[Elyzabeth]

This is at a very mainstream women's clothing store on the internet !
This is the most outrageous rate I have ever seen, and I am shocked that it is legal?
When I was a kid in America there were people who lent money at extremely high rates, they were called "loan sharks," and they charged something like 25 % to 30 % interest on their loans
What has happened to our western society that we are okay with these kind of rates?

[Rich]

Consumer inter rates should be limited. Certainly no higher than 20% maybe less. This would also have the nice side effect of limiting a seventies style inflation take off, because as inflation rises, the maximum real rate of consumer interest would fall, choking off consumer credit.

[Bulaba Khan Jones]

Which very mainstream store is this at?

[Elyzabeth]

I first saw in on Women's World as a "special"?

Also looked it up and it sounds like Morgan Stanley also charges a the same rate..
"Morgan Stanley has launched a new credit card, this credit card charges a whopping 57.8% APR !"

APR stands for annual percentage rate, and includes Interest rate, fees and charges.
so it is not for the interest rate alone... but..?
...It is still totally ridiculous !

[Prosthetic Conscience]

Meh. British TV ads for Wonga loans currently quotean interest rate of 1509% - and that's down from 5853% last year.

[Potemkin]

Capitalism - love it or leave it!

[layman]

Certainly no higher than 20% maybe less.

Some people wont get loans then. In fact virtually noone will get a mortgage, thats for sure.

[Elyzabeth]

Meh. British TV ads for Wonga loans currently quotean interest rate of 1509% - and that's down from 5853% last year.

I didn't realize that... how can they get away with it?
In the US they USE to have caps and rules about how much interest can be charged doubt if they still have it,
But Wonga? I had no idea that their rates were so over the top!
They should be prosecuted... where are the rules that protect the poorest of the poor, who need and use these services?

[mikema63]

The battle with payday loans has been long and hard, a lot of state politicians are in their pockets or outright own a payday loan chain.

[Potemkin]

The battle with payday loans has been long and hard, a lot of state politicians are in their pockets or outright own a payday loan chain.

Payday loans are a jolly wheeze for the bourgeois class to exploit the working class twice over, first at their workplace and then on payday. It's the modern equivalent of the company-owned shops which used to be so popular back in the 19th century - the workers had no choice but to buy their staples of life at these company-owned shops, which would charge extortionate prices to their captive market. The employers would give their workers their salary with one hand, and take it back again with their other hand. That was outlawed, so payday loans are the next best option. Failing that, credit card debt is clearly the way to go.

[Prosthetic Conscience]

Certainly no higher than 20% maybe less.

Some people wont get loans then. In fact virtually noone will get a mortgage, thats for sure.

No, the mortgage market is completely different. No-one pays 20% or more on mortgages, because the amounts are too high for anyone to be able to afford that. Mortgages are secured on the property, so lenders feel safe, and actually compete with rates. It's the unsecured loans that get ridiculous rates, especially for those who have been marked 'high risk'.

But even if a high risk person can find someone with a good credit history to guarantee the loan (ie they will be legally responsible for payments if the borrower stops paying), they still charge a high rate of interest - 49.9% APR for 'Amigo Loans', who, again, are big enough to advertise on British TV: http://community.amigoloans.co.uk/answe ... r-criteria

[Truth To Power]

Meh. British TV ads for Wonga loans currently quotean interest rate of 1509% - and that's down from 5853% last year.

That's astonishing. That's more than 16% interest PER DAY. How are people rendered so desperate that they will agree to such extortionate terms?

No, the mortgage market is completely different. No-one pays 20% or more on mortgages, because the amounts are too high for anyone to be able to afford that.

Actually, some mortgage rates in the early 80s peaked at over 20%. Of course no one could afford it for any length of time, but it was understood that such rates would be temporary.

[Prosthetic Conscience]

That's astonishing. That's more than 16% interest PER DAY. How are people rendered so desperate that they will agree to such extortionate terms?

No, it's not actually that much per day. With such high rates, you do have to remember that interest is compounded (with lower rates, the difference between simple and compound interest is much less). So the calculation is:
5853% = pay back, after a year, 59.53 times the initial loan
Each day, the amount owed rises by 59.53 to the power of 1/365 , which is 1.01126 times.
So the interest per day is 1.126%. That's still pretty bad, of course - if the loan was over a month (which is quite likely, for a short term 'I can pay when I get paid' loan), then the interest would be 40.6%.

Actually, some mortgage rates in the early 80s peaked at over 20%. Of course no one could afford it for any length of time, but it was understood that such rates would be temporary.

Fair enough - yes, temporary peaks of that might happen, but it couldn't be sustained.

[Rejn]

I've never applied for a personal credit card, and just use my debit card. Some of my friends have more than five credit cards - no idea why.

As for payday lenders, you have to think about the fact that probably half of all loans will never be paid back - that's why the rate is so high.

[mikema63]

More than cerdit cards? Highly doubtful.

[Rich]

Certainly no higher than 20% maybe less.

Some people wont get loans then. In fact virtually noone will get a mortgage, thats for sure.

What? Most mortgage rates are less 5% or less. Pay day loans should be handled by the government. The government can get direct access to wages and benefits, so they can ensure repayment. There needs to be a cost to discourage people from looking to government to manage their personal finances for them, but there's absolutely no need to allow the extortion of the pay day loans industry. But in extreme cases individuals or families should be put on a daily allowance.

Yes there is a middle way away between Leninist Communist theocracy on the one hand and Libertarianism on the other where we allow people to sell themselves and their children into slavery.

[Ganeshas Rat]

I know the writer who decided to publish the anthology of American (and just Western) science fiction in early 90's after the falling of Soviet Union, when it became possible. The publishers were mostly interested about exploitation literature, with violence, pornography, all that was forbidden by the censorship before. So he had no other choice except borrowing money to open his own publishing company. He went to people who had money in these times: they gave him $50,000 or even $100,000 at 25% interest. Per month. With guaranteed slitting the throat in the case of payment delays.

Thank God, in these years nobody called anything that gives less than 300% of profits as a "business", so he finally closed this debt.

[SecretSquirrel]

The degree of economic illiteracy and accompanying lack of basic comprehension of fundamentals behind human action and motivation in this thread are mindboggling (with the partial exeption of Layman).

People like yall are the reason why the bulk of humanity still lives in muck and shit

[mikema63]

That's an interesting accusation, backed up by nothing.

[SecretSquirrel]

It's an observation. A person who looks at some specific interest rate and becomes outraged at the magnitude demonstrates a fundamental ignorance of basic principles of human action and motivation.

If he then demands that the State take repressive action to lower said rate coercively, then he is in fact standing athwart civilised principles and human progress