Bernie Sanders Proposes Trump’s Cap on Credit Cards at 10%

They will have less credit because a lot more people are going to get their CC applications denied. Or they are going to charge merchants more per transaction to make up the difference and prices will go up.

 

The banks are going to make up for that lost revenue somewhere.
One place would be to start charging annual fees on every card. I do not carry balances on my credit cards and I'm not going to be happy if I have to start paying annual fees on all of them. Right now I pay an annual fee on only one card, AmEx Gold, and that is because the benefits justify that cost.

 

It’s completely asinine.

If we want to impose an arbitrary cap (aka price controls), it should at least be on the fringe of what would be considered “predatory”? How many sane people view 11% as a predatory? That’s barely above prime. So all this means is banks won’t extend credit to people with only slightly lower than prime credit.

Govt should stay out of the business of price controls. I’d be more ok if it was just strictly aimed at actual predatory lenders and payday lenders, whose rates approach 400%. Some of those guys are more like criminals, so even if govt “price controls” them out of existence no real value is lost to society. I view this kind of like minimum wage, the govt should only regulate disclosures and maybe the extreme end of rates. So for a credit card that would probably be something around 30%. Govt can require more clear disclosure and maybe better arbitration/refinancing terms when people get in trouble, but to slap price controls at a ridiculously low rate will just limit credit. It’s literally just math. The commies and right wing populists never seem to get that.

 

I used to invest in loans through a company called "lending club", and there was another version of that called "prosper" ... It wasn't great. They offered rates as high as 28% to people with bad credit, and I got to see first hand that the default rate was through the roof, such that it was barely profitable in the long run. I made around 6% after all the defaults, which isn't terrible, but IMO, if rates were capped at 10%, it probably would have been a money loser by the same model. They'd have to change their model to giving loans only to people with the highest scores. That company stopped allowing the public to participate in funding loans and went to an institutional investor only model.

 

I used to use prosper and probably made closer to 9% or so. Would like to continue but it is no longer allowed in Maryland.

 

flat out terrible idea. Almost, but not quite, as bad as not letting Nippon Steel buy US Steel.

 

This will never happen as banks contribute immensely to the campaigns of politicians

 

The financially vulnerable will get hammered & their rates will go up as they will be forced to seek even worse rates elsewhere. Idiocy.

 

They will get paid. Super easy to up processing fees. Shoot there are a lot of businesses that are paying far more than they need. Every couple of years I have to threaten to switch. It’s like cable. Here is your rate and they up a year or two later. In our industry the goal is 2%. Not worth my trouble if I am there. If it nudges up. I make a a phone call and it gets adjusted back typically. Kind of over BOA and may switch this year just to do it. But the company I would go to is fair and last time told me to stay as it would be a wash and the hassle to switch was up to me.

If you own a business make sure you are interchange plus and not on a tier plan. I learned that our first year of business back in 2008.

 

Pretty clever by Mr Sanders considering we know Trump won’t follow through..

 

Don't we already have usury laws which cap rates of interest? Do credit cards not currently fall under those, or is there carveout?

 

Why don't we just cap the price of eggs at $1/carton of 12 as well? And, gas at $1.50/gallon! Yes - it's a dumb idea whether from Trump and/or Sanders.
See what rent control has done for cities who implement it.

 

So want to fight price gauging

 

I always find it fascinating that people (OP) cheer on caps for voluntary and willingly participating consumers ( read nobody forced you to fill out the CapOne application) but want unlimited ability for a government entity to require compulsory participation though the threat of jail time for citizens to participate in endless string of government boondoggles.

 

And Hawley would proclaim himself a conservative.

 

Would definitely help RFK out...

 

I’m not a fan of limiting a business on charging a fee for the use of its service. One would have to claim the banks are a public utility, which they are not (but too big to fail?).

One would think that if there is such a perceived high margin, there would be flood of new business entrance into the market for credit cards and loans to higher risk credit card consumers. A cap implies that there is a market imbalance of competitors.