up for and if you can’t make the minimum payment this is a sign of bigger problems with your finances as a whole. I got into trouble but was able to turn it around in one year by making a very frugal budget and sticking to it.
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Yes, let’s get the legislature to pass a bunch of laws to protect idiots who run up credit card debt and don’t pay their bills. Let’s make credit card companies increase the merchant fees (so the cost of good becomes higher for all of us) or assess high annual fees (so that all of us can foot the bill).
Lots of folks have "unforeseen tragedy" and still manage to pay their bills. The real problem is people who live way beyond their means. They run up credit card bills, only pay the minimum, and expect all sorts of special privileges.
These are the same people whining about late fees and bad credit because they were "only a few days late". They lack basic financial management skills to recognize that due date means not later than.
MOST people actually pay their bills on time and don’t get hit with late fees. Nor do most people have default interest rates on their credit cards. You get high interest rates and late fees because you are a high risk and you should accept the consequences of your own lack of responsibility!
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We definitely need to do that.
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