Credit card loans collide with record level
US credit cards are taking the loan record money, and the interest rate is nearby.
Fox – Seattle
Between credit card interest rates and rising crime, a bill with bilateral cooperation will increase prices for the current half -average, 10 %, about HALF half average, for five years.
This legislation will dramatically reduce the card rate, which is an average of 21.5 %. Nevertheless, industry experts say legislation can take consumers under both support and hindrance.
Bill sponsor, senses. Bernie Sanders, Iwat. %, “At least temporarily,” when working Americans catch. “
Trump promises a 10 % hat on card rates. Will he follow?
Now, both senators want to keep the president for his pledge.
Holly said in A, “US records are drowning in credit card debt, while the largest credit card issuers get richer and richer by increasing their interest rates on the moon.” Description. “Like President Trump, keeping a credit card interest rate at 10 %, is an easy way to provide a meaningful relief to working people.”
History shows that the bill is unlikely to be passed. Holi suggested a The more minor hat In 2023, at the card rates, 18 %, the measure died. Bank industry leaders predict that the Congress will not be hot.
“I know they understand how much it is, and we think it will be strong resistance.” Lindsay JohnsonCEO of the Consumer Bankers Association.
Industry leaders sent A letter Both senators in opposition to legislation.
He wrote, “This bill will eliminate credit card access to millions of consumers and bring them to credit sources, which is much more expensive and less regular.”
If the Congress meets interest rates, will the credit card be eliminated?
Credit card companies when they take a risk when they increase the credit to the user with a shaky credit. Those consumers often pay the highest rates. Card companies make money on interest. The revenue also protects users from the losses that do not refund.
Default rates 3 % on credit cards, the highest level since 2011, when the nation was emerging with great recession. Defits of Spell for Card companies.
If the Congress completed a 10 % prices, according to some industry observers, the card companies will probably stop the credit card approval for someone, with credit history spots or short. This means that millions of low -income, financially delicate Americans can no longer use credit cards, analysts said. Young consumers can try to enter manpower and establish credit history, may not have credit access.
“The fact is, a 10 % hat will really be, really restricted.” Ted RasmanSenior industry analysts in bankruptcy, personal finance site. “In fact, this card will not be profitable for issuers.”
Russia Maine and others say the high rate and rising crime of the card operates in a kind of vicious cycle. Increasing rates some consumers to stop paying. Run Card companies reduced their losses by increasing the rates.
Analysts say that if card companies cannot receive high rates, they will stop issuing cards to dangerous users.
“People who are in the high part of the risk spectrum will be denied straight. And this is the place where you get into a huge problem. Nicolas AnthonyCato Institute, a policy analyst at the Libertian think tank. “People who need it most are effectively cut off from the system.”
If a 10 % hat becomes law, “Credit cards can get less opportunities for users across the credit spectrum,” said John Cable, Managing Director of Payment Intelligence in Consumer Analytics Firm JD Power –
Without a credit card, borrowers can find worse options
With a credit card away from the table, consumers can find other forms of credit, some of them are probably worse.
“I guess so many people will create the attractiveness of ‘buy now, pay later’,” Rossman said, citing a small -term loan that allowed consumers to pay over time Is found. The product has increased popularity, but it can lead to delicate lenders More loans they can afford.
Other consumers can turn off salaried loans. A Pay lone Usually there is a short -term, high interest loan that comes to your next salary. Interest and fees can pursue effective costs in the past by borrowing money.
Critics said that the card industry had earlier made arguments for the worst situation. The industry predicted its non -intended results Credit Card Accountability, Responsibility and Discovery Act 2009Which is limited to limited penalties fees and card issuers to inform users before hiking rates Other fixes.
Then analyze The 2009 law saved consumers, and extended access to credit.
“You just face the most doubts about any industry lobby or psychologist who says that any rules,” said Carter Dogti, director of communications for financial reform, a progressive Advocacy Group, said Carter Dogti, director of communications for financial reform. Credit access causes loss. ”
Although 10 % hat may not be realistic, many industry observers raise interest rates, which are now 30 % top of the usual on store cards. Meanwhile, card companies receive more margins than a record, which effectively increase their profits.
What do you think about an interest rate of 20 % or 30 %?
The 10 CAP hat proposal can serve as an early Salvo, and Beijing can be debated whether Congress will consider card rates on a high personality.
Federal Credit Union cannot charge More than 18 % Interest on credit card. Act of military loan lending The caps card rate for active duty service members and covered dependents is 36 %.
“You can probably imagine a top hat of more than 30 percent for the commercial card industry,” said JD Power’s Cabel.
But he said, negative consequences for any cap users.
“It has to be noted that these are dangerous financial products,” he said. “There is no suicide attack. A loan for the user is being raised on good faith, which comes with a price.
