Who here thinks that the federal government should curtail interest rates on credit cards?

Question

Is anyone else disturbed by the fact that credit cards charge up to 21% interest on all the purchases? It makes it so much harder to pay all of the bills. Who here thinks that there should be no higher than 9.99% interest rates?

When I used to work for a chartable organization I have seen many people being hurt by the credit card companies and have seen them lose everything, I think that credit card abuse needs to end soon.

Do you agree?

If you agree what do you think needs to be done?

Answer 1

The Government already caps interest loan charges. Currently I believe it is 29.9 percent default rate, though dont quote me. Lowering this cap is not in the best interest of consumers or the economy as a whole. Most credit worthy consumers already pay roughly 9.9 percent. Lowering the rates that far would merely insure people with higher credit risk or a short credit history would no longer be offered credit. Credit lenders would still get their revenue by increasing fees proportionately, which would damage consumers who pay their balances in full each month and currently avoid interest charges.

Credit and debt problems are very high in our country and need to be addressed. Government and private sector sources need to make a serious push into education on money management and investing. Our culture has become an instant gratification society. People own cars, HDTV's, homes, clothes etc purchased on credit at very young ages. Once upon a time, people worked for years, saved money and purchased items that today we buy first and pay for later. That societal attidutde has far far more to do with credit debt problems than high interest rates, remember interest rates are set not by the credit companies but by what consumers are willing to pay. Yes, there are many questionable and predatory lending practices that need to be address through the courts or legislation, but free markets determine interest rates not arbitrary and exclusive government numbers.

Answer 2

Credit card companies are private organizations...and as such...they can charge whatever they want. And if you don't like the interest rate, you can stop using them, or switch to a company offering lower rates.

I understand your frustration, and I sympathize. But its a slippery slope when you ask the government to step in to make regulations on private companies.

The other important factor is that consumers don't NEED credit cards...they only see them as a need. When I recognized my growing dependence on credit, I cut up all my cards except one. I lowered the maximum on that one to $500 - which would really only give me the ability to use it when it was necessary (online, renting cars, etc.) It was difficult at first, adjusting to the cash system. But once I got used to it, I enjoyed the freedom of not being 'owned' by a company. My spending habits improved, although they weren't out of control in the first place. And I will never go back to them.

I think that consumers need to recognize what the cards are really for...and not use them simply because they don't have the cash to pay for something. When you look at the amounts that people are in debt to credit card companies, you'll have to admit that the bigger problem is not interest rates...its abuse and dependence upon credit.

Answer 3

I think credit rates should equal the fed rates, but ultimately it's up to the consumer, but then I have a relative that takes every card that is offered, so I would say there is a point where those who issue lose credit should accept being defaulted on, it's their problem, not the government. A bad risk will always be a bad risk, throw money at a bad risk, don't come crying to the government when they can't repay. Same goes for "sub prime mortgages", make bad business choices, you go out of business, there should be no government bailouts. (Does Whitewater/Rose Law Firm sound familiar?) Real estate is artificially overvalued based on bad mortgage lending, it needs to come back down, the sooner the softer it will land.

Answer 4

Your credit card company is not obligated to lower the rate. They can keep it the same. Even if they do, there is a time lag. It doesn't happen immediately. Also, credit card rates often depend on your credit rating and whether you are paying your bills on time. If your credit is poor and you are a high risk, you're not going to get a low rate. If you've missed payments or have been late (even on non-credit card bills), your rate won't go down. If you're paying 29.44%, that tells me that you either have serious credit problems or you're being ripped off horribly. That's not even close to normal!

Answer 5

Nothing can be done by the federal government. The Supreme Court ruled the federal government cannot control interest rates on credit cards. The Supreme Court said only states have that right.

All credit card companies headquarters are located in states without credit card regulations.

"It also has been construed to authorize the use of interest rates authorized by the state where the lender is located no matter where the borrower resides. Marquette Nat'l Bank v. First Omaha Serv. Corp., 439 U.S. 299 (1978). "
FDIC: FDIC Law, Regulations, Related Acts - General Counsel's Opinions
http://www.fdic.gov/regulations/laws/rules/5500-700.html

MARQUETTE NAT. BANK v. FIRST OF OMAHA CORP., 439 U.S. 299 (1978)
http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?friend=nytimes&navby=case&court=us&vol=439&invol=299

Answer 6

Actually I do agree. When more and more places require a credit card the interest rates need to be fixed at a set rate and have done with it.

Answer 7

No I don't think the government needs to step in. Credit card companies are a business just like anything else. People just need more self control with regards to credit cards.

Credit card companies don't force you to have a credit card.

Answer 8

I think the American people need to stop depending on credit cards to get the things that they want. They need to live within their means. Then they wouldn't have to worry about the interest rates on credit cards.

Answer 9

There are credit cards out there with 1% interest. Apply for them and transfer your balance.

Answer 10

pay your balance off every month and you wont pay any interest.
Or dont use credit cards. Its not like we are forced to use credit cards.