Comments on: Congress Legalized Loan-Sharking http://myhundred.net/wordpress/?p=362 New Ideas for a Fair Deal Sun, 05 Sep 2010 14:21:16 -0600 http://wordpress.org/?v=2.8.2 hourly 1 By: Zeke http://myhundred.net/wordpress/?p=362&cpage=1#comment-220 Zeke Wed, 27 May 2009 23:55:39 +0000 http://myhundred.net/wordpress/?p=362#comment-220 Just to see how badly "we've" behaved I researched the "beginning of the consumer credit card"...Seems as if it was issued by the then San Francisco-based "Bank of America" in 1966 - that's just a short 43 years - barely two generations. It's totally out of control - conspicuous consumption gone wild. Zero restraint. No responsibility whatsoever. Oh by the way, we'll be expected to pick up the bill, no matter how large. Just to see how badly “we’ve” behaved I researched the “beginning of the consumer credit card”…Seems as if it was issued by the then San Francisco-based “Bank of America” in 1966 – that’s just a short 43 years – barely two generations. It’s totally out of control – conspicuous consumption gone wild. Zero restraint. No responsibility whatsoever. Oh by the way, we’ll be expected to pick up the bill, no matter how large.

]]> By: Bill J http://myhundred.net/wordpress/?p=362&cpage=1#comment-219 Bill J Tue, 26 May 2009 12:34:31 +0000 http://myhundred.net/wordpress/?p=362#comment-219 I agree almost completely with Jim S. Where I differ is allowing the credit card companies to change the interest rate. A home mortgage is either a fixed or variable rate. If it's a variable rate it's usually tied to the prime rate. The interest rate on your mortgage doesn't go up based on your credit worthiness. When's the last time a credit card company lowered your interest rate on an existing balance because you became less of a risk? I agree almost completely with Jim S. Where I differ is allowing the credit card companies to change the interest rate. A home mortgage is either a fixed or variable rate. If it’s a variable rate it’s usually tied to the prime rate. The interest rate on your mortgage doesn’t go up based on your credit worthiness.

When’s the last time a credit card company lowered your interest rate on an existing balance because you became less of a risk?

]]> By: Jim S http://myhundred.net/wordpress/?p=362&cpage=1#comment-218 Jim S Tue, 26 May 2009 01:08:15 +0000 http://myhundred.net/wordpress/?p=362#comment-218 I don't believe that there should be a maximum interest rate, a fixed rate for everyone, a ban on retroactive rate changes or elimination of late charges. The term is already fixed by the expiration date of the credit card, and either party can terminate the agreement during the term for any one of several reasons. Interest is a function of risk. The higher the risk, the higher the interest charged. Surely, the person who has a history of paying all his bills as agreed on time shouldn't have to pay the same rate as one who doesn't and is a bigger credit risk. If a person doesn't want to pay the rate that the lender charges him, he shouldn't accept the credit card. If the risk becomes greater during the term of the loan because the creditworthiness of the borrower is less that it was at the time the contract was entered into, the creditor should be allowed to raise the return rate to compensate for the higher risk. When the lender's cash flow is interrupted by late payment per the agreement, he should be compensated with a late charge. When payments are late, the lender doesn't have as much capital available, and his total income is affected. An excavation contractor would charge one amount for clearing an acre of ground that is easily accessible and flat, yet he would charge more to clear a remote site on the side of a hill. If he is unable to do the job because of another contractor's fault, he submits a "charge back" to the general contractor or owner. Money lending should be allowed to work the same way. Reality is that people shouldn't carry a balance on their credit card. Credit shouldn't be used to finance an unaffordable life style. A HUGE percentage of America's problem with debt is because people refuse to live within their means. No one is forced to live in a home that they can't afford. No one is forced to buy that expensive car or SUV. No one is required to take an expensive vacation to Hawaii or a Caribbean cruise. People can eat at home instead of spending three, four or five times more to eat out several times a week. It's time for Americans to face reality and live within their means. We shouldn't and can't be our brothers' keepers. I don’t believe that there should be a maximum interest rate, a fixed rate for everyone, a ban on retroactive rate changes or elimination of late charges. The term is already fixed by the expiration date of the credit card, and either party can terminate the agreement during the term for any one of several reasons.

Interest is a function of risk. The higher the risk, the higher the interest charged. Surely, the person who has a history of paying all his bills as agreed on time shouldn’t have to pay the same rate as one who doesn’t and is a bigger credit risk. If a person doesn’t want to pay the rate that the lender charges him, he shouldn’t accept the credit card.

If the risk becomes greater during the term of the loan because the creditworthiness of the borrower is less that it was at the time the contract was entered into, the creditor should be allowed to raise the return rate to compensate for the higher risk.

When the lender’s cash flow is interrupted by late payment per the agreement, he should be compensated with a late charge. When payments are late, the lender doesn’t have as much capital available, and his total income is affected.

An excavation contractor would charge one amount for clearing an acre of ground that is easily accessible and flat, yet he would charge more to clear a remote site on the side of a hill. If he is unable to do the job because of another contractor’s fault, he submits a “charge back” to the general contractor or owner. Money lending should be allowed to work the same way.

Reality is that people shouldn’t carry a balance on their credit card. Credit shouldn’t be used to finance an unaffordable life style. A HUGE percentage of America’s problem with debt is because people refuse to live within their means. No one is forced to live in a home that they can’t afford. No one is forced to buy that expensive car or SUV. No one is required to take an expensive vacation to Hawaii or a Caribbean cruise. People can eat at home instead of spending three, four or five times more to eat out several times a week. It’s time for Americans to face reality and live within their means.

We shouldn’t and can’t be our brothers’ keepers.

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