Re: Credit Card Hearings in Congress

In article <h_P5j.22333$MJ6.507@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
"SpammersDie" <xx@xxxxx> wrote:

"Shawn Hirn" <srhi@xxxxxxxxxxx> wrote in message
news:srhi-C91D86.22044405122007@xxxxxxxxxxxxxxxxxxxxxxxxx
In article <bWy5j.8132$VJ.5663@trndny05>,
"AllEmailDeletedImmediately" <derjda@xxxxxxxxxxx> wrote:

"Shawn Hirn" <srhi@xxxxxxxxxxx> wrote in message
news:srhi-DCDC50.23190404122007@xxxxxxxxxxxxxxxxxxxxxxxxx
In article

snip

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.

i'm not sure what you mean here. the cc should be allowed to apply the
new interest rate to the entire balance, as that's what's at risk, not
just
the
new purchases.

If the current balance is being paid off on time then the risk is
minimal,

Considering how it can take years to pay off even a moderate balance if the
borrower is only making minimum payments, I don't think the risk is
"minimal." It's still effectively a long term installment loan with no
collateral securiing it and it's at an interest rate that the card issuer
has just determined to be below market rate for the borrower's risk
category.

Sure the risk is minimal. If a borrower is years into paying off a
balance via minimal payments, chances are that when the balance is paid
off, the borrower will end up paying several times the value of the
original loan. So if the borrower defaults, unless the default occurs
early, the odds are good that the lender would have already been paid
back the original balance, at least once, if not multiple times. The way
for a credit card lender to reduce risk with an existing customer is to
stop lending that customer new money.
.

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