Any successful stimulus package must address credit card interest rates. Right? Why aren’t they including it?
May 29th, 2009 | by admin |Kit Car Ted asked:
Any successful stimulus package must address credit card interest rates. This would have an immediate and positive impact on the economy.
There are a few states that already cap interest rates, but for the rest of us, 21-29% (and higher) is very common and would be considered usury under most other circumstances.
Lowering the prime rate does not help because the banks changed their terms over the last few years to include a little gem like this: your rate is prime plus X but will never be lower than YY… in a nut shell, credit card bills are not going down!
It’s time to federally regulate interest rates on credit cards, so why are they seemingly doing nothing about it?
By the answers so far, I have to ask:
Is it not clear that lowering credit card/revolving interest rates to reasonable levels would immediately increase disposable income for most US households EVERY month (not just onetime via the “tax rebate”)?
GENIE
5 Responses to “Any successful stimulus package must address credit card interest rates. Right? Why aren’t they including it?”
By Tim on May 29, 2009 | Reply
No they don’t need to include credit card rates.
If your credit score is bad, you will have high interest rates. You can always shop around for a better rate. Credit card rates are higher because they are unsecured lines of credit.
If you default on your home loan, they take your home. If you default on your credit card payments they have nothing to take.
I have no idea what my rate is. I pay off the card every month. You need to live within your means.
By Michael E on May 30, 2009 | Reply
The gov’t does not want you to have lower rates because you might be inclined to use the refund check to pay off credit card debt. Paying off debt does little to the economy as a whole.
sucks.
By kweavermtg on Jun 1, 2009 | Reply
Michael is right….the government does not want you to use stimulus funds to pay off debt. Debt was accumulated on spending which already occured. The stimulus money if spent on new goods and services will generate further revenue and in turn tax dollars for the entire economy. Credit card rates are high based on an amount of defaults the companies know they will face. Historically they know X% of people will not pay. Whether we like it or not, the rates we pay on credit card debt offset these losses caused by those who do not pay. If defaults greatly increased the lender would be more likely to raise rates to offset these additional losses.
In the big picture:
Lower taxes/stimulus $ to us means everyone has more money to spend. All of that additional revenue when added up actually creates more tax dollars for the government long-term. Politicians who want to significantly raise taxes, whether they realize it or not, are actually reducing the tax revenue of the government long-term if we as consumers have less to spend.
By heybulldog on Jun 1, 2009 | Reply
We already have to much Government in our lives.
Leave them out of it.
If you wanna play the credit card game. It’s at your own risk.
Play with snakes and you will get bit.
By heyteach on Jun 3, 2009 | Reply
The stimulus package is sheer idiocy. However, your point re: the disappearance of usury laws IS a good one because as the schools are very careful to teach little math, no business, and no economics, the public does NOT understand how compound interest works. In addition to credit card loans, there are MANY contracts out there where people are paying around 60% and more. You get better terms from a loan shark.
However, this should not be done at the federal level–love that Constitution and Amendments IX and X–something we don’t have time to teach while indoctrinating students in important things like why the US is responsible for all evils throughout history. This is something states CAN and SHOULD do.