credit card issuers say it is a 'risk' business so their customers should assume that risk

[ensho]

this is what Bill Himpler of the Amer. Financial Serv. Assoc. said on Wash. Journal this a.m.

the 'risk' being higher and higher percentages weather you have a good record or not.


I think that if you start a 'risk' business then you should take the risks not your customers.


are credit cards the only risk business that makes the customer pay the risk?

[ellacott]

1. I would say that the stock market is a risk business where customers pay the risk

Credit card agreements were never meant to be comparable to the stock market.

[ensho]

7. the market is different. everyone knows playing the stocks is gambling

nt

[ellacott]

17. Well, according to that Credit card guy you quoted

he seems to think that the public knows that credit cards are risks that we've agreed to.

You asked for examples and that's what came to my mind.

[Rabrrrrrr]

2. It's only a "risk" business because they hand out cards like candy

and are now reaping the harvest of their stupidity.

As well as they make it inherently more risky by charging 30% to 50% interest, thus guaranteeing even more people won't be able to pay off their cards and will default.

If they ran their industry like human beings instead of vulturous hyenas, it wouldn't be as bad.

[Fresh_Start]

3. insurance - all types makes the customer pay for the

assessed risk.

[ensho]

5. isn't that a different kind of risk?

credit cards and not insurance policies.

[Fresh_Start]

22. actually its the same

insurance companies are financial service companies. Both use actuarial methods to determine the future costs and allocate that cost to the current customers.

An insurance customer prices its policies to cover its probable claims (Cost), operating costs plus profit. A consumer credit company will charge its customers to cover its probable costs plus profit. In the case of the consumer credit products, a good customer winds up paying part of the cost for customers defaulting on loans just like an insurance customer payments cover the costs to pay for other customers claims.

[lonestarnot]

4. They make more money off defaults than customers who pay on time.

Shitty business, riskie's ass!

[ensho]

6. but the defaults penalties are a scam, a set up

nt

[remedy1]

9. Actually they don't. n/t

[remedy1]

8. He is essentially right.

Credit cards are generally unsecured loans. The card issuer takes the risk of loaning money without collateral. They pass it on to the borrower(s) as higher interest rates. The better your credit score, the lower your interest rate will be because of your risk profile.

When creditors default, we all pay.

[safeinOhio]

11. Logic

Legalize loan sharks and let them take the risk. Oh, thats right, we are doing that.

I think there is something wrong when BOA charges me 19.99% interest and my local bank charges me 8.89%. Same risk, double the return. I think the only difference is that BOA is now loaning me back the money I bailed their asses out with. Well not anymore, I canceled. Every one needs to shop around and no one needs to pick the picture on their cards.

[remedy1]

13. Your local bank

is in a better risk position because they probably have less cards out there. I agree with you that it is better to bank locally.

B of A just tried to raise the rate on one of my cards. I called them on it and they backed down.

Everyone should assess their need for a credit card, and cancel the ones they don't need, and either pay the balance in full each month or work very hard to keep their balances to a minimum. That is the only way to stay ahead with credit cards.

[Democrats_win]

10. They're still shoveling that line of bull sh*t? It's not true.

Over the past five or so years the credit card companies have been so profitable that their old bromide about needing to gouge customers doesn't hold water. They've made tens of billions every year by gouging people. It's not wrong to make a profit, but the profits are excessive. Who do they think they are, oil companies?

The truth is, this is usury. It is immoral and illegal in many states. The federal government must reign in these companies and bring fairness to the system.

[Toucano]

12. The fees they collect from merchants carry no risk.

The credit card scam sucks money out of the economy at both ends.

[remedy1]

14. Merchants don't have to pay the fees.

Because they don't have to accept the cards. The merchant makes that choice.

[Toucano]

15. Do card issuers collect fees from the merchant or not?

The point is not that merchants have a choice, but that issuers collect money on both sides of the transaction, and on the merchant side, there is no risk.

This is something A LOT of people don't realize.

[remedy1]

18. Yes they do.

The fee is for processing the transaction. The merchant agrees to it. The merchant benefits by being able to accept the credit card, and to get paid for the sale by the issuer.

It is a business, after all.

[Still Sensible]

16. They can't manage their own risk, but they want

the consumer to pay for this failure. That risk is the cost of doing business... if you can't handle that risk without usury interest rates and outrageous penalties on the risky customers you have issued credit cards to, you should not be in the business.

The fact is the banks got greedy and weren't showing enough "growth" to satisfy their shareholders, so they discovered they could extend credit in this manner and really get that growth train rolling... they knew there was going to be a high default rate and they built it into their business models. But, lo and behold, when the economic house of cards came falling down the credit card default rates went through the roof... well over their "business model" projections.

And now they want the consumer to bail them out because they rolled the dice and lost. Fuck 'em. And get the regulation back in (and the usury out) of the credit card industry!

[Kajsa]

19. Wrong, It's not a large risk

if they issue credit cards to those
who have the financial means to pay
off their credit card bills.

Responsible lending practices include setting
credit limits according to the customers income
level,i.e

NOT giving a customer with an annual income of
$23,000. a credit limit of $25,000.!

I used to be a credit checker for BofA, back in
1976.
That's how they determined credit limits then.
A lot of people were turned down for a
BankAmericard ( now VISA) because they didn't
have enough income to qualify.

Nowadays, they will issue a credit card to anyone
who breathes.

:(

[MiniMe]

20. Where was our share of the profits?

You can't have it both ways.

[Mudoria]

21. They wouldn't have that problem of "risk" if they did a better

job of vetting the people they give them out to. If a person is a risk to repay why would you give them a card?