Sonia

Credit Card Catastrophe: Congress Can't Help

Used wisely, credit cards are both convenient and profitable. My Discover card pays 1% cashback and Capital One Visa, 1 1/4% carhback. I put everything including my grandson's college tuition on these cards, pay off the balance each month weeks before the due date by on line transfer from our bank, and get a receipt on line. The companies make certain money from the merchants, so everybody's happy. The banks are self defeating when they charge outrageous interest rates. The escalating balances and fees mean borrowers can never hope to repay, and end by filing bankruptcy, losing the banks what is owed. Fixed low interest rates on cards, with credit limits based on credit history, would benefit both banks and borrowers.

Credit Card Cancer

An thought provoking article! It's true, we do consider unused credit card balances as "Rainy day funds" - a life saver when the car breaks down and needs extensive repairs while we're on a trip. The problem (as in the housing crisis) is the proliferation of credit to folks who cannot repay. We received a dozen or more offers every week for years, and offers addressed to Samantha - our cat. If I'd filled in her application with a pawprint I suspect she would have got a card. The companies covered their losses by charging 26% or more on balances that would never be paid, but it all looked good on paper, so the CEO's enjoyed fat bonuses. Now the chickens are coming home to roost.