Why Credit Card Companies are so Mean

[DGuller]

Repeal those laws too!  If the people demand chainsaws that don't kick back, the market will provide them with options!

Actually you can turn off the clutch thingy that is supposed to protect against chainsaw kickback.

I read a story about a lumberjack who did that once, and then his chainsaw kicked and cut through his neck so far that his head almost fell off.  Amazingly, he didn't die even though he had to walk like 3 miles for help. 

The chainsaw went through his neck, and he could still walk 3 miles after that?  Good thing for the saw manufacturer that there are no product effectiveness laws.

[DGuller]

What has Berkut said that justifies that sort of snarky response?

As is usually the case with Berkut, it's not what, it's how.  He's just not worth tolerating.

[Berkut]

What has Berkut said that justifies that sort of snarky response?

As is usually the case with Berkut, it's not what, it's how.  He's just not worth tolerating.

is this the part where you go back to pretending to ignore me, and wait until someone responds to me, then respond to them, because of "how" I shot down your arguments and refused to engage in your infantile personal bitching matches?

[ulmont]

The flaw in this argument is that you are assuming that credit cards, right now, "kick back" and that if only the State would set up the rules properly, people would not borrow themselves into debt.

Yup.

I don't think that is the case

And we disagree on this point. 

Do you think marketing and advertising work, in the sense of increasing the amount of purchases of a particular product?

Do you think the credit card companies are advertising?

Why do you then not think that there are people who would not borrow themselves into uncontrollable debt if the credit card companies were not marketing to them / producing confusing products?

(my apologies for the number of negatives in that previous sentence.  Rephrased only positively:  The credit card companies, through advertising and confusing products, are causing more people to borrow themselves into uncontrollable debt.)

it is pure, grade-A populism.

"You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold!"

[Caliga]

ulmont, maybe then the issue is deceptive advertising, rather than the actual terms of the loans?  If so, why isn't Congress addressing this?  After all, there are already plenty of truth-in-advertising laws.

[Berkut]

The flaw in this argument is that you are assuming that credit cards, right now, "kick back" and that if only the State would set up the rules properly, people would not borrow themselves into debt.

Yup.

I don't think that is the case

And we disagree on this point. 

Do you think marketing and advertising work, in the sense of increasing the amount of purchases of a particular product?

Do you think the credit card companies are advertising?

Why do you then not think that there are people who would not borrow themselves into debt if the credit card companies were not marketing to them / producing confusing products?

Credit card companies market because they want you to borrow money from them instead of someone elsemoreso than because they want you to borrow so much you cannot pay it back.

As a general rule, there has historically been much more money available for an individual to borrow than they really ought to borrow. This is true for all kinds of credit though, and even more so when you consider how much credit is available to people in aggregate.

If Congress *really* wants to address the core problem with credit card debt, they would pass laws restricting how much people can borrow, rather than restricting the terms under which it can be lent and borrowed.

But they aren't really interested in solving the problem - in fact, there is no way they would touch that with a ten foot pole.

This is like saying that we can make fat people not be fat anymore if only we tell McDonalds they have to sell a double cheeseburger for a little less, or make the combo meal more affordable. It makes no sense - if anything, making the terms for borrowing money more beneficial to the borrower is going to make the overall problem worse, not better.

The problem is not the terms - the problem is the amount that people are borrowing. People are not "breaking" because the bank changes their rates on them. That cannot be the case since they can simply refuse the new rate, but only as long as they are willing to lose additional credit. The problem is that they are NOT willing to lose the ability to borrow more and more and more money.

They are "breaking" because they borrow more money than they can afford to repay. It is just that simple. The average American carries over $10 grand in unsecured debt. That is insane, and it is the fault of the consumer, not the banks loaning them the money.

[ulmont]

ulmont, maybe then the issue is deceptive advertising, rather than the actual terms of the loans?

Perhaps.  No matter the advertising, though, when you have an industry that can only maximize revenue by having a customer on the perpetual edge of bankruptcy, it's an inherently predatory industry and so should be carefully watched.

Much like the insurance industry...

[Razgovory]

What has Berkut said that justifies that sort of snarky response?

Berkut's crimes are manifold.

[DGuller]

ulmont, maybe then the issue is deceptive advertising, rather than the actual terms of the loans?

Perhaps.  No matter the advertising, though, when you have an industry that can only maximize revenue by having a customer on the perpetual edge of bankruptcy, it's an inherently predatory industry and so should be carefully watched.

Much like the insurance industry...

How is insurance industry predatory?

[Berkut]

ulmont, maybe then the issue is deceptive advertising, rather than the actual terms of the loans?

Perhaps.  No matter the advertising, though, when you have an industry that can only maximize revenue by having a customer on the perpetual edge of bankruptcy, it's an inherently predatory industry and so should be carefully watched.

Much like the insurance industry...

How is insurance industry predatory?

Uh oh, don't go after the insurance companies, DG is an actuary, after all!

Is this going to be like Strix and his union?

State Farm did give me a free coaster at Canal Days this year...hmmm...do they sell "insurance" to college students???

[alfred russel]

ulmont, maybe then the issue is deceptive advertising, rather than the actual terms of the loans?

Perhaps.  No matter the advertising, though, when you have an industry that can only maximize revenue by having a customer on the perpetual edge of bankruptcy, it's an inherently predatory industry and so should be carefully watched.

Much like the insurance industry...

How is insurance industry predatory?

Why don't we investigate who is purchasing life insurance, for whom, and what are the commissions paid?

[DGuller]

Why don't we investigate who is purchasing life insurance, for whom, and what are the commissions paid?

Seriously, though, I'm having a hard time seeing how insurance industry is maximizing its revenue when its clients are in hardship.  It seems like most of the time it works the opposite way.  I guess the annuity departments of the life insurance companies could be hiring the hit men to mitigate their claims, I don't know how things are done over there.

[ulmont]

How is insurance industry predatory?

The insurance company maximizes revenue by collecting premiums and then never paying claims.  They accomplish this by writing confusing exceptions to coverage that turn out to make your coverage worthless.  When that doesn't work, they just deny your claim and stonewall in the hopes that you'll go away.

[DGuller]

The insurance company maximizes revenue by collecting premiums and then never paying claims.  They accomplish this by writing confusing exceptions to coverage that turn out to make your coverage worthless.  When that doesn't work, they just deny your claim and stonewall in the hopes that you'll go away.

Ok, that's not really the same thing at all, and I fail to see the parallels with credit cards.  Bad faith insurance is a valid concern, however, and it's the primary reason why insurance is so heavily regulated.

[ulmont]

I fail to see the parallels with credit cards.

In both cases, the industry can make the most money by actively screwing the consumer.

The fact that both are intangible products may be what leads to this...