Issues of a Domestic Nature (READ WARNING ON PAGE 1 BEFORE POSTING)

cavsfan1985

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https://www.cnbc.com/2019/05/09/bernie-sanders-aoc-will-unveil-plan-to-cap-credit-card-interest-rates.html

Bernie and AOC, the faces of the Democratic Party's left-wing, have introduced a new bill to cap credit card and loan interest rates at 15%.

Is there an argument against this measure? I assume it won't be "good" for credit card companies and payday lenders, but that's not the point obviously. And if there are reasons to be weary of this idea, are there any solutions out there for dealing with predatory payday loan lenders because that is a shit cycle that feeds on poverty.
The only negative I could see is people with bad credit or low income having a hard time getting cards. But really that’s a good thing as it should not be easy to take in debt if they know they can’t afford it.

One other thing is you could see more fees to help make up the revenue lost.
 

Huber.

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https://www.cnbc.com/2019/05/09/bernie-sanders-aoc-will-unveil-plan-to-cap-credit-card-interest-rates.html

Bernie and AOC, the faces of the Democratic Party's left-wing, have introduced a new bill to cap credit card and loan interest rates at 15%.

Is there an argument against this measure? I assume it won't be "good" for credit card companies and payday lenders, but that's not the point obviously. And if there are reasons to be weary of this idea, are there any solutions out there for dealing with predatory payday loan lenders because that is a shit cycle that feeds on poverty.
Sounds unconstitutional. If they can't afford the rates, don't make the charges.
 

AZ_

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Sounds like something that will help millions of low and middle class people, so it will be called socialist and adamantly opposed by the right.
 

cavsfan1985

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Sounds like something that will help millions of low and middle class people, so it will be called socialist and adamantly opposed by the right.
I am not sure if it will help or not. What if it makes it harder to get credit or they find other ways to charge fees. To me this could hurt those who pay off there cards every month or those with good credit.
 

AZ_

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I am not sure if it will help or not. What if it makes it harder to get credit or they find other ways to charge fees. To me this could hurt those who pay off there cards every month or those with good credit.
How?
 

Cavatt

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Fees I'm guessing.

This is basically what we had until the 80's I think. What has been so great about the changes? Your average American carrying more debt? I just don't see what problem lifting the cap solved, and the difference between 15 and 21 or more is crazy and super difficult to pay down. Can anyone point to a problem the high interest rates solved other than fatter wallets for the banks? I'm not sure riskier loans for riskier people is a good answer.

I think it is time for institutions that lend money to be more responsible and say, "Hey your credit isn't good enough to lend you money." Because really they are not thinking they are going to get the money back, they just want you to pay them small amounts for the rest of your life.
 

cavsfan1985

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Few reasons of the top of my head.

1) There is a cost to extend credit to those with lower credit scores and lower income when it comes to risk of being paid back.
2) Rates usually float to an index, so capping at 15%, means as rates go up, the return the credit card companies goes down. Why should a credit card company bare the risk of interest rates floating on short term debt.
3) If they are forced to have capped rates, I am sure you will start to see more annual fees to get a card, shorter payment windows potentially even some cards with no float. Meaning you start to pay interest at the time of purchase vs at end of statement.
 

cavsfan1985

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IMO the changes that need to happen are more about disclosure and transparency. I would also support the raising of a min payment. To me that is the biggest issue with a lot of this. Lets say you had to make atleast a 5% min payment of the balance, + interest costs. That way your balance never grows and gets smaller each month. If you have a $1000 balance @ 15% rate, the min payment would be $50 + $12.50 in interest so $62.50.
 

Cavatt

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IMO the changes that need to happen are more about disclosure and transparency. I would also support the raising of a min payment. To me that is the biggest issue with a lot of this. Lets say you had to make atleast a 5% min payment of the balance, + interest costs. That way your balance never grows and gets smaller each month. If you have a $1000 balance @ 15% rate, the min payment would be $50 + $12.50 in interest so $62.50.
I agree they were not aggressive enough on min payment when they changed it a couple of years ago.

Our grandparents got buy without a ton of credit. I think the economy is too tilted towards buying on credit in any case, and it opens us up to disaster during bad times.
 

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I agree they were not aggressive enough on min payment when they changed it a couple of years ago.

Our grandparents got buy without a ton of credit. I think the economy is too tilted towards buying on credit in any case, and it opens us up to disaster during bad times.
Our grandparents had mortgage rates near 15%.
 

Cavatt

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Our grandparents had mortgage rates near 15%.
Yeah I would love that on a 15k dollar house. People are always focusing on the rate when the houses were 10x cheaper if not more. The low rate means they can charge many many times the price.

They rarely got a 30 year mortgage. You could also earn money on money you had in the bank. If you had a good job you could afford a house, hell if you worked 40 hrs you could usually afford a house. Bragging about the low interest rate doesn't make sense when you end up paying twice as long for something 10x as expensive lol.

That's why old people are saying "well if you drank less coffee you could afford a house". that was true in their day, today saving even a couple of grand a year doesn't do much.

My parents down payment was 4k. Not drinking coffee for a year and saving a bit will get you there. Now try to avoid starbucks and save 20-50k
 

Huber.

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Yeah I would love that on a 15k dollar house. People are always focusing on the rate when the houses were 10x cheaper if not more. The low rate means they can charge many many times the price.
You're making the point of why rates shouldn't be capped.
 

Cavatt

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You're making the point of why rates shouldn't be capped.
I would be if I was suggesting it be capped at 1-3%, not instead of 15. It's about the difference in the rate the bank can borrow the money vs lend it to you. They have plenty of margin between 2-3% and 15%.
 

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Sounds like something that will help millions of low and middle class people, so it will be called socialist and adamantly opposed by the right.
This is a rhetorical question, but why do so many poor and middle class right wing people constantly vote against bills or laws that would actually save them money. I don't get how Republicans get so many poor people to vote for them.

Is it Guns? Is it they hate Mexicans more than they like money?
 

pr26

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This is a rhetorical question, but why do so many poor and middle class right wing people constantly vote against bills or laws that would actually save them money. I don't get how Republicans get so many poor people to vote for them.

Is it Guns? Is it they hate Mexicans more than they like money?
It’s because politics have become a lot less about ideology/policy, and much more about culture IMO. Social media dumped gasoline on that trend.

Sad for political theory nerds like me :(
 
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