Re: Credit Card Hearings in Congress

In article
<john-6411A7.16180004122007@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
"John A. Weeks III" <john@xxxxxxxxxxxxx> wrote:

In article
<cdca79eb-e558-4262-bded-24c95ac13cfb@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
Rosebuds <design38967@xxxxxxxxx> wrote:

It's long overdue that our lawmakers should take a look at the credit
card industry so that something can finally be done to stop the abuse
of consumers without giving a second thought to what it is doing in
the long run. I know that it is wrong to raise the interest rate when
a consumer has:
1. Made all required payments and made them on time;
2. No exceeded their credit limit;
3. Used their credit responsibly.

That would be nice in an ideal world where everyone is responsible.
But out here in the real world, the first clue that a vendor might
get that a customer has a problem is how they treat other credit
obligations. If a customer suddenly becomes a greater risk, the
vendor should have the right to be compensated fairly for taking
that risk.

Then they should simply stop lending that customer more money.

After all, the customer doesn't have to accept the new higher
interest rate. They always have the option of paying off the
debt.

And the credit card issuer does not have to continue lending money to a
customer it views as risky or charge a higher interest rate for
subsequent transactions, not past ones.

It never ceases to amaze me that credit card lenders can suspect you
of "having money problems" and yet they you to pay more! If the
truth is told, they want you to get in a hole that you can't climb out
of so that they can continue to make money.

That is not true. They are simply (1) being compensated more
when the risk is higher (which a fundamental principal of
finance) and (2) trying to influence the behavior of the customer
to not take on yet more debt by making the current debt more
expensive.

That's the risk creditors take, or should take.
.

Relevant Pages

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