Words of Advice:

"If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

"Flying the Airplane is More Important than Radioing Your Plight
to a Person on the Ground Who is Incapable of Understanding or Doing Anything About It." -- Unknown

"Everything is easy if somebody else is the one doing it." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Sunday, March 29, 2020

Pandemic Profiteers: Bankster Ed.

As millions of Americans get thrown out of work during the pandemic, one group stand ready to make a killing: The Banksters.

This is why: When it comes time to making decisions on buying stuff during this crisis, more and more people are going to turn to their credit cards. The landlord isn't going to take plastic, but the grocery stores and the pharmacies will. Millions, if not tens of millions of people who would routinely pay off their credit card each month are now going to, out of necessity, run balances on them, The banks stand ready to reap massive profits from the pandemic.

Credit card rates are averaging 17-20%, with some cards into the mid-30s. During a time of crisis, this is nothing short of usury and profiteering.

I am not against the banks making a profit. but I am opposed to them making a killing on the backs of people during a global pandemic and its ensuing economic crisis.

So please, Gentle Readers, sit down at your keyboards and send off emails to your Senators and Congressmen. Ask them, for the love of Your Dear and Fluffy Lord, to step up and do something.

(Feel free to repost.)


B said...

I understand your point, and it is a somewhat valid one.

However, if the profit was ok a month ago, then why is it different today?

(If they were wise, they'd OFFER reduced rates to their customers, but yes, they are greedy and it likely won't happen)

However, since you feel that the Feds should FORCE the card companies to reduce their rates, then I assume you will also be in favor of FORCING private citizens to save for the next pandemic or other crisis? Say 5% of their income so that they won't have to depend on Credit Cards but then will have a savings account to draw on?
I'm talking about a separate account for each person, not the forced "retirement" savings of Social Security that is adjudicated and spent foolishly by the federal Government.

It could be just another payroll deduction. Think of the number of people that we could add to the Federal payroll with this program.

Or we could tell them to eat those McMansions or those high end cars and clothes. Maybe that tattoo they spent money they didn't have purchasing. Or the ^$6 coffees they purchase each morning...

CenterPuke88 said...

The difference is one of needs. For most of the credit card era, the rates on cards have been either fixed (rare after the 70’s) or indexed. After the mess that was the late 70’s inflation fiasco, indexed rates ruled the roost. Companies would index their cards interest rate to some established figure (prime rate plus 8% or such). The huge change came as the rates plunged after the fiscal Pearl Harbor of 2008. Already a number of leaders had either increased the index rate over prime or re-indexed to a higher base, but now lenders openly disengaged the link.

Credit cards had become essential to the American lifestyle, but the protections that credit cards afforded consumers were more expensive than the issuers wished, so they tried to encourage users to move to debit cards. Debit cards have fewer and weaker protections, and are more profitable for the companies because of that, despite being able to charge usurious rates on credit cards, and the habits of many of carrying a balance.

The essential issue here is one of power. With “plastic” being essential to living in today’s society, in much the same way bank accounts are now because of mandated direct deposit, both have become important profit centers for the bankers. The problem is that the bankers won’t leave good enough along, and are constantly pushing the envelope to increase profit. Want to use electronic bill pay, it’s only free if you use it often AND have direct deposit. Want a low interest rate, have a good credit rating...whoops, lost a few points on your rating up goes your fees and interest rate.

Look at “promotional rates”, for instance. 1.99% on purchases in Oct-Dec, but read the fine print. If you carry any balance, they apply payments to the promotional rate purchases first, while your 17.99% balance continues to accrue interest. There are Federal Laws on payday lending to prohibit excessive charges and interest rates, certainly this field of banking deserves a little oversight. Strict regulation, perhaps not, but certainly some daylight to make people better understand the complexities they hide in the fine print.

Ten Bears said...

Strawman central - I just... can't.

Check out the graphic that got me kicked off Zuckerberg's Famous Pig for a week.

seafury said...

I can only imagine the letter from my congressman. " thank you for your your correspondence from 4/1/2020. Rest assured I share your concerns regarding (insert concerns here) I will be bringing your concerns up when congress returns to session. I will do my upmost to make sure banks and credit card regulations are eased during these trying times so as not to risk systemic failure of our financial institutions. This is not the time to ease interest rates on borrowers during a crisis. Please contact me in the future regarding any questions you might have" Sincerely Thurston Throckmorton Howell. US Congress

Dark Avenger said...

I’m glad you’re here to defend the voiceless bankers, B.

dinthebeast said...

"It could be just another payroll deduction."
Yes it could be. It could be called "taxes", in fact, it already is.

I got an email from my bank this morning about their COVID-19 responses. According to the email they include:

Suspension of residential property foreclosure sales and evictions.
Suspension of involuntary automobile repossessions.
A 90 day suspension of mortgage payments.
An offer for additional accommodations including payment deferrals for credit card, automobile, personal and small business loans.

Having never had a credit card, they don't really apply to me, and they seem a little short term in their focus compared to what is actually going on in their customers' lives, but they are more than nothing, and as my bank has been in a lot of trouble for some time now, perhaps an attempt at some PR.

It seems like now would be a good time to have a functioning CFPB.

-Doug in Sugar Pine

Comrade Misfit said...

Seafury, you know what they result will be if you don't write.

seafury said...

Yes I agree. Sometimes my cynical nature gets the best of me.

B said...

DA: I also said that it would be a good idea for them to lower their rates.

Doesn't mean that I am wrong about folks saving a bit instead of spending every dine as soon as they get paid....living at the edge of their means.

And if we are gonna force companies to change their profit strategy, then why not force people to prepare for next time?

Either smacks of Socialism.

Dark Avenger said...

Profits before people, B. That’s what made this country great.

CenterPuke88 said...

B., in case you missed it, the Republican Party (and the Democratic too) has enthusiastically endorsed the Socialist idea you suggest, that of (at first) Social Security and then automatic enrollment in 401(k)’s or similar programs. They have also been quite happy to direct that recent mandated 401(k) savings into the stock market, rather than more moderate investments. The biggest difference between the parties on this has been the continuous drumbeat of demands for a change, by the Republican Party, toward a risk based versus assured savings model. Why, you ask, because then campaign contributors can make money advising people and managing funds, something they can’t do with Social Security. The preoccupation with making money out of even Government functions continues to handicap the Republican Party and their ability to fairly support a broad array of supporters...even in the Socialist areas.