Maximum Credit Card APR
Author: Doug
Posted: Thu Jul 15, 2004 4:18 pm
Post subject: Maximum Credit Card APR
11/7/2001 11:24 am CDT
I have asked six different credit card customer services what is the maximum APR they could charge allowed by law.
I got nearly identical answers. "Oh, I don't know, but I have seen other cards that go as high as 33%"
Well that is a bunch of baloney. They know all right. And for most - it is "unlimited". Yes, that is right. Your credit card company could up your APR to 50%, 100%, or 1000% if they so choosed. And you have no legal protection.
But you say wait a minute my state has limits! Not so, a 1978 Supreme court ruling on usery fees, determined that the state of the lender, not the borrower (you), are the controlling authority. Not suprising, most big issuers have their billing addresses in three states, Delaware, South Dakota, and Nevada. There are no limits to APR in those states. Plus, old stalwart states, like Arkansas which had limits to APRs of institutions in those states,
have swung to the credit card side.
I don't claim to be any kind of legal expert, but I find it appalling that our Federal Government allows this situation to continue.
The Federal Govenment needs to lasso in the out of control credit card industry. It is a scary situation.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Ira Stoller
Posted: Thu Jul 15, 2004 4:19 pm
Post subject: Maximum Credit Card APR
11/7/2001 10:08 pm CDT
Right, you have no legal protection against rising credit card interest rates. But you do have an even more powerful tool available: you can get another credit card and drop the high interest card. It's called competition and it works every time in every industry. Charge too much and the public will beat a path AWAY from your door step.
Author: Doug
Posted: Thu Jul 15, 2004 4:20 pm
Post subject: Maximum Credit Card APR
11/9/2001 1:29 pm CDT
Ha! Ha! That is funny. What happens is this. Your credit card company treats you great with a low interest rate. Things are going good until you run up a high balance.
No problem. You think you are going to pay it down quickly because of the cushion of cash you have available each month. However, your credit card company has a scheme that you have not even thought about. For no good reason they quickly raise your APR over a couple of months to 28%.
Suddenly instead of a $150 monthly payment, it becomes $450.
That's over $5,000 dollars of interest in a year. Now you are in big trouble. And don't expect the credit card company to be symphatetic.
So you think that you are just going to switch to another card. It is not that easy. When the credit card companies are in a power mode, that is, every cards rate is high, then you are not going to find those cheap deals.
Read the cardholders reviews at this site. You will notice the complaints are very similar. The industry is corrupt. It needs government regulation to limit the maximum APR to 5% or 6% over the prime rate. That would solve 99% of the complaints.
Right now the credit card companies are hurting - offering 0% intro APR for up to six months. But to their existing customer base there are no such offers. The good news is that customers are playing musical chairs. The credit card industry will soon experience their worst nightmare -
no cash flow. About next August 2002, watch for them to seek a government bailout.
Until there is Government regulation on the maximum allowable APR, the best protection is not to use a credit card unless there is no other alternative, and to keep your balance at zero.
Author: Ira Stoller
Posted: Thu Jul 15, 2004 4:21 pm
Post subject: Maximum Credit Card APR
11/9/2001 9:43 pm CDT
Doug you had better get back into the real world. The credit card industry is THRIVING! Introductory teaser rates have been around for close to ten years and won't go away. However, they are just that: INTRODUCTORY rates. If you sign up for a zero interest rate for six months and you run up a high balance, why are you surprised to be hit with a high interest rate in the seventh month, and by the way, why are you running up such a high balance anyway?
READ YOUR CARDHOLDER AGREEMENT! Read it very carefully, and if you don't like certain provisions, don't accept the card. Do not blame the banks if you don't understand that the rates will grow up after the intro period.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Doug
Posted: Thu Jul 15, 2004 4:22 pm
Post subject: Maximum Credit Card APR
11/12/2001 2:55 am CDT
Ira, I agree wholeheartly that the credit card industry has shown enormous profits through Q1, Q2, and Q3 so far this year. And year to year growth has been climbing. But there is a dark cloud looming on the horizon. Card companies like Providian have seen their stock tumble from over $90 to under $10. The same goes for NextCard. But the real shock is going to come in the fall of 2002.
Look on the internet and all those offers being sent to you.
0% for six months. In the past this has been unheard of.
Teaser rates have never been this low and broad based.
The issuers are getting worried over getting customers. With the current economic downturn in travel and job layoffs, consumers are spending less and starting to pay down debt. This trend is only going to get worse for lenders as time progresses. With credit card debt being paid down by workers who fear losing their jobs and no new consumer spending, the credit card cash flow will be contracting exponentially. If there is a large number of people switching cards, i.e. playing musical chairs, to get the 0% for 6 months, tranferring high APR balance gravy trains - then where are the credit card companies going to get their income for those six months? They are going to be hurting. And there will be no impetus to return to the good old days.
To supplement their problem is that people will be using the freed up cash to pay down the balance, so that when the
agreggate credit card balance returns to higher APRs, the pie won't be as large for them to take big bites out of. For America it will be a good thing, but for the credit card issuers, many will go belly up.
Not only that, there have been a tremendous number of Americans hurt by the credit card unscrupulus business practices. Especially over the last two years. And they have a long memory. Read the review posts on this site.
Due to the extraordinary converging events of a recessionary economy and the WTC tragedy, there is going to be a fortress mentality change in America's spending habits - similar to that of the Japanese and the Germans.
It's going to happen. And it will forever change our country.
And no, I don't blame the issuers when the rate goes up to 13.9% after the intro period. But what I do blame them for is the 24 -28% switchero. They can legally change the APR to whatever they want. 1000% if they want to.
Why would I want to run up a big balance? I wouldn't, since I am older and wiser. Knowing that you are dealing with immoral and dishonest people is your best protection. But credit card companies prey on the uninitiated. Plus sometimes you have no choice, if you have some unforseen emergency like a big dental bill or medical expense.
The people posting their reviews on this site are the victims, not the perpretrators. There complaints for the most part carry the same theme.
With limits on APRs and late fees, then most of complaints would go away.
In the 1930's and 1940's usery fees were set at 6%. So, historically, limits on usery fees is not unprecidented. The country needs this to keep from going bankrupt.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Thu Jul 15, 2004 4:18 pm
Post subject: Maximum Credit Card APR
11/7/2001 11:24 am CDT
I have asked six different credit card customer services what is the maximum APR they could charge allowed by law.
I got nearly identical answers. "Oh, I don't know, but I have seen other cards that go as high as 33%"
Well that is a bunch of baloney. They know all right. And for most - it is "unlimited". Yes, that is right. Your credit card company could up your APR to 50%, 100%, or 1000% if they so choosed. And you have no legal protection.
But you say wait a minute my state has limits! Not so, a 1978 Supreme court ruling on usery fees, determined that the state of the lender, not the borrower (you), are the controlling authority. Not suprising, most big issuers have their billing addresses in three states, Delaware, South Dakota, and Nevada. There are no limits to APR in those states. Plus, old stalwart states, like Arkansas which had limits to APRs of institutions in those states,
have swung to the credit card side.
I don't claim to be any kind of legal expert, but I find it appalling that our Federal Government allows this situation to continue.
The Federal Govenment needs to lasso in the out of control credit card industry. It is a scary situation.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Ira Stoller
Posted: Thu Jul 15, 2004 4:19 pm
Post subject: Maximum Credit Card APR
11/7/2001 10:08 pm CDT
Right, you have no legal protection against rising credit card interest rates. But you do have an even more powerful tool available: you can get another credit card and drop the high interest card. It's called competition and it works every time in every industry. Charge too much and the public will beat a path AWAY from your door step.
Author: Doug
Posted: Thu Jul 15, 2004 4:20 pm
Post subject: Maximum Credit Card APR
11/9/2001 1:29 pm CDT
Ha! Ha! That is funny. What happens is this. Your credit card company treats you great with a low interest rate. Things are going good until you run up a high balance.
No problem. You think you are going to pay it down quickly because of the cushion of cash you have available each month. However, your credit card company has a scheme that you have not even thought about. For no good reason they quickly raise your APR over a couple of months to 28%.
Suddenly instead of a $150 monthly payment, it becomes $450.
That's over $5,000 dollars of interest in a year. Now you are in big trouble. And don't expect the credit card company to be symphatetic.
So you think that you are just going to switch to another card. It is not that easy. When the credit card companies are in a power mode, that is, every cards rate is high, then you are not going to find those cheap deals.
Read the cardholders reviews at this site. You will notice the complaints are very similar. The industry is corrupt. It needs government regulation to limit the maximum APR to 5% or 6% over the prime rate. That would solve 99% of the complaints.
Right now the credit card companies are hurting - offering 0% intro APR for up to six months. But to their existing customer base there are no such offers. The good news is that customers are playing musical chairs. The credit card industry will soon experience their worst nightmare -
no cash flow. About next August 2002, watch for them to seek a government bailout.
Until there is Government regulation on the maximum allowable APR, the best protection is not to use a credit card unless there is no other alternative, and to keep your balance at zero.
Author: Ira Stoller
Posted: Thu Jul 15, 2004 4:21 pm
Post subject: Maximum Credit Card APR
11/9/2001 9:43 pm CDT
Doug you had better get back into the real world. The credit card industry is THRIVING! Introductory teaser rates have been around for close to ten years and won't go away. However, they are just that: INTRODUCTORY rates. If you sign up for a zero interest rate for six months and you run up a high balance, why are you surprised to be hit with a high interest rate in the seventh month, and by the way, why are you running up such a high balance anyway?
READ YOUR CARDHOLDER AGREEMENT! Read it very carefully, and if you don't like certain provisions, don't accept the card. Do not blame the banks if you don't understand that the rates will grow up after the intro period.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: Doug
Posted: Thu Jul 15, 2004 4:22 pm
Post subject: Maximum Credit Card APR
11/12/2001 2:55 am CDT
Ira, I agree wholeheartly that the credit card industry has shown enormous profits through Q1, Q2, and Q3 so far this year. And year to year growth has been climbing. But there is a dark cloud looming on the horizon. Card companies like Providian have seen their stock tumble from over $90 to under $10. The same goes for NextCard. But the real shock is going to come in the fall of 2002.
Look on the internet and all those offers being sent to you.
0% for six months. In the past this has been unheard of.
Teaser rates have never been this low and broad based.
The issuers are getting worried over getting customers. With the current economic downturn in travel and job layoffs, consumers are spending less and starting to pay down debt. This trend is only going to get worse for lenders as time progresses. With credit card debt being paid down by workers who fear losing their jobs and no new consumer spending, the credit card cash flow will be contracting exponentially. If there is a large number of people switching cards, i.e. playing musical chairs, to get the 0% for 6 months, tranferring high APR balance gravy trains - then where are the credit card companies going to get their income for those six months? They are going to be hurting. And there will be no impetus to return to the good old days.
To supplement their problem is that people will be using the freed up cash to pay down the balance, so that when the
agreggate credit card balance returns to higher APRs, the pie won't be as large for them to take big bites out of. For America it will be a good thing, but for the credit card issuers, many will go belly up.
Not only that, there have been a tremendous number of Americans hurt by the credit card unscrupulus business practices. Especially over the last two years. And they have a long memory. Read the review posts on this site.
Due to the extraordinary converging events of a recessionary economy and the WTC tragedy, there is going to be a fortress mentality change in America's spending habits - similar to that of the Japanese and the Germans.
It's going to happen. And it will forever change our country.
And no, I don't blame the issuers when the rate goes up to 13.9% after the intro period. But what I do blame them for is the 24 -28% switchero. They can legally change the APR to whatever they want. 1000% if they want to.
Why would I want to run up a big balance? I wouldn't, since I am older and wiser. Knowing that you are dealing with immoral and dishonest people is your best protection. But credit card companies prey on the uninitiated. Plus sometimes you have no choice, if you have some unforseen emergency like a big dental bill or medical expense.
The people posting their reviews on this site are the victims, not the perpretrators. There complaints for the most part carry the same theme.
With limits on APRs and late fees, then most of complaints would go away.
In the 1930's and 1940's usery fees were set at 6%. So, historically, limits on usery fees is not unprecidented. The country needs this to keep from going bankrupt.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 4:22 PM
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