Monday, January 28, 2008

good credit/bad credit/no credit

Hey guys.

I can't think of my usual one-topic anecdote, so I'll just mention a few things I've been doing lately. Sorry if they're boring, but not really. Got netflix and have been watching movies endlessly. One of the movies we watched was a documentary on predatory lending called 'Maxed Out'. Normally I don't get really involved in anything political, but I thought it was interesting that there are no limits on how high the interest rates can go on major credit cards, and the fine print on all credit card contracts reads they can raise rates at any time, for no reason.

Limits on interest rates are called usury ceilings. After a bit of indignant poking around, I found two relevant facts:
1) most banks are located in Delaware or South Dakota where there are no legal usury ceilings, (for that very reason) and
2) there is a lot of research showing that usury ceilings can actually be bad for the economy if the ceiling is below the supply/demand equilibrium- ie the standard market values.

What's not really mentioned in those reports is that a lot of people with poor credit are getting reamed with interest rates WAY higher than market value, and there's not much anyone can do about it. I thought I'd write congress or something, but the pbs website 'Frontline' is pretty pessimistic.

SO anyways, careful with those credit cards, kiddos.


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