Quote:
Originally Posted by Inkstain82
I hear this sentiment quite a bit, and it's completely unfair.
Unsecured debt is priced to risk, and the risk in bad economic times is enormous. Roughly 1 in 8 credit-card accounts are delinquent or in default, and many of those accounts carry the a larger than average percentage of the companies' loans paid out.
And not all of those people in default now were people with bad credit before. If you have no savings (as most Americans don't) and you could lose your job at any moment (as most Americans could right now), you are never far from defaulting on unsecured debt.
Unsecured debt is priced at a variable rate. That means instead of a nice, steady price, it will be extremely cheap in good times and very expensive in bad times. Nobody said a word when times were good and they benefited from the cheaper rates. But now the flip-side of the coin isn't as much fun, and the credit-card companies are accused of doing something morally wrong. (Not that they are saints by any means.)
Anyone who thinks they can do better should start their own company and start offering unsecured debt at rates they feel is fair, and see how long they last.
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You really think a jump by almost 19% to 29.9% is fair? 1 delinquent credit card in 8 no way justifies this. These people are not losing money if you do the calculations. There needs to be laws in place for this. Even at 11% is not a low interest either that they cannot make money from and recoup any losses due to any delinquent accounts. Just saying because it is "unsecured debt" shouldn't mean an open door to charge whatever you want.