OMG, I can not believe this is legal

[pollypurebred39]

[Nishu]

Payday loan places are illegal if your'e military. Our area used to have a ton of payday loan places and they've all pretty much gone out of business.

We wouldn't be in this situation in the first place if it weren't for lenders like this loaning stupid amounts of money at stupid interest rates to people who couldn't afford it. How many people are going to be able to pay back a 79% credit card?

I believe in a free market but I'm so seriously over this crap.

When these crappy banks make bad loans, they write off the debt on their taxes and heck, sometimes they even get a bailout. How much of the bailout money was needed because of bad lending? How many people are on public assistance because of financial troubles that began with overextended credit? We all pay for bankruptcies in one way or another.

If we're going to have a free market economy, then have a free market economy for pete's sake. If you're going cry "free market" in the name of predatory lending and then remove the natural consequences of that stupidity on both the part of the lender AND the borrow, then the point is moot. If taxpayers are going to PAY for stupid lending and stupid borrowing, then taxpayers should have a right to place limits on that stupidity.

I'm not exactly in support of government regulations, but corporate America can't have it's cake and eat it too.

[larabelle]

Just plain stupid...and I looked at the guy at Firestone like he had two heads when he offered me a visa with 24% APR.

[greekislandgirl]

Wow!! I understand the arguments that say that people should read the small print -- but when someone is desperate to survive after going into medical debt or whatever, this is exploitation and even if it's legal, it's immoral. They'd be better off offering a credit card with a $50 credit limit at a reasonable rate than a $700 card at an 80% rate.

[lparker]

I saw on the news that they stopped the 69.9% rate for the rest of this month because they hit their limit on new accounts. Yay!

[a.nonymous]

Wow!! I understand the arguments that say that people should read the small print -- but when someone is desperate to survive after going into medical debt or whatever, this is exploitation and even if it's legal, it's immoral. They'd be better off offering a credit card with a $50 credit limit at a reasonable rate than a $700 card at an 80% rate.

The interest rate also represents a premium for risk of default. If anything, it shows that the involved banks (whether moral or not) are waking up to the reality.

$50 at a reasonable rate would be the same as donating $40 per card. Banks are in it for profit, not for offering welfare. It's still the consumers responsibility to check their end of a deal; no one's holding a gun to their head while signing the papers.

So, would you rather have them offer a credit limit of $0 at 0% or $700 at %80 if the risk of default is that high?

[greekislandgirl]

The interest rate also represents a premium for risk of default. If anything, it shows that the involved banks (whether moral or not) are waking up to the reality.

$50 at a reasonable rate would be the same as donating $40 per card. Banks are in it for profit, not for offering welfare. It's still the consumers responsibility to check their end of a deal; no one's holding a gun to their head while signing the papers.

So, would you rather have them offer a credit limit of $0 at 0% or $700 at %80 if the risk of default is that high?

My point was that if they don't think these customers are credit worthy, why are they extending them so much credit ($700)? Isn't it more PROFITABLE to a bank to have a customer who pays interest on a $50 loan than a customer who defaults on a $700 loan? (Obviously the answer is NO or they wouldn't do it, which means that many of these people ARE paying back their loans, which goes back to usury not being THE most moral thing.)

[Greebo]

My point was that if they don't think these customers are credit worthy, why are they extending them so much credit ($700)? Isn't it more PROFITABLE to a bank to have a customer who pays interest on a $50 loan than a customer who defaults on a $700 loan? (Obviously the answer is NO or they wouldn't do it, which means that many of these people ARE paying back their loans, which goes back to usury not being THE most moral thing.)

If the bank is stupid enough to lose money in this manner I have no problem with them going out of business - just like I have no problem with someone being stupid enough to sign up for this kind of debt in the first place.

[HoustonDave]

It's worse than you think. One credit card, and I think it was this one, offered:

79.9% interest rate
$300 credit limit
$75 fees in the first year.

So not only do you pay an outrageous interest rate, about 25% of your credit limit is automatically used up with fees, which you get to pay interest on!

Wheee!!!!

The deep philosophical question here that will divide this (and other) groups is "Is it the government's responsibility to protect people from themselves and from unethical people?" Libertarians typically say no it is not. Progressives typically say yes it is. This is why we have helmet laws in some states but not others.

Most people will agree, however, that government does have a responsibility to ensure people have sufficient information to make a good decision IF they are willing to look at it.

[dcompton]

If it were just stupid people making stupid decisions, that's one thing. But I agree with some of the other posters who have pointed out that we have failed at educating many in the population - the young now, and older folks in the past. In addition to not being able to understand the math, there are probably just as many who, even if they read, or try to read the fine print, wouldn't understand a quarter of it, because they don't have the reading, language, and logic skills they need to navigate the complexities of our society. Those of us who do are fortunate.

I think it's a bit unfair to write off everyone who accepts credit cards like this as stupid and willfully deciding to just do it anyway. As others have said, some are desperate, and some simply don't have the education and knowledge to make sound judgements in financial matters. Whether it's moral or immoral, I find it sad that so many fall into this trap.

Just my two cents worth (interest free).

[greekislandgirl]

Being stupid isn't morally wrong, illegal, or even something that a person chooses to be.

Some - MANY - people are stupid. It sucks, and they suffer in many ways throughout their lives, but not everyone is born with even an average IQ - that's why it's average - and often there is nothing that they can do about it. Genetics, poor nutrition as a child, bad luck, whatever the cause.

It seems like a lot of people in this thread are of the opinion that just because someone isn't of average intelligence or higher, they deserve whatever exploitation comes their way. I probably would have said that myself 10 years ago. Teaching special education and various other intervening experiences have now led me to believe that a healthy society stands to benefit from protecting its weaker members - including intellectually weaker - from exploitation.

So yes, I think the government could bear at least some measure of responsibility in limiting the extent to which these credit card companies can destroy people's lives when those people perhaps lack the ability to determine for themselves what is in their best financial interest. (An obvious example would be banning a card that is in literally nobody's financial interest.)

There is an enormous population of people out there who are neither mentally retarded (and therefore can expect some additional level of protection) nor intelligent (and can expect to protect themselves). They are still people and they still pay taxes.

I like the helmet law comparison because wearing a helmet is not a decision requiring intelligence. You don't have to be of average intelligence to figure out that wearing a helmet might save your life in a motorcycle accident. However, you do need to be of average intelligence to arrange your personal finances when the banking industry is exploitative, advertises heavily, often targeting specific groups, and can be outright misleading. So if some states (and most countries) can agree that having helmet laws is beneficial to society, why can we not agree that banning abusive credit card agreements is too?

[a.nonymous]

It seems like a lot of people in this thread are of the opinion that just because someone isn't of average intelligence or higher, they deserve whatever exploitation comes their way.

That is a bit too easy (actually bordering on insulting) of an argument to suspect I, or others, believe that "they" deserve exploitation.

If a person simply is not able to understand the terms and effects of papers signed, and this explicitly excludes just being too lazy/not bothered to read and understand them, then the only effective way to protect them is by making their signature legally invalid.
Protecting people is all fine and well, and in this case where specific weaker groups are actively targeted may carry benefits. But it is a dangerous game to keep calling for a "nanny state"; even moreso if freedom to do as you like and to make your own decisions is what you want - which is at least want I want with all consequences attached.

In my opinion, the helmet law comparison falls a bit short, too.
It does not take much intelligence to realize that wearing a helmet while riding a motorcycle protects you better than not wearing one.
As a matter of fact, even when walking on the sideway, wearing a helmet would be a better protection than a baseball cap.
What people did underestimate (or ignore) is by how much this statistically lowers fatality rates - a rate the government has an active interest in pushing down given the (monetary!) value that a citizen has for the state over his/her life time.

In effect, they are protecting their assets, their future income streams. Of course they will sell it as being concerned in your well-being only, because saying "we want the best for your health so you can pay more taxes" won't go down as well.

[kita]

Being stupid isn't morally wrong, illegal, or even something that a person chooses to be.

Some - MANY - people are stupid. It sucks, and they suffer in many ways throughout their lives, but not everyone is born with even an average IQ - that's why it's average - and often there is nothing that they can do about it. Genetics, poor nutrition as a child, bad luck, whatever the cause.

It seems like a lot of people in this thread are of the opinion that just because someone isn't of average intelligence or higher, they deserve whatever exploitation comes their way. I probably would have said that myself 10 years ago. Teaching special education and various other intervening experiences have now led me to believe that a healthy society stands to benefit from protecting its weaker members - including intellectually weaker - from exploitation.

So yes, I think the government could bear at least some measure of responsibility in limiting the extent to which these credit card companies can destroy people's lives when those people perhaps lack the ability to determine for themselves what is in their best financial interest. (An obvious example would be banning a card that is in literally nobody's financial interest.)

There is an enormous population of people out there who are neither mentally retarded (and therefore can expect some additional level of protection) nor intelligent (and can expect to protect themselves). They are still people and they still pay taxes.

It is an interesting question. When I was in Jersey in 2007 or even earlier there was a lot of ruckus about some mortgage companies who were selling houses with high interest rates to people who felt that they couldn't afford a better rate. After encouraging them to "pad" the statement of income so the borrower could "afford" a larger loan, the lender would wait for them to foreclose. The lender would then accept the house as deed in lieu (sp?), wait a few months and sell the house for more than what was owed. I think there were even a few cases where the borrower didn't foreclose and the mortgage lender went after them because they (the borrower) had falsified records...and it was later proven that the lender had encouraged income inflation on a regular basis.
Of course while the racket survived the lender was making out like a bandit. so, should that be legal?
I think it was a sting operation before they caught them telling people to inflate their income. Of course for a decades their houses had a habit of going through something like three foreclosures. Even though there was a down payment.
Of course they targeted first generation immigrants and uneducated African-Americans.
Yeah, I'm one of those who thinks that there should be some guidelines in place. And a TON of education.

[Greebo]

Oh I ABSOLUTELY think companies which commit or encourage fraud should be gone after. No question.

But where does that relate to this story? Is there any hint that this credit card company is acting falsely in some manner?

[bast]

My credit is mid-range, and I still got a solicitation from this outfit last year. I don't remember the interest rate being quite that high on the one I was sent, but I remember it being high enough that I actually used their postage-paid envelope to send the forms back with a note reading "Are you ******* kidding me?"