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Credit Card Interest Rates - How much is too much? - 7/25/2008 5:35:03 PM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
Status: offline 		I've mentioned in past posts that due to my divorce, my house went through foreclosure (final foreclosure was saved by a last minute short sale) and my ex racked up (and did not pay) a joint Visa account that I had forgotten about. Before anyone gets on a foreclosure bandwagon, I had a fixed rate at a cozy 4.2% or something nice like that, and made every payment on time until the ex attached my wages in addition to forcing me to make all the mortgage payments (in addition to me having my own rent payments and living expenses). My error here was not in poor financial decisions (I had no credit card debt and the cars were paid off when I moved out), but in poor husband picking. :)

Having said that, my credit score went from excellent to totally laughable. Like, REALLY laughable. I couldn't finance a rock if I wanted to (not that I'd want to). And I'm in debt up to my eyeballs from legal bills, plus, as if all that was going on wasn't enough, I was laid off, too!

What's interesting is what the credit card companies are doing. First, they dropped my line of credit, which is totally understandable (although in one case Citibank dropped my credit line to BELOW what I owned on it and then charged me an overlimit fee!), but then they hiked up my interest rate to 30%. 30%!!!

Now, I'm not a conspiracy theorist so I don't think there's some big plot in the sky to keep the poor man poor, but...isn't it odd that those who can't afford squat are being charged so much interest that they'll never pull themselves out? Is this a way of taking advantage? I mean here I am a sitting duck for the credit card companies. I don't qualify for a NEW card at a lower interest rate, so they gouge me at whatever rate they want, knowing I can't pay them off and knowing they'll just keep feasting off my interest charges until kingdom come.

As it turns out, I have borrowed the money from a friend at a rate of 5%, more than what she's getting in her money market, so we both win - my cards are paid off, I'm saving thousands in interest, she receives more interest than the bank is getting her, and my credit score goes up because according to FICA, I am debt free. So this isn't about my own personal woes; rather, it's an observation of what happens when people are struggling. And while it's true a lot of people live beyond their means and don't plan well, there are also cases like my own where people are just trying to get by.

30% interest is criminal. Do you think interest rates should be regulated? How much is going too far? Do you think poor slobs like me deserve to be gouged? I have found my own solutions so this isn't about a cry for help on my part or anything. I'm just interested in what people think of the interest rates out there and what should be done, if anything.

Thanks for playing!

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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 5:38:59 PM   
NormalOutside


Posts: 622
Joined: 1/8/2008
Status: offline 		If you think society itself isn't a contruct put here to keep tens of millions of us working for someone else, paying bills, paying taxes, and trying to stay out of debt while at the same time purchasing all the best iPods and other "important" things, you're pulling the blinder over your own eyes, imo!

But I agree with you, banks, credit card companies, and other big financial businesses are 98% completely unfair.  Avoid dealing with them as much as you can, and you'll be better off for it.

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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 5:40:03 PM   
NeedingMore220


Posts: 615
Joined: 6/5/2008
Status: offline 		Wow.  I've never heard of 30%.  You know ... people hit hard times, and it doesn't always have to do with making greedy, selfish choices.  Sometimes it's just that life throws a curve ball and you have to pick yourself up again.  Then you get simply spanked by the cc people to put it up to 30%.  I wonder if there are any laws governing just how high a rate can go?  I understand 18-19% for those with worse credit than others and rewarding those with good credit, but I see no reason for a rate this high.

Congrats to you for figuring a way out of this hole for yourself.  I can imagine the overwhelming stress this whole situtation must created for you.  

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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 5:44:54 PM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
Status: offline 		Oh I agree the whole "I gotta have it" concept is whacked, but does that give credit card companies the right to take advantage of consumers? I think you're saying it doesn't, which I agree with. I also agree that it's best not to BE in debt. But people are going to be, and I think there should be some sort of limits in place as to what to charge them. Maybe there are limits and I just don't know them or agree with them...(wouldn't be the first time!)

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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 5:46:46 PM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
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quote:

ORIGINAL: NeedingMore220

Wow.  I've never heard of 30%.  You know ... people hit hard times, and it doesn't always have to do with making greedy, selfish choices.  Sometimes it's just that life throws a curve ball and you have to pick yourself up again.  Then you get simply spanked by the cc people to put it up to 30%.  I wonder if there are any laws governing just how high a rate can go?  I understand 18-19% for those with worse credit than others and rewarding those with good credit, but I see no reason for a rate this high.

Congrats to you for figuring a way out of this hole for yourself.  I can imagine the overwhelming stress this whole situtation must created for you.  


Thanks for the kind thoughts. I'm actually in really good spirits these days. I'm going to look into governing rates.

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Good is the enemy of great.

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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 11:09:11 PM   
UtopianRanger


Posts: 3251
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quote:


30% interest is criminal. Do you think interest rates should be regulated?



Not regulated---abolished....And then supplanted by ''fee based'' banking and lending.

Not only is thirty-percent criminal, but its also both predatory and parasitical. And when I say ''parasitical'', I mean, eventually the ''host'' is dissolved....

And for those who spout the whole ''Personal responsibility rebuttal argument ''  I say to them - In today’s game, you put peanut butter in a spring-trap for a rat - it's going to try and eat it....

Of course I could go on......but let me end this by paraphrasing Einstein in saying '' Compounding interest is the most destructive force on the planet next to mother nature ''




- R











_____________________________

"If you are going to win any battle, you have to do one thing. You have to make the mind run the body. Never let the body tell the mind what to do... the body is never tired if the mind is not tired."

-General George S. Patton


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RE: Credit Card Interest Rates - How much is too much? - 7/25/2008 11:56:34 PM   
ownedgirlie


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quote:

ORIGINAL: UtopianRanger

Not only is thirty-percent criminal, but its also both predatory and parasitical. And when I say ''parasitical'', I mean, eventually the ''host'' is dissolved....

I loved your whole post but this line was brilliant. Fee based lending is an interesting notion and what can I say, I'm a sucker for peanut butter!

Thanks for chiming in your thoughts!!

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 12:21:43 AM   
Thadius


Posts: 5091
Joined: 10/11/2005
Status: offline 		Is there a max rate on interest rates for credit cards?....

quote:

http://ago.mo.gov/ConsumerCorner/blog/10436/What_is_the_maximum_credit_card_interest_rate/

Many consumers are suprised to find there is no limit on credit card interest rates (APR) under federal law. Those limits are set by state law, and card issuers are governed by the laws of the state they're based in.
So let's say you're in Missouri, and you a have a credit card account with a bank based in California. That card company is subject to California laws when it comes to the interest rates they can charge you.



http://www.lectlaw.com/files/ban02.htm has the various laws of each state listed.




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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 12:30:50 AM   
slaveboyforyou


Posts: 3607
Joined: 1/6/2005
From: Arkansas, U.S.A.
Status: offline 		I've never had a credit card, and I won't ever have one.  It's hard for me to feel sympathy for people that are financially irresponsible, when I have made a point to not put myself in those situations. 

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 12:40:59 AM   
Thadius


Posts: 5091
Joined: 10/11/2005
Status: offline 		I have them. I use them for almost everything.  I also budget how much I spend on them. Finally, I pay off the balance at the end of each month.  Each paycheck goes straight into the bank, the cash sits until it is time to pay the one bill I pay with it.  This is allowing me to build up a decent credit rating, and credit line (for emergencies).  Also credit card purchases are protected a bit better than buying things with cash, not to mention fraud protection.

I used to think the same way, and technically I still do, if I can't afford it outright I don't need it.  However, have you tried to buy air travel, rent a car, or stay in a hotel without a credit card?

Just my thoughts,
Thadius

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When the character of a man is not clear to you, look at his friends." ~ Japanese Proverb

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 1:56:52 AM   
NorthernGent


Posts: 8730
Joined: 7/10/2006
Status: offline
quote:

ORIGINAL: ownedgirlie

Now, I'm not a conspiracy theorist so I don't think there's some big plot in the sky to keep the poor man poor, but...isn't it odd that those who can't afford squat are being charged so much interest that they'll never pull themselves out? Is this a way of taking advantage? I mean here I am a sitting duck for the credit card companies. I don't qualify for a NEW card at a lower interest rate, so they gouge me at whatever rate they want, knowing I can't pay them off and knowing they'll just keep feasting off my interest charges until kingdom come.



I'm not convinced the idea is to maintain a level of poverty, but I am convinced the current system is in place by design - grand ideas are discouraged within a consumer society. This doesn't necessarily equate to government by the government and business allies for the government and business allies - the objective of politics is to maintain stability and liberal democracy, with its broad framework of encouraging the freedom to buy and sell as you wish while discouraging community and political ideals, is no different in that it has been deemed to be the system most likely to maintain stability.

quote:

ORIGINAL: ownedgirlie

30% interest is criminal. Do you think interest rates should be regulated?



I agree. It's shocking really and an easy trap to fall into as magazines and television repeatedly drum home the consumer lifestyle.

Interest rates regulated? The root of the problem is far deeper than interest charges. Banks are far from the only organisations fleecing your man in the street - internet providers, insurance and telecomms companies etc.........are all at it.

Edited to add: banging in unjustifiable charges for anything from cancellation to administration, is the order of the day.

< Message edited by NorthernGent -- 7/26/2008 2:01:41 AM >

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 2:15:35 AM   
UtopianRanger


Posts: 3251
Status: offline 		Thank you for the nice compliment. And the rat/spring-trip analogy was prolly the wrong one to use, and most assuredly not directed at you. You were obviously right on it in realizing{and taking care of it} thirty-percent, compounded-- on any significant balance--- is essentially a sucker punch in the Adam’s apple from the equivalent of Mike Tyson.

From my standpoint, if I had to dole out thirty-percent, I’d rather see it go to Joey Bananas instead of some stodgy, bald guy with a smirk and gold wire-frames, who’s conned and paid-off our politicians in order to deregulate the financial industry so they can freely prey on the folks least able to afford it.

What’s equally disenchanting, is the expensive consumer goods and gadgets that folks purchase with these credit cards really can’t even be considered valued assets after their taken home because of their instant high-rate of depreciation.






- R


PS - No offense Gent {eventhough I don't picture you in gold wire frames}


< Message edited by UtopianRanger -- 7/26/2008 2:24:15 AM >

_____________________________

"If you are going to win any battle, you have to do one thing. You have to make the mind run the body. Never let the body tell the mind what to do... the body is never tired if the mind is not tired."

-General George S. Patton


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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 2:15:50 AM   
slaveboyforyou


Posts: 3607
Joined: 1/6/2005
From: Arkansas, U.S.A.
Status: offline
quote:

I have them. I use them for almost everything.  I also budget how much I spend on them. Finally, I pay off the balance at the end of each month.  Each paycheck goes straight into the bank, the cash sits until it is time to pay the one bill I pay with it.  This is allowing me to build up a decent credit rating, and credit line (for emergencies).  Also credit card purchases are protected a bit better than buying things with cash, not to mention fraud protection.

I used to think the same way, and technically I still do, if I can't afford it outright I don't need it.  However, have you tried to buy air travel, rent a car, or stay in a hotel without a credit card?

Just my thoughts,
Thadius


Thadius, I have a debit card from my bank.  It does double as a credit card, so I suppose I technically have one.  But I have never used it for credit.  I always have enough money in the bank to cover my purchases. 

I have not leased a car since 1993.  I won't ever buy a new car again.  It's a waste of money.  I don't see the benefit in making interest payments on something that depreciates in value. 

Right now the most irresponsible thing I am doing is renting my abode.  I would rather be buying a home, but I don't know if I will be here next year.  So I am being wishy washy about that. 

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 2:19:56 AM   
Thadius


Posts: 5091
Joined: 10/11/2005
Status: offline 		My next new car purchase will occur when I win the redneck retirement fund.  The only long term debt I plan on incurring in the future is on a piece of land that I have been eyeing, it is pretty damn close to what I have always wanted for building my home (well I guess the building costs will get added on to that debt).

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 8:08:15 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Hunny, try joining a credit union.  One is charged less in bank fees since a shareholder IS an owner of the bank [credit union].

I have been simplifying my life. The idea is to reduce down debit and credit cards.  As time goes on this business finds even more ways to extract my hard earned money from me.

30% is too high.

I pay 5.9% fixed for life of balance of that transfer.
and 9.9 %  both thru a credit union.

Capital one was so nice to issue a $500 line of credit.   But the rate is so high I dont use it.

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 8:13:49 AM   
KatyLied


Posts: 13029
Joined: 2/24/2005
From: Pennsylvania
Status: offline 		I think the main difference between using the credit vs debit function is that debit seems to post immediately to your account and credit takes approximately three days to post. 

About those low interest rate cards, consumers should read the fine print.  On some of them if you are one payment late the interest rate will skyrocket and you will be screwed with no recourse. 


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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 10:21:54 AM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
Status: offline 		Thanks for the replies, everyone! I was mostly interested to see what other views were on outlandish interest rates. To answer those who have posted:

Thadius - thanks for that link! That is amazing to me that there is no federal regulation on rates. I'm typically opposed to our lovely government imposing regulations on capitalism, but in certain cases I do think it is appropriate.

slaveboyforyou - It seems you are saying if people do not live their lives as you do, then too bad for them if they get hung up. I understand those sentiments, as I used to feel that way myself. I no longer do. In my personal case, as stated in my OP, it was not a case of being irresponsible with credit cards. Also, the difference between using a debit card vs. credit card, and the reason I won't use a debit card, is if there are any fraudulent charges, you are out that money off the bat until it gets sorted, whereas with a credit card, you simply don't pay the challenged amount. I once had to deal with $2,000 of fraudulent charges in China (I've never been to China) and I would have been hurting had I been without my money until the banks sorted it.

I also have a travel rewards card. My spending habit was that I would charge everything to that card, get travel points, and pay the card off at the end of the month. I currently have 2 free airline tickets as a result. Since I travel a lot, I need a card for airlines, hotels, and other expenditures. I won't use a debit card, making my checking account vulnerable to abuse.

NorthernGent, I agree with what you said that this isn't about maintaining a level of poverty. I also agree the problem is far more deeply rooted than just interest charges. We live in an instant gratification society, which has become impatient for having to wait until actually having funds to buy what we want. He who dies with the most toys wins, right? But the credit card companies do seem to have a "sock it to ya" attitude.

Utopian Ranger - I was not at all offended by the rat analogy, and in fact I thought it was perfect. And the problem with being in financial straights is that you can not just change to a lower interest card - no one wants your credit until your credit rating goes back up, and your credit rating doesn't go back up until you pay your balances down, and who the heck can pay their balance down at 30%? It's an interesting cycle, for sure.

pahunkboy - My credit union dropped my membership when my house went into foreclosure. They lost money on the short sale of the house, so they don't want my business.

KatyLied - I agree, but all the fine print in the world isn't going to prepare you for what happens when you become financially ruined. When I signed up for the cards years ago, the idea of being in this position wasn't even in my scope of thoughts. One of the cards that is now 30% was something like 8% when I signed up...with a credit line of $16,000!!! (which I never reached or even came close to). It goes back to that rat trap that UR was talking about...




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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 12:08:35 PM   
KatyLied


Posts: 13029
Joined: 2/24/2005
From: Pennsylvania
Status: offline 		I understand.  I had to start over again after a divorce.  I had nothing, but I did have a solid credit rating, which I'm thankful for.  Other than that, I had to start again, from the ground up.  

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 12:10:45 PM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
Status: offline 		Isn't it fun? I guess this means I'm starting from a negative, but hey I'm always up for a challenge.

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Good is the enemy of great.

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RE: Credit Card Interest Rates - How much is too much? - 7/26/2008 2:54:31 PM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Well you have to shop around then.   I belong to 5 credit unions.  Down from 20ish.  Some are stingy.  basically I was looking for someone to say yes after my bankruptsy.  So that is why I joined so many.  find another credit union.

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