Competition in the Credit Card market

[shanegl]

Do you disagree with the notion that interest rates should not be so low as to encourage high levels of personal debt?

High inflation maybe, but interest rates should have nothing to do with how much debt people have. If the powers that be are worried about that they should introduce tougher lending criteria.

 

[CCOVICH]

CCOVICH, this is an outrageous viewpoint...morality and people's self discipline should have nothing to do with setting interest rate levels. That's Thought Police stuff.

Sorry, but I am not a believer that usury is sin, and I am also a borrower so you can leave the morals out of it.

Higher levels of personal debt would imply increasing inflation which is bad news for almost everyone.

Higher interest rates serve to cool the appetite for debt.

That's common sense. Not 'Thought Police' stuff.

 

[KalEl]

Sorry, but I am not a believer that usury is sin, and I am also a borrower so you can leave the morals out of it.

Higher levels of personal debt would imply increasing inflation which is bad news for almost everyone.

Higher interest rates serve to cool the appetite for debt.

That's common sense. Not 'Thought Police' stuff.

But what you were suggesting was artificially keeping interest rates high to curb the irresponsible behaviour of some when it comes to credit cards.
A credit card should only be used as a cash flow aid or for distance purchases (online etc) Anything else is using the card for a purpose it was not designed for. But penalising the majority would be unfair, like curbing the use of shovels just because some use them to hit people over the head!

 

[CCOVICH]

A credit card should only be used as a cash flow aid or for distance purchases (online etc) Anything else is using the card for a purpose it was not designed for. But penalising the majority would be unfair, like curbing the use of shovels just because some use them to hit people over the head!

But there is no penalty if you pay off your balance within the intrest free period (this is how a credit card 'should' be used, right?)-and if 50% of us are doing that all the time, then the 'majority' aren't affected , are they?

And how else would you suggest that people are discouraged from misusing, i.e. for reasons other than you have outlined above, their card? Should they be encouraged to build up debts on their credit cards?

I am not suggesting artificially high rates. I am saying that rates should be appropriate to a stable economy.

My morals have nothing to do with my views on this-it's purely self-interest, which would suggest my morals aren't as high as you are implying...

And as far as I know, hitting someone over the head with shovel is generally illegal, so their use is most certainly curbed in that respect.

 

[KalEl]

What I am saying is people shouldn't be encouraged or discouraged purely by the rate. Yes entitities like the Financial Regulator and even the banks themselves should warn people of the perils of unsustainable debt, much like bookies run self exclusion and help programmes.
But keeping interest rates high purely to discourage the misuse of credit cards is too extreme in my opinion.

 

[CCOVICH]

Fair enough. I agree with much of what you have said there, especially re. the role of the Fincancial Regulator as a source of information (in fact I feel we should have a totally separate entity to perform such a function, but that's another discussion).

 

[Riddler]

Price is not an issue so long as it's reasonable for the vast majority of consumers. What really matters is access when and where I want it. Factor in convenience and you begin to understand the dynamics ...Now and again someone will disrupt this dynamic by offering and shouting about lower prices at a high cost (marketing spend). Some of the loudest are in fact in the process of pulling a fast one. As bankers are great mimics they will always copy instead of compete it's intrinsic fact of life when you are into balanced mediocrity. Some super consumers focus too much on price but you have to remember this is not the total "cost" that people reckon on. Credit is a habit and it seems we are in for a shock as it has a cost most people have difficulty in addressing...consume now and pay for it out of future income...a cyclical hurtful learning experience that requires for many people an external intervention.