Comments on: Adventures with consumer lending, Missouri edition http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: youniquelikeme http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-2/#comment-34900 Tue, 10 Jan 2012 22:48:14 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34900 TFF, I am well aware that the stats I cite is the average credit card debt FOR HOUSEHOLDS WITH CREDIT CARD DEBT. being we are speaking of household debt here, why are you lumping in business debt.

A business owner would be using a business card with special rates as well as giveaways and rewards, so were he to also use his HOUSEHOLD CREDIT card that would not be wise.

Why not glom onto the fact that Americans are addicted to debt? The URL was added to show some pretty interesting statistics in the past few years.

That you and I live within out means and may not be in debt (ok me then =no debt, nada zero), guess where I am in the stats? The bar that isn’t visible) doesn’t mean we are not going to be affected by the ensuing debt crisis… so I wouldn’t make your own stats up about “many/most” people paying off their balances every month…when the stats on that page say it is more like 30%… from the last consumer survey, done well before the bubble burst… when people became even more reliant on debt and “credit”, bankruptsies and mortgage and loan defaults when sky high.

Some other info on there…

“36 percent of respondents said they didn’t know the interest rate on the card they use most often. (Source: FINRA Investor Education Foundation, “Financial Capability in the United States,” December 2009)”

“Total bankruptcy filings in 2009 reached 1.4 million in 2009, up from 1.09 million in 2008. The vast majority were personal bankruptcies — Chapter 7 and Chapter 13. Business bankruptcies made up 6 percent of all filings. (Source: AACER, the American Bankruptcy Institute, January 2010)”

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By: mt57 http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-2/#comment-34898 Tue, 10 Jan 2012 19:12:12 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34898 You ask is there a Kiva for America. There is. Kiva lends in the US now. However, the loans are experiencing a high default rate. For example, one portfolio I looked at to confirm my recollection is showing a 8.55% default rate and a negative 27% return on assets.

Implications….

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By: EmilyMorgan http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-2/#comment-34887 Tue, 10 Jan 2012 11:05:59 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34887 I have used a pay day loan occasionally when a big unexpected bill pops up. I pay $36 to borrow $200 for 2 weeks. A bank charges you $35 to borrow $1 if you make a mistake doing math in your check book. Who are the rip off people here?
One time I used the wrong deposit slip (my mistake) and my bank charged me $175 in fees for 5 $4 lunches on my ATM card even when I had $1600 in a savings account in the bank. Yes I made a mistake but the bank could have just transferred some money or taken 5 minutes to call me. By the way most banks have a way to make your card be turned down if funds aren’t available but you have to ask for it. Then they often “forget” to keep that feature turned on also. Better a devil you know at the pay day loan place that is honest about his fees up front than your good buddy banker that will twist the knife he drives in your back when you are shaking his had in friendship.
http://cashadvancesus.com/missouri-cash- advance-loans/

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By: TFF http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-2/#comment-34867 Mon, 09 Jan 2012 18:36:06 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34867 “(1) leasing a car is cheaper than financing that same car”

No it isn’t. The monthly payments are lower, but the long-term cost ends up being much higher. If I buy a car with financing, I pay the loan for 3-4 years and then drive it for another 3-4 years payment-free. If I lease a car, I pay every year that I use the car (along with paying a little extra every 3-4 years).

Leasing a car makes financial sense only if you absolutely MUST have a new car to drive every few years. Even then, a savvy buyer might do better with financing followed by a resale. (The implied APR on lease arrangements tends to be much higher than on financing.)

“(4) there are cheaper (sub-35K) beemers.”

You’re talking to somebody who would scream at $20K for a new car…

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By: skads http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34865 Mon, 09 Jan 2012 16:20:32 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34865 I’m not defending her decision to lease the BMW, but let’s agree that (1) leasing a car is cheaper than financing that same car; (2) she may not be building wealth, but this monthly lease could potentially be part of a *positive* monthly budget; (3) leases are reported to credit rating agencies as installment loans and therefore build credit; and (4) there are cheaper (sub-35K) beemers. Just sayin’.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34859 Mon, 09 Jan 2012 12:59:24 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34859 You have to be careful with statistics like that, younique. The number you cite is the average credit card debt FOR HOUSEHOLDS WITH CREDIT CARD DEBT. Since many/most credit cards are paid off each cycle, they don’t contribute to this at all.

The total revolving debt (mostly credit card) is $793B, which comes to an average of $7k per household (based on 112M households). Still way too high, especially for debt carrying double-digit rates, but it is less than half of the number you cite.

Yet this may be a situation where the average is a poor representation of the whole? The distribution of credit card debt is not even faintly normal, moreover those running high balances are divided between some who can’t control their spending (and typically pay usurious rates) and some who have excellent credit and use this as a liquid source of business funds (often paying rates under 8% APR).

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By: youniquelikeme http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34854 Mon, 09 Jan 2012 05:13:32 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34854 PS: Average credit card debt in USA is over 15k…

http://www.creditcards.com/credit-card-n ews/credit-card-industry-facts-personal- debt-statistics-1276.php

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By: youniquelikeme http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34853 Mon, 09 Jan 2012 05:13:28 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34853 PS: Average credit card debt in USA is over 15k…

http://www.creditcards.com/credit-card-n ews/credit-card-industry-facts-personal- debt-statistics-1276.php

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By: youniquelikeme http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34852 Mon, 09 Jan 2012 05:08:10 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34852 @mcarson, I volunteered all day at a soup kitchen and make 200 muffins for a drop in centre yesterday. (and do that often) I established an education bursary in my father’s name rather than greedily horde the money he left me. I have a dozen charities I give to and I do not look down unless i am giving a hand up. I can fill a few pages of charitable work and donations in my lifetime, so frankly there is NOTHING wrong with me.

This was a legitimate discussion given the information points. The BMW/professor was the example used and the replies were quite intelligent and on topic. Yes it was a distraction, but more so, it was also a red flag. I don’t want the sharks to eat you up and yes they should not be able to gouge to extreme extents, but no, the woman doesn’t need protection, she needs a clue. Teachers should lead by example. I suppose if she can’t pay back the loan she will be living in her car, until they repossess it that is.

If the Government wishes to intervene and cap at 36%, why is there not some Government alternative to provide the competition that might bring the rates down?

(because they might all fold shop and go gouge elsewhere and leave the taxpayers to take on the risk?)

We should be teaching people to live within their means and figuring how to do that, being, if we do not, this society is addicted to credit and we have not even seen an iota of what that means for the future…

(another depression as great educator and equalizer perhaps?)

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By: OneOfTheSheep http://blogs.reuters.com/felix-salmon/2012/01/05/adventures-with-consumer-lending-missouri-edition/comment-page-1/#comment-34849 Mon, 09 Jan 2012 02:11:34 +0000 http://blogs.reuters.com/felix-salmon/?p=11733#comment-34849 @CaptainWilly,

The concepts of “justice”, right and wrong seems to be an almost genetic human blind spot in that an individual’s perspective can make white black and black white. To an evengelical, the issue of “right to life” is absolute from the moment of [presumed] conception. To a feminist, the “right to choose” can easily be a matter of life and death…HERS! Fortunately there are few such subjects where compromise is capitulation.

Since long before America was founded, many societies and many different religious have seen fit to adopt restrictions on the amount and even the practice of charging interest by the “moneylenders”. Just as every person with money needs a way to at least protect it’s purchasing power from governments that habitually and apologetically steal by inflating currency, individuals and society have legitimate needs for securing funds such as the farmer without funds and without seed or fertilizer that owns land.

Usury laws were the manner in which a given society established rules for the practice, and they remain the law of the land in many places even if currently ignored. On a fundamental level it would seem unconstitutional for any level of government to simply ignore a law all judges and “officers of the court” are sworn to uphold equitably. I don’t think any of us covers ourselves with glory by arguing that the financial community should be as unregulated as the “wild west” and exclusively governed by the principle of Caveat emptor, or “Let the buyer beware”. Much of America’s recent financial problems have emergeg from such attitudes.

I happen to believe that “professionals” in ANY field, finance, legal, whatever, should be held to a higher standard IN THAT FIELD than any lay person they deal with because their very training and experience give them undue advantage. I don’t think the “level playing field” is a naive or aspirational concept, but one that should be mandatory whenever and wherever practical. Vendors and government should not be encouraged to “succeed” by taking undue advantage of “we, the people”.

As in Star Trek, the “needs of the many” do not always trump the “needs of the few, or the one”; but the conversation is neither archaic or inappropriate. There is an overriding “public interest” in any civil society that crime [including unfair business practices that victimize “the people” for profit, or “white collar crime”] should not pay.

Today, all too often, it does! A “dog eat dog” society should not be acceptable as a long term goal anywhere.

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