Credit card usury

Fed to Pursue Aggressive Checks on Credit Cards – washingtonpost.com:

The Federal Reserve and two other banking regulators are set to unveil today one of the most aggressive efforts in decades to crack down on the credit card industry, prohibiting practices such as arbitrarily raising interest rates on outstanding balances.

The proposed regulations, which could be finalized by year’s end, would label as “unfair or deceptive” practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate.

Before, all the Fed made the credit card companies do was to inform the consumer of such practices. Now, the Fed will forbid them.

Even if you bemoan government interference into businesses and the economy, isn’t this a good idea? Isn’t there a moral issue here that the state does have a Romans 13 right to restrict, namely that all-but-forgotten sin of usury?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Carl Vehse

    There used to be laws against loan sharking, but they disappeared when inflation hit double digits. Such laws, along with anti-trust legislation, and accountability regulations on financial institutions, need to be enforced, and not just for one or two photo-op examples by political-climbing prosecuting attorneys.

  • Carl Vehse

    There used to be laws against loan sharking, but they disappeared when inflation hit double digits. Such laws, along with anti-trust legislation, and accountability regulations on financial institutions, need to be enforced, and not just for one or two photo-op examples by political-climbing prosecuting attorneys.

  • Eric

    Carl; amen, 2nd, Ditto…..

  • Eric

    Carl; amen, 2nd, Ditto…..

  • Chilibean

    I must be a liability to credit card companies because I and my wife have made it a rule from day one of our marriage – We will not carry balances from one period to another. The card is paid off each month or we will remove it.

    We’ve mistakenly missed a payment on a dept. store credit card, but the fee wasn’t extreme.

    I think there’s a bigger issue though with consumers who do extend their credit limit amd the financial institutions who make it so easy to have it all.

  • Chilibean

    I must be a liability to credit card companies because I and my wife have made it a rule from day one of our marriage – We will not carry balances from one period to another. The card is paid off each month or we will remove it.

    We’ve mistakenly missed a payment on a dept. store credit card, but the fee wasn’t extreme.

    I think there’s a bigger issue though with consumers who do extend their credit limit amd the financial institutions who make it so easy to have it all.

  • Bror Erickson

    I agree with this whole heartedly. Usury laws need to be stricter, and enforced better. This isn’t necessarily government interference in the free marked economy either. It is just common sense. It’s not like the Credit Card companies are going to be put out of buiseness for these laws either.

  • Bror Erickson

    I agree with this whole heartedly. Usury laws need to be stricter, and enforced better. This isn’t necessarily government interference in the free marked economy either. It is just common sense. It’s not like the Credit Card companies are going to be put out of buiseness for these laws either.

  • kerner

    I don’t feel sorry for the credit card companies. They lobbied hard for changes in the bankruptcy laws that prevented consumers from discharging their debts ( which is, incidently, another biblical concept: see the year of jubilee). Now the shoe is on the other foot. Too bad.

  • kerner

    I don’t feel sorry for the credit card companies. They lobbied hard for changes in the bankruptcy laws that prevented consumers from discharging their debts ( which is, incidently, another biblical concept: see the year of jubilee). Now the shoe is on the other foot. Too bad.

  • utahrainbow

    Did there used to be laws against these kind of things? Or was it that there was more, shall we say, principled (no pun intended) bankers? In the past did banking ethics inhibit these practices, rather than laws? It certainly is different than it was even thirty years ago. It seems that “legitimate” banks practice old loan sharking techniques nowadays. I also wonder what part easy credit plays into all of this? These questions aren’t rhetorical, I really don’t know much about all this, but nevertheless am curious.

  • utahrainbow

    Did there used to be laws against these kind of things? Or was it that there was more, shall we say, principled (no pun intended) bankers? In the past did banking ethics inhibit these practices, rather than laws? It certainly is different than it was even thirty years ago. It seems that “legitimate” banks practice old loan sharking techniques nowadays. I also wonder what part easy credit plays into all of this? These questions aren’t rhetorical, I really don’t know much about all this, but nevertheless am curious.

  • Bror Erickson

    Utahrainbow,
    not only did there used to be laws against this, there still are in many states. But you share the joy with me of living in Utah, where there are none, which is why so many banks and credit card companies are located here. I really think this is somehow bound up with the mormon culture here, and the LDS’s economy.

  • Bror Erickson

    Utahrainbow,
    not only did there used to be laws against this, there still are in many states. But you share the joy with me of living in Utah, where there are none, which is why so many banks and credit card companies are located here. I really think this is somehow bound up with the mormon culture here, and the LDS’s economy.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Carl nails it; many usury laws disappeared when the Fed decided to pursue inflationary monetary policy–which it’s been doing pretty much constantly since 1914. So more or less, the Fed is trying to tame the creature that it itself created. Glad to see they’re trying to tame usury; now maybe Bernanke will see a reason to set inflation targets at 0% instead of 4-5%, like the Bundesbank and the EU bank have been doing since the end of WWII.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Carl nails it; many usury laws disappeared when the Fed decided to pursue inflationary monetary policy–which it’s been doing pretty much constantly since 1914. So more or less, the Fed is trying to tame the creature that it itself created. Glad to see they’re trying to tame usury; now maybe Bernanke will see a reason to set inflation targets at 0% instead of 4-5%, like the Bundesbank and the EU bank have been doing since the end of WWII.

  • Joe

    I don’t have any big disagreement with the substance of the changes but the process is not good. Here is my problem with it. We are having major changes in our banking and borrowing laws forced on banks and consumers through an unelected, regulatory body that answers to pretty much no one.

    Here is another problem with it. While it is being sold as a way to help struggling people what is much more likely to happen is that the money supply will become even tighter. Since the sub-prime mess hit banks have been hesitant to lend money causes a tight money supply and a general contraction in capital borrowing by companies. These regulations have the potential to similarly tighten the willingness of banks to extend credit (i.e. loan money) to individuals. This will further tighten the money supply and further weaken the economy.

    I do think it is another aspect of big government protecting grown adults. Is it really that much to ask that people read the fine print before singing up for the card? Of the various cards available they offer different terms and conditions. Some offer terrifically low introductory rates that get bumped in a very short term. So offer great rates on transfers. So offer mediocre rates that remain stable. I have found uses for all such cards at different points in time and have manipulated them to save money. I don’t necessarily want my options limited because some people didn’t pay attention to the fine print.

  • Joe

    I don’t have any big disagreement with the substance of the changes but the process is not good. Here is my problem with it. We are having major changes in our banking and borrowing laws forced on banks and consumers through an unelected, regulatory body that answers to pretty much no one.

    Here is another problem with it. While it is being sold as a way to help struggling people what is much more likely to happen is that the money supply will become even tighter. Since the sub-prime mess hit banks have been hesitant to lend money causes a tight money supply and a general contraction in capital borrowing by companies. These regulations have the potential to similarly tighten the willingness of banks to extend credit (i.e. loan money) to individuals. This will further tighten the money supply and further weaken the economy.

    I do think it is another aspect of big government protecting grown adults. Is it really that much to ask that people read the fine print before singing up for the card? Of the various cards available they offer different terms and conditions. Some offer terrifically low introductory rates that get bumped in a very short term. So offer great rates on transfers. So offer mediocre rates that remain stable. I have found uses for all such cards at different points in time and have manipulated them to save money. I don’t necessarily want my options limited because some people didn’t pay attention to the fine print.

  • http://chaz-lehmann.livejournal.com Pr. Lehmann

    Some of us get into a bit of credit card trouble due to circumstance rather than irresponsibility. I was a Lutheran School teacher and was being paid way below the cost of living.

    I had to use credit to make ends meet.

    I really got clobbered not when I was making regular monthly payments but when I tried to pay off the debt and consolidate it with a low interest loan from LCEF.

    The credit card company showed a cleared balance on one statement and $300 interest on the next. They were unwilling to bend on it at all. That was not a good month.

    I understand why they did it. They wanted to squeeze every dime out of me they could. But the problem is also simple. They make it hard to be responsible because they punish you for it. These are good reforms.

  • http://chaz-lehmann.livejournal.com Pr. Lehmann

    Some of us get into a bit of credit card trouble due to circumstance rather than irresponsibility. I was a Lutheran School teacher and was being paid way below the cost of living.

    I had to use credit to make ends meet.

    I really got clobbered not when I was making regular monthly payments but when I tried to pay off the debt and consolidate it with a low interest loan from LCEF.

    The credit card company showed a cleared balance on one statement and $300 interest on the next. They were unwilling to bend on it at all. That was not a good month.

    I understand why they did it. They wanted to squeeze every dime out of me they could. But the problem is also simple. They make it hard to be responsible because they punish you for it. These are good reforms.

  • Matthew

    As an employee of a major credit card company, I honestly have very little sympathy for either side in the credit debacle.

    Both the consumer and the credit card companies behave in a parasitic manner toward one another. Instead of entering into a solid, trusting business relationship, one side looks to snatch as much interest and fees out of the consumer as possible and the other wants to spend $6,000 on a jet ski and not have to worry about financial difficulty as a result.

    Joe is absolutely right. ALL of the policies and procedures are sent to the customer ahead of time. You know what the most common excuse I get is? “Who has time to read those!?” Laziness.

    I agree with the reforms the feds seek to impose on the companies. They may save a lot of headache on both sides in the end. But I also get tired of hearing the woes of irresponsible consumers as well. Same as the housing problem. Did anyone MAKE you buy a $400,000 house?

  • Matthew

    As an employee of a major credit card company, I honestly have very little sympathy for either side in the credit debacle.

    Both the consumer and the credit card companies behave in a parasitic manner toward one another. Instead of entering into a solid, trusting business relationship, one side looks to snatch as much interest and fees out of the consumer as possible and the other wants to spend $6,000 on a jet ski and not have to worry about financial difficulty as a result.

    Joe is absolutely right. ALL of the policies and procedures are sent to the customer ahead of time. You know what the most common excuse I get is? “Who has time to read those!?” Laziness.

    I agree with the reforms the feds seek to impose on the companies. They may save a lot of headache on both sides in the end. But I also get tired of hearing the woes of irresponsible consumers as well. Same as the housing problem. Did anyone MAKE you buy a $400,000 house?

  • http://chaz-lehmann.livejournal.com Pr. Lehmann

    I read all the policies. Did I understand them? No, not completely. That’s another dimension of the problem. I tried to do things right, beginning to end, but the company was always the adversary, by their own choice. Never were they willing to explain their policies or help me understand how I could improve the situation.

    I’ve had different experiences with other companies. In the end, some credit card companies want a trusting relationship with their customers (I do know that).

    But others, with initials like BOA, just want you to bend over and take it.

  • http://chaz-lehmann.livejournal.com Pr. Lehmann

    I read all the policies. Did I understand them? No, not completely. That’s another dimension of the problem. I tried to do things right, beginning to end, but the company was always the adversary, by their own choice. Never were they willing to explain their policies or help me understand how I could improve the situation.

    I’ve had different experiences with other companies. In the end, some credit card companies want a trusting relationship with their customers (I do know that).

    But others, with initials like BOA, just want you to bend over and take it.

  • utahrainbow

    This is a tough one for me because I’m not a big fan of government interference (perhaps mostly the Fed though, who as some here have said, created this beast). That being said, I’m not sure that restraint should have to fall on the consumer. That’s a tough act considering you’re asking sinful people to RESIST a strong temptation to use an often large credit line. Great job to those of you who have done just that, but realize that it is very difficult.

    I also want to point out along Pr. Lehmann’s line that there are those out there who aren’t using their credit cards for jet skis, etc., but because of medical bills, car repairs, and other unexpected costs when they just don’t have the savings to cover it. And often they don’t have the means to pay it back quickly and with the card companies changing rates, fees, gotcha schemes, etc, it becomes a snowball. It IS difficult for average people to maneuver the thicket, so why should the burden fall on them?

    Bror, I agree that Utah might have a peculiar problem with this. My theory is that it has to do with the important measure of success in LDS culture, and people are just trying to keep up with the “Smith’s”. However, I admit to struggling with this too, and I’m neither LDS and certainly don’t have the stuff my neighbors do. It’s probably an American thing, and intensifies in the LDS American religion.

  • utahrainbow

    This is a tough one for me because I’m not a big fan of government interference (perhaps mostly the Fed though, who as some here have said, created this beast). That being said, I’m not sure that restraint should have to fall on the consumer. That’s a tough act considering you’re asking sinful people to RESIST a strong temptation to use an often large credit line. Great job to those of you who have done just that, but realize that it is very difficult.

    I also want to point out along Pr. Lehmann’s line that there are those out there who aren’t using their credit cards for jet skis, etc., but because of medical bills, car repairs, and other unexpected costs when they just don’t have the savings to cover it. And often they don’t have the means to pay it back quickly and with the card companies changing rates, fees, gotcha schemes, etc, it becomes a snowball. It IS difficult for average people to maneuver the thicket, so why should the burden fall on them?

    Bror, I agree that Utah might have a peculiar problem with this. My theory is that it has to do with the important measure of success in LDS culture, and people are just trying to keep up with the “Smith’s”. However, I admit to struggling with this too, and I’m neither LDS and certainly don’t have the stuff my neighbors do. It’s probably an American thing, and intensifies in the LDS American religion.

  • Matthew

    Oh I agree, Pr. Lehmann, there are customers out there that do behave responsibly with the funds they’ve been loaned and end up getting screwed by the system.

    But I will tell you from my own experience within the industry, that it is often a much smaller minority. I assist customer’s at a managerial level for call escalations and I will tell you that 9 out of 10 of the overwhelming burden of debt is incurred entirely because of consumer irresponsibility with spending/inability to repay the loan and not necessarily because of payment or finance charge policies.

    There are those who use them for unexpected costs and end up in difficult financial situations, but those are usually the cases where many companies will be proactive in assisting them because they want to retain the responsible consumer’s business. It always depends on the company, of course.

  • Matthew

    Oh I agree, Pr. Lehmann, there are customers out there that do behave responsibly with the funds they’ve been loaned and end up getting screwed by the system.

    But I will tell you from my own experience within the industry, that it is often a much smaller minority. I assist customer’s at a managerial level for call escalations and I will tell you that 9 out of 10 of the overwhelming burden of debt is incurred entirely because of consumer irresponsibility with spending/inability to repay the loan and not necessarily because of payment or finance charge policies.

    There are those who use them for unexpected costs and end up in difficult financial situations, but those are usually the cases where many companies will be proactive in assisting them because they want to retain the responsible consumer’s business. It always depends on the company, of course.

  • http://www.cockahoop.com/ tODD

    Bror (@4), I have to disagree that “This isn’t necessarily government interference in the free market economy either.” I mean, it is — or at least government-ish. It’s just that it’s a good example of how (limited) government interference can be a good thing. Similarly, Oregon recently capped payday loans at 36%.

    As to Matthew’s complaint (@11) that people not reading all the policies is “laziness”, I imagine there’s some of that. And no small amount of innocent ignorance as well (as Pastor Lehmann points out @12 — I certainly fall in this category as well). Frankly, I don’t think the policies are meant to be read so much as printed for legal purposes. If someone wants me to read and understand the important points of a document, they print it in easy-to-read type, highlighting main points in bold or with graphs and so on. Magazines are frequently good examples of how to communicate ideas. Credit card policies are usually not.

    Matthew, the last time you installed software, did you read the entire End-User License Agreement (EULA)? Did you even scroll through it? Or did you just click “OK” in order to get to the point where your software worked? (Hey, I do the same thing, but that’s the point: the EULA isn’t designed to be read by anyone but a lawyer. They don’t care if I understand it, they just want to enforce it.) I don’t think credit card companies actually want people to fully understand the implications of their policies, as that would only result in fewer customers.

    Not that those in debt aren’t often to blame. My then-fiancee’s roommate was a classic example of bad debt management (she got a bonus at work, took it and paid for an immediate spendy vacation, and when she got home, exclaimed, “Oh, I really should have used the bonus to pay off some debt!”). But as Utahrainbow pointed out (@13), that anecdote isn’t necessarily accurate for all of those in debt.

  • http://www.cockahoop.com/ tODD

    Bror (@4), I have to disagree that “This isn’t necessarily government interference in the free market economy either.” I mean, it is — or at least government-ish. It’s just that it’s a good example of how (limited) government interference can be a good thing. Similarly, Oregon recently capped payday loans at 36%.

    As to Matthew’s complaint (@11) that people not reading all the policies is “laziness”, I imagine there’s some of that. And no small amount of innocent ignorance as well (as Pastor Lehmann points out @12 — I certainly fall in this category as well). Frankly, I don’t think the policies are meant to be read so much as printed for legal purposes. If someone wants me to read and understand the important points of a document, they print it in easy-to-read type, highlighting main points in bold or with graphs and so on. Magazines are frequently good examples of how to communicate ideas. Credit card policies are usually not.

    Matthew, the last time you installed software, did you read the entire End-User License Agreement (EULA)? Did you even scroll through it? Or did you just click “OK” in order to get to the point where your software worked? (Hey, I do the same thing, but that’s the point: the EULA isn’t designed to be read by anyone but a lawyer. They don’t care if I understand it, they just want to enforce it.) I don’t think credit card companies actually want people to fully understand the implications of their policies, as that would only result in fewer customers.

    Not that those in debt aren’t often to blame. My then-fiancee’s roommate was a classic example of bad debt management (she got a bonus at work, took it and paid for an immediate spendy vacation, and when she got home, exclaimed, “Oh, I really should have used the bonus to pay off some debt!”). But as Utahrainbow pointed out (@13), that anecdote isn’t necessarily accurate for all of those in debt.

  • Matthew

    I understand your point Todd about how those policies are printed out in the cardholder agreements. But many times, rules and regulations pertaining to a transaction are clearly communicated. A good example would be “Sir, did you read on the check for cash access we sent you that the rate is 20.99% and there is a 3% transaction fee?” Customer: “No one reads those things!”

    And I didn’t spend $10,000 on my computer software with the End-User License Agreement.

  • Matthew

    I understand your point Todd about how those policies are printed out in the cardholder agreements. But many times, rules and regulations pertaining to a transaction are clearly communicated. A good example would be “Sir, did you read on the check for cash access we sent you that the rate is 20.99% and there is a 3% transaction fee?” Customer: “No one reads those things!”

    And I didn’t spend $10,000 on my computer software with the End-User License Agreement.

  • Matthew

    By the way, to Lutheranize this topic. One can do wonders with a theology of the cross and vocation working for a financially rich, morally bankrupt industry.

  • Matthew

    By the way, to Lutheranize this topic. One can do wonders with a theology of the cross and vocation working for a financially rich, morally bankrupt industry.

  • Bror Erickson

    tODD,
    Wow! You mean if in Oregon and you want to exploit the poor and down trodden, you can, but you can’t take any more than a little over a third of what they borrowed in interest. capped at 36% !!!! One wonders how much the politicians made in that sweet little deal.
    I pass by those places and think they ought to be fire bombed, if there was any justice in the world.
    As for having usury laws, yes I suppose it could be considered government intervention. I was more thinking along the lines that it won’t make it unprofitable for the banks and credit card companies.

  • Bror Erickson

    tODD,
    Wow! You mean if in Oregon and you want to exploit the poor and down trodden, you can, but you can’t take any more than a little over a third of what they borrowed in interest. capped at 36% !!!! One wonders how much the politicians made in that sweet little deal.
    I pass by those places and think they ought to be fire bombed, if there was any justice in the world.
    As for having usury laws, yes I suppose it could be considered government intervention. I was more thinking along the lines that it won’t make it unprofitable for the banks and credit card companies.

  • http://www.cockahoop.com/ tODD

    Bror (@18), I don’t think those places are of any value, either, but the same poor people they prey on are often the ones defending them (or so I saw in trying to Google for a data point), because those poor people see payday lenders as one of the few places they can get loans, even if their rates only serve to perpetuate the problem.

    Anyhow, 36% is still quite ridiculous, but before the law was passed, the rates were well over ten times that! According to The Oregonian, “Payday lenders on average charge[d] 528 percent annual interest.” If you’re wondering where that 36% came from, according to the Seattle PI, “Congress approved a 36-percent cap on loans to military personnel in 2006.” It’s high, but it’s nowhere near as high as it was.

    And still a few outfits have left Oregon after the legislation was passed. Good riddance.

  • http://www.cockahoop.com/ tODD

    Bror (@18), I don’t think those places are of any value, either, but the same poor people they prey on are often the ones defending them (or so I saw in trying to Google for a data point), because those poor people see payday lenders as one of the few places they can get loans, even if their rates only serve to perpetuate the problem.

    Anyhow, 36% is still quite ridiculous, but before the law was passed, the rates were well over ten times that! According to The Oregonian, “Payday lenders on average charge[d] 528 percent annual interest.” If you’re wondering where that 36% came from, according to the Seattle PI, “Congress approved a 36-percent cap on loans to military personnel in 2006.” It’s high, but it’s nowhere near as high as it was.

    And still a few outfits have left Oregon after the legislation was passed. Good riddance.

  • Don S

    The amazing thing is that even WITH those usurious rates and fees, the banks and credit card companies ARE unprofitable. At least right now.

    The best way to “fire bomb” the payday loan establishments is to stay out of them. I actually think those are the fairest lenders of last resort because their customers typically know pretty much exactly what they are getting. It’s “hard money” lent to people who can’t qualify for a more favorable loan, so I guess it serves its purpose, and the rates and fees have to be high to cover all of the deadbeats.

    It is certain unsavory practices on the part of credit card companies which cause all of the difficulty, not high rates and fees, as long as those rates and fees are clearly disclosed. The worst practices are changing a customer’s interest rates without notice based on a drop in their credit score or a late payment on a different account, and causing a forfeiture of a promotional or standard interest rate (in addition to a $35 late fee) in favor of a default rate because a payment was received a day late. These kinds of things are horrible PR and even free market guys like me think that this is a worthy area for limited regulation.

    So, bottom line, I think lenders should be able to charge whatever rates and fees they want to as long as they are clearly disclosed. But once they’ve committed to a fixed or variable rate, they should not be able to impose a default rate unless a customer misses a payment on that account or pays it late more than once in a 6 or 12 month period (I think a $35 late fee and the additional interest is enough of a penalty the first time a payment is late).

  • Don S

    The amazing thing is that even WITH those usurious rates and fees, the banks and credit card companies ARE unprofitable. At least right now.

    The best way to “fire bomb” the payday loan establishments is to stay out of them. I actually think those are the fairest lenders of last resort because their customers typically know pretty much exactly what they are getting. It’s “hard money” lent to people who can’t qualify for a more favorable loan, so I guess it serves its purpose, and the rates and fees have to be high to cover all of the deadbeats.

    It is certain unsavory practices on the part of credit card companies which cause all of the difficulty, not high rates and fees, as long as those rates and fees are clearly disclosed. The worst practices are changing a customer’s interest rates without notice based on a drop in their credit score or a late payment on a different account, and causing a forfeiture of a promotional or standard interest rate (in addition to a $35 late fee) in favor of a default rate because a payment was received a day late. These kinds of things are horrible PR and even free market guys like me think that this is a worthy area for limited regulation.

    So, bottom line, I think lenders should be able to charge whatever rates and fees they want to as long as they are clearly disclosed. But once they’ve committed to a fixed or variable rate, they should not be able to impose a default rate unless a customer misses a payment on that account or pays it late more than once in a 6 or 12 month period (I think a $35 late fee and the additional interest is enough of a penalty the first time a payment is late).

  • fw

    police action IS “government interference”. that does not make it wrong.

    Charging usurious rates is wrong and sinful. The government is not wrong to set a cap and outlaw practices such as changing the due date without notice and jacking up the overall interest rate because one payment was late. 40% interest compounded is confiscatory. Most people ARE lazy, yet many simply can not read and comprehend the 7-8pt legalese that their credit cards send them. They are not excused, but government insistence on greater transparency is also not a bad thing…. Banks are not exactly falling over each other to make sure that their customers understand exactly what they are signing up for. If I were a Lutheran banker, I think i would feel a moral obligation to be painfully transparent and not simply sell easy credit. A Free market does have it´s moral limits, and yes victoria, the government DOES have duty to “legislate morality” at times. This is one of those times I think.

    Dr Luther pointed out that the sin of coveteousness is far more subversive than sexual sinning, because even for a moral person: simple greed, and fear, love and trust in money above God can be cloaked in virtuous principles like hard work and thriftiness and self-discipline, and self-deception can reign rather completely here.

    These are often hard things for pastors to help members root out and see as the devastating sin it can be. Wrong motives can be obscured by moralistic arguments. Luther was right.

    Yes credit will tighten and people will suffer as a result. This would be an excellent corrective and not a bad thing at all. At a reasonable 2-3 points above prime lenders would vet potential customers very carefully. This seems like sanity restored to me as a CPA.

    Usurious interest rates are the unspoken cause of a huge part of the financial mess that is unwinding today with mortgates and banks. Yes there is greed on the side of consumer and lender. I am so very glad that it is finally on someone´s radar.

  • fw

    police action IS “government interference”. that does not make it wrong.

    Charging usurious rates is wrong and sinful. The government is not wrong to set a cap and outlaw practices such as changing the due date without notice and jacking up the overall interest rate because one payment was late. 40% interest compounded is confiscatory. Most people ARE lazy, yet many simply can not read and comprehend the 7-8pt legalese that their credit cards send them. They are not excused, but government insistence on greater transparency is also not a bad thing…. Banks are not exactly falling over each other to make sure that their customers understand exactly what they are signing up for. If I were a Lutheran banker, I think i would feel a moral obligation to be painfully transparent and not simply sell easy credit. A Free market does have it´s moral limits, and yes victoria, the government DOES have duty to “legislate morality” at times. This is one of those times I think.

    Dr Luther pointed out that the sin of coveteousness is far more subversive than sexual sinning, because even for a moral person: simple greed, and fear, love and trust in money above God can be cloaked in virtuous principles like hard work and thriftiness and self-discipline, and self-deception can reign rather completely here.

    These are often hard things for pastors to help members root out and see as the devastating sin it can be. Wrong motives can be obscured by moralistic arguments. Luther was right.

    Yes credit will tighten and people will suffer as a result. This would be an excellent corrective and not a bad thing at all. At a reasonable 2-3 points above prime lenders would vet potential customers very carefully. This seems like sanity restored to me as a CPA.

    Usurious interest rates are the unspoken cause of a huge part of the financial mess that is unwinding today with mortgates and banks. Yes there is greed on the side of consumer and lender. I am so very glad that it is finally on someone´s radar.

  • Bryan Lindemood

    I just like the insane idea of more Lutheran influenced bankers actually thinking about what the vocation of banking ought to be about. The first priority of any Lutheran banker would never be “making money”. Though important for making a living, that one would be further down the list.

  • Bryan Lindemood

    I just like the insane idea of more Lutheran influenced bankers actually thinking about what the vocation of banking ought to be about. The first priority of any Lutheran banker would never be “making money”. Though important for making a living, that one would be further down the list.

  • Joe

    I also like how we have redefined the word “usury” over the years. In the early church it meant any interest. Then it meant that priests could not charge interest but lay people could. Then is was applied to everyone but it only meant really unfair rates. Query: at what point does interest become usury.

    http://en.wikipedia.org/wiki/Usury

    fw – I am understanding you correctly that you do not think the gov’t has jurisdictional legitimacy to intervene in the abortion issue but does have jurisdiction over what interest rate your credit card charges? Seems kind of backwards. The gov’t doesn’t have the right to intervene in saving a life but does have a right to save a credit score.

  • Joe

    I also like how we have redefined the word “usury” over the years. In the early church it meant any interest. Then it meant that priests could not charge interest but lay people could. Then is was applied to everyone but it only meant really unfair rates. Query: at what point does interest become usury.

    http://en.wikipedia.org/wiki/Usury

    fw – I am understanding you correctly that you do not think the gov’t has jurisdictional legitimacy to intervene in the abortion issue but does have jurisdiction over what interest rate your credit card charges? Seems kind of backwards. The gov’t doesn’t have the right to intervene in saving a life but does have a right to save a credit score.

  • http://www.hempelstudios.com Sarah in Maryland

    You know, according to Dante the userers are in the same circle in Hell as the sodomites. Ponder that…

  • http://www.hempelstudios.com Sarah in Maryland

    You know, according to Dante the userers are in the same circle in Hell as the sodomites. Ponder that…

  • Rose

    You have a right to know your credit score. But you have no right to see the mathematics that created the score. I’ve been told “Your score may be reduced by having too many credit cards. Or BY HAVING TOO FEW CREDIT CARDS.” You are given a FICO score, which is an acronym for “Fair Isaac Corporation”. But you are not entitled to know how the top score of 850 has been reduced in your case. It’s as if you are filling out your income taxes, but at the very end, there’s no tax table; just a statement “We will figure out your tax; trust us.”

  • Rose

    You have a right to know your credit score. But you have no right to see the mathematics that created the score. I’ve been told “Your score may be reduced by having too many credit cards. Or BY HAVING TOO FEW CREDIT CARDS.” You are given a FICO score, which is an acronym for “Fair Isaac Corporation”. But you are not entitled to know how the top score of 850 has been reduced in your case. It’s as if you are filling out your income taxes, but at the very end, there’s no tax table; just a statement “We will figure out your tax; trust us.”

  • The Jones

    I always saw it as a moral problem with credit card companies who make LOADS of money from people who CAN’T pay their loans. People with bad payment histories aren’t to be avoided in that industry, they are almost sought out. The less regularly they pay, the higher the interest can get, and then it’s free money from there.

    I suppose it’s the same thing as if banks made more money by foreclosing on houses than on receiving regular payments from their borrowers. Doesn’t seem like a good business to me. I’m with FW on this one: Police action is government intervention, and I LIKE IT!

  • The Jones

    I always saw it as a moral problem with credit card companies who make LOADS of money from people who CAN’T pay their loans. People with bad payment histories aren’t to be avoided in that industry, they are almost sought out. The less regularly they pay, the higher the interest can get, and then it’s free money from there.

    I suppose it’s the same thing as if banks made more money by foreclosing on houses than on receiving regular payments from their borrowers. Doesn’t seem like a good business to me. I’m with FW on this one: Police action is government intervention, and I LIKE IT!

  • http://personalmoneystore.com/moneyblog/ Payday Loan Advocate

    Ted Strickland, the Governor of Ohio, is in the process of trying to convince people in his state to vote in favor of House Bill 545. Enacted unethically, without the voice of the people earlier this year, support of the bill would put a cap on the annual interest rates that no fax payday loan companies can charge to 36 percent. This would mean that for every $100 that a lender issues to a customer, they can only make a measly dollar and change. Considering that no business can survive by making just over a dollar per transaction, House Bill 545 would drive this entire industry out of the state. What’s worse, is that democratic presidential candidate Barack Obama now is trying to do Strickland one better, as per his campaign promises. Should he win the White House, Obama has gone on record stating that he wishes to impose Strickland’s interest rate cap nationally. What this will definitely mean is that people will be much more hard-pressed to make ends meet in tough times. Therefore, if their job pays them a lot less than they’re used to, or life throws them one of its little surprises, hitting rock bottom is almost inevitable. Such measures illustrate the importance of voting and having your voice heard.
    Post Courtesy of Personal Money Store
    Professional Blogging Team
    Feed Back: 1-866-641-3406
    Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
    Blog: http://personalmoneystore.com/moneyblog/

  • http://personalmoneystore.com/moneyblog/ Payday Loan Advocate

    Ted Strickland, the Governor of Ohio, is in the process of trying to convince people in his state to vote in favor of House Bill 545. Enacted unethically, without the voice of the people earlier this year, support of the bill would put a cap on the annual interest rates that no fax payday loan companies can charge to 36 percent. This would mean that for every $100 that a lender issues to a customer, they can only make a measly dollar and change. Considering that no business can survive by making just over a dollar per transaction, House Bill 545 would drive this entire industry out of the state. What’s worse, is that democratic presidential candidate Barack Obama now is trying to do Strickland one better, as per his campaign promises. Should he win the White House, Obama has gone on record stating that he wishes to impose Strickland’s interest rate cap nationally. What this will definitely mean is that people will be much more hard-pressed to make ends meet in tough times. Therefore, if their job pays them a lot less than they’re used to, or life throws them one of its little surprises, hitting rock bottom is almost inevitable. Such measures illustrate the importance of voting and having your voice heard.
    Post Courtesy of Personal Money Store
    Professional Blogging Team
    Feed Back: 1-866-641-3406
    Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
    Blog: http://personalmoneystore.com/moneyblog/

  • Lisa P

    Using of credit serves as our financial assistance to survive in the challenging world particularly in the economy as well. New Hampshire education officials are pushing to have some high-school graduate by 10th grade, which means young people will be out into the real world of bills, payday loans, and responsibility a whole lot sooner. The plan is to administer state board exams to sophomores; the students that pass will be allowed to move on to community or technical colleges, foregoing the last two years of high school. You should read the full article to formulate your own opinion.

    Do we think a 16 year-old is ready to handle the stresses of the real world of different social situations and learning responsibility? It wouldn’t even be legal for these younger graduates to apply for payday loans to help pay for books or overload credits. Click to read more on Payday Loans

  • Lisa P

    Using of credit serves as our financial assistance to survive in the challenging world particularly in the economy as well. New Hampshire education officials are pushing to have some high-school graduate by 10th grade, which means young people will be out into the real world of bills, payday loans, and responsibility a whole lot sooner. The plan is to administer state board exams to sophomores; the students that pass will be allowed to move on to community or technical colleges, foregoing the last two years of high school. You should read the full article to formulate your own opinion.

    Do we think a 16 year-old is ready to handle the stresses of the real world of different social situations and learning responsibility? It wouldn’t even be legal for these younger graduates to apply for payday loans to help pay for books or overload credits. Click to read more on Payday Loans


CLOSE | X

HIDE | X