Credit Card Total Interest Payment Cap
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Isn't it time the United States passes a law that caps the total interest a bank or other financial institution can charge on credit card debt? I would like to see a law passed that "caps" the total interest one would owe that is directly related to the original credit card amount that was borrowed.
If a consumer borrows a thousand dollars on a credit card and then is only barely able to pay the monthly minimum requirement, how much interest should they ultimately have to pay on that 1,000 dollar loan over the life of the loan?
It actually hurts our entire society when people are forced to pay prolonged interest on the same debt. Many times consumers pay off an item even after the item has either become obsolete or can no longer be effectively used anymore. This creates an indenturedness situation that benefits the financial institutions but hurts everyone else.
If a financial institution charges 60 dollars interest on a 30 dollar toaster and the consumer is still paying off the toaster even after the toaster no longer works, the consumer is entering into an enslaved and indentured form of agreement.
I just read a story about one customer who had their inerest rate raised so that now 176 dollars of every 200 payment only goes to the interest. This is can be called racketeering posing as a legalized banking practices. The person being punished wasn't even late on a payment, it was just that their credit score had dropped.
Now realize that there is around 1 trillion dollars in consumer credit card debt and one can see how egregious interest rate charges on old debt is just destroying the local economies all around the country.
Let us play devils advocate for a moment. "I never spend money I don't have, if people are that irresponsible running up debt then they deserve to pay all the interest the banks want to charge". Yes, but no. You may make a living making products or offering services that are purchased with credit cards by others. Taking a holier than thou position in my opinion may be unintentionally elitist.
The compromise solution is to still let banks make significant profit via interest without creating an indentured customer. Europeans escaped a system of indenturedness that existed in England and migrated to North America. Now the same indenturedness seems to be manifesting itself again.
If you are a conservative or liberal, the bible states that usury is wrong. Usury (charging interest) is Wrong. My proposal would cap the total interest paid by the consumer to 50% of the amount of money that was actually borrowed. Once 50% of the borrowed amount has been paid in interest payments, the remaining debt would be paid off interest free.
Credit Card Paydown Solution Revealed
Credit-Card-Cap.com. Would it be so wrong to cap the total amount of interest the customer has to pay to 50% of the total amount that was borrowed?
Personally I think that 50% is still a crazy and very high amount, but that is certainly better than requiring someone to pay 75%, a 100%, or even 150% to 200% in interest because they can only afford to pay the monthly minimum.
I cringe at a figure as high as a 50% interest cap, but lets realize that some people already pay a lot more than that and as a result struggle to pay off their credit card debt.
What is even worse is this borrower becomes a poorer credit risk by the very system that charges excessive interest which then causes the customers debt to rise! Once labeled a bad credit risk they eventually fall behind and are late on their payments.
Can you imagine paying down a 1,000 dollar debt to 500 dollars, but you had to spend a thousand dollars in interest to do it? You still would owe 500 dollars plus interest whereas with my idea the debt would be completely paid off.
I just can't see how a bank collecting 500 dollars on a 1,000 dollar loan has been harmed, can you? Once the 50% of the borrowed amount has been paid in interest the consumer could be offered a choice, either paydown with no more interest but with a 2% to 3% monthly minimum of the remaining total due, or they can continue to dwaddle along paying interest plus 1% of the total due.
My point is that after a certain amount of interest has been paid back, the consumer should be given newer and better terms to pay off the remaining amount.
If this Credit Card Total Interest Payment Cap Idea was implemented, it could provide an unforseen benefit to most Americans. As people reach that 50% total interest payment cap, they will subsequently see what they still owe will begin to drop much faster. This could create renewed enthusiasm to reduce debt, and that is probably a good thing and most likely better than someone giving up and declaring bankruptcy.
The more people that agree not to give up on their debt, the less maneuvering the banks will have to do to shift the unpaid debt onto the shoulders of those who believe in the system and continue to pay their debts.
Lets not penalize those who do not file for bankruptcy by making them cover the debt that is left behind by those who choose to give up and file for bankruptcy because the credit card companies are proving to be unreasonable on what they insist on receving for old debt.
It is as if the credit card companies WANT customers to default, and that is something worthy of an investigation.