RSAAKS

Credit Card Crunch: Creating a New Generation of Subprime

when banks are allowed to charge 25% interest against their cost of funds at less than 3-4%, greed overtakes and reckless lending begins. That is what we had in last few years, every month there were on average 30-40 card offers in my bail box. Many in my shoes probably had those cards issued and will never be able to pay using 20+% interest rate. Greed could only go so far. Perhaps banks will learn to loan money to those who have HIGH probability of paying heir loans, and charge a reasonable rate for it. Those who can pay will not accept 25% rate, those who cannot pay, it is not worth charging any rate-meaning no loans.