Interest rates

[Raybyrnes]

4plexowner
“I pay my cards in full each month as well – the credit card companies don’t like people like you and I, AN”

Credit card companies love you and AN . They love anyone who uses CC. Most companies make their guaranteed income on the merchant fees they charge not on the interest they earn from you. The more you and AN use their brand of card the more pressure they can put on the merchant to raise his fees which in turn means that the the merchant needs to raise his prices to accommodate the cost of CC fees that he is being forced to pay.

On small transaction from discover fees and pints can be greater than 10%

[4plexowner]

That’s a good point, Raybyrnes

I recently saw an article talking about the usurious (think ‘usury’ http://en.wikipedia.org/wiki/Usury) interest rates that credit card companies charge

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

The article also pointed out that the maximum interest rate anyone could charge used to be 16% – then lobbyists for the banking industry got Congress to change the laws and here we are today

[4plexowner]

That’s a good point, Raybyrnes

I recently saw an article talking about the usurious (think ‘usury’ http://en.wikipedia.org/wiki/Usury) interest rates that credit card companies charge

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

The article also pointed out that the maximum interest rate anyone could charge used to be 16% – then lobbyists for the banking industry got Congress to change the laws and here we are today

[4plexowner]

That’s a good point, Raybyrnes

I recently saw an article talking about the usurious (think ‘usury’ http://en.wikipedia.org/wiki/Usury) interest rates that credit card companies charge

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

The article also pointed out that the maximum interest rate anyone could charge used to be 16% – then lobbyists for the banking industry got Congress to change the laws and here we are today

[4plexowner]

That’s a good point, Raybyrnes

I recently saw an article talking about the usurious (think ‘usury’ http://en.wikipedia.org/wiki/Usury) interest rates that credit card companies charge

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

The article also pointed out that the maximum interest rate anyone could charge used to be 16% – then lobbyists for the banking industry got Congress to change the laws and here we are today

[4plexowner]

That’s a good point, Raybyrnes

I recently saw an article talking about the usurious (think ‘usury’ http://en.wikipedia.org/wiki/Usury) interest rates that credit card companies charge

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

The article also pointed out that the maximum interest rate anyone could charge used to be 16% – then lobbyists for the banking industry got Congress to change the laws and here we are today

[peterb]

Yup, just look at Visa’s profit margin. Or other card processing companies. Fee based. As long as they can maintain transaction volume, their ok. Middle man action…like realtors or any broker for that matter. They dont care where the market or the deal is going, just do the deal. That’s how they make money. No transactions, no money.

[peterb]

Yup, just look at Visa’s profit margin. Or other card processing companies. Fee based. As long as they can maintain transaction volume, their ok. Middle man action…like realtors or any broker for that matter. They dont care where the market or the deal is going, just do the deal. That’s how they make money. No transactions, no money.

[peterb]

Yup, just look at Visa’s profit margin. Or other card processing companies. Fee based. As long as they can maintain transaction volume, their ok. Middle man action…like realtors or any broker for that matter. They dont care where the market or the deal is going, just do the deal. That’s how they make money. No transactions, no money.

[peterb]

Yup, just look at Visa’s profit margin. Or other card processing companies. Fee based. As long as they can maintain transaction volume, their ok. Middle man action…like realtors or any broker for that matter. They dont care where the market or the deal is going, just do the deal. That’s how they make money. No transactions, no money.

[peterb]

Yup, just look at Visa’s profit margin. Or other card processing companies. Fee based. As long as they can maintain transaction volume, their ok. Middle man action…like realtors or any broker for that matter. They dont care where the market or the deal is going, just do the deal. That’s how they make money. No transactions, no money.

[davelj]

[quote=4plexowner]That’s a good point, Raybyrnes

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

[/quote]

You’re getting two different types of companies confused with each other. That’s why the processing fees are never mentioned.

The folks that testify to Congress are the underwriters (or lenders) like Capital One, Citi, etc. These companies don’t get the merchant processing fee. They just collect interest (and theoretically principal… one day).

Visa, Mastercard, Amex, etc. are processors. They collect the merchant processing fee. I believe Amex and Discover are the only two companies that collect both (that is, they are underwriters and processors), but they are a small percentage of the total due to the dominance of Visa and Mastercard.

(Actually I think folks from Visa and Mastercard have testified before Congress as well, but on a totally different subject than you’re referring to – monopoly/competitive issues.)

But all that aside, would you like to be in the credit card industry right now? Even with these “usurious” rates? Most of the underwriters are losing their asses right now, despite the high rates, because charge-off levels are so high. It’s pretty clear that, if anything, they haven’t been charging high enough rates as of late – or at least not high enough to reflect the risk inherent in their borrowers. Higher interest rates generally reflect higher risk, and higher risk generally reflects a higher probability of loss… it’s that old saw about risk and return…

[davelj]

[quote=4plexowner]That’s a good point, Raybyrnes

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

[/quote]

You’re getting two different types of companies confused with each other. That’s why the processing fees are never mentioned.

The folks that testify to Congress are the underwriters (or lenders) like Capital One, Citi, etc. These companies don’t get the merchant processing fee. They just collect interest (and theoretically principal… one day).

Visa, Mastercard, Amex, etc. are processors. They collect the merchant processing fee. I believe Amex and Discover are the only two companies that collect both (that is, they are underwriters and processors), but they are a small percentage of the total due to the dominance of Visa and Mastercard.

(Actually I think folks from Visa and Mastercard have testified before Congress as well, but on a totally different subject than you’re referring to – monopoly/competitive issues.)

But all that aside, would you like to be in the credit card industry right now? Even with these “usurious” rates? Most of the underwriters are losing their asses right now, despite the high rates, because charge-off levels are so high. It’s pretty clear that, if anything, they haven’t been charging high enough rates as of late – or at least not high enough to reflect the risk inherent in their borrowers. Higher interest rates generally reflect higher risk, and higher risk generally reflects a higher probability of loss… it’s that old saw about risk and return…

[davelj]

[quote=4plexowner]That’s a good point, Raybyrnes

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

[/quote]

You’re getting two different types of companies confused with each other. That’s why the processing fees are never mentioned.

The folks that testify to Congress are the underwriters (or lenders) like Capital One, Citi, etc. These companies don’t get the merchant processing fee. They just collect interest (and theoretically principal… one day).

Visa, Mastercard, Amex, etc. are processors. They collect the merchant processing fee. I believe Amex and Discover are the only two companies that collect both (that is, they are underwriters and processors), but they are a small percentage of the total due to the dominance of Visa and Mastercard.

(Actually I think folks from Visa and Mastercard have testified before Congress as well, but on a totally different subject than you’re referring to – monopoly/competitive issues.)

But all that aside, would you like to be in the credit card industry right now? Even with these “usurious” rates? Most of the underwriters are losing their asses right now, despite the high rates, because charge-off levels are so high. It’s pretty clear that, if anything, they haven’t been charging high enough rates as of late – or at least not high enough to reflect the risk inherent in their borrowers. Higher interest rates generally reflect higher risk, and higher risk generally reflects a higher probability of loss… it’s that old saw about risk and return…

[davelj]

[quote=4plexowner]That’s a good point, Raybyrnes

The article pointed out that the 2-3% fee the credit card companies charge the merchants is never mentioned when the credit card companies are testifying to Congress about why they need to charge 26-29% interest rates

[/quote]

You’re getting two different types of companies confused with each other. That’s why the processing fees are never mentioned.

The folks that testify to Congress are the underwriters (or lenders) like Capital One, Citi, etc. These companies don’t get the merchant processing fee. They just collect interest (and theoretically principal… one day).

Visa, Mastercard, Amex, etc. are processors. They collect the merchant processing fee. I believe Amex and Discover are the only two companies that collect both (that is, they are underwriters and processors), but they are a small percentage of the total due to the dominance of Visa and Mastercard.

(Actually I think folks from Visa and Mastercard have testified before Congress as well, but on a totally different subject than you’re referring to – monopoly/competitive issues.)

But all that aside, would you like to be in the credit card industry right now? Even with these “usurious” rates? Most of the underwriters are losing their asses right now, despite the high rates, because charge-off levels are so high. It’s pretty clear that, if anything, they haven’t been charging high enough rates as of late – or at least not high enough to reflect the risk inherent in their borrowers. Higher interest rates generally reflect higher risk, and higher risk generally reflects a higher probability of loss… it’s that old saw about risk and return…

[Author]

Posts