News articles like this speak loudly about who this kind of news is written for.
The article headline makes it sound "dangerous" and "bad" for the "lenders." Billions on the line!
It's never "billions on the line for consumers!"
Profits for corporations are always treated by news media as a given and anything interrupting them, including people's real lives, are less important.
Won't anyone think about the poor milti-billion bollar corporations
this again is why I will pipe in I like biden. So many things have come out of the agencies of this administration. He can't make congress function but he can sure as heck streamline stuff at the executive level.
But I heard people disagree with some of his stances, so it’s a coin toss between him and that other guy who quotes Hitler /s
Fuck yeah this is a win for consumers, assuming there is no loophole or other way to bypass this regulation... Assuming...
Loophole of the "payment not received on time fee" of $40.
Obligatory - Join a credit union. They're non profit financial institutions that offer the same service as a bank. As a non profit, their fees and rates are much better.
Not always.
Washington State Employees Credit Union famously lost a lawsuit over overdraft fees. You can bet your ass if it's an accepted practice at major banks, your Credit Union can and will do similar things, if they want to.
When I moved states and closed my accounts with the local bank I'd been with since my first bank account (and never once paid a fee to) I looked into the credit unions in my area. The fees were absurd, I finally found one that looked decent and then found that there was a $6 fee any time you transferred or withdrew money from any savings accounts. I'm not paying to access my own money. Ended up going with another small local bank and haven't paid a fee yet. Customer service is great too, I give them a call and get a real person the next county over and the few times I've actually gone to a branch they've been almost too nice.
I probably come off as a Fidelity shill with how much I've mentioned them on Lemmy, but it's a genuinely good platform for banking. They're not a traditional bank. They're a brokerage that offers checking and savings accounts that you can directly buy/sell securities with.
I moved all my assets to them after Chase pissed me off one too many times and it was the greatest decision I've ever made. Account to account transfers are instant (I've transferred like $60k and they didn't give a fuck) and they front you the money for external incoming transfers that are still in pending. You never have time periods where you can't access your money because it's in the ether that is our antiquated banking system.
No minimums, no transfer fees, no stock/ETF purchase fees, and they pay ATM withdrawal fees automatically (including my $10 ATM fee in Vegas). The one time I had to call them to request a chargeback on my credit card the whole call, including waiting, took 5 minutes.
By far my favorite feature though is you can buy into money market funds like SPAXX in your normal accounts, so you get 5% APY on your money. However, it's still treated as normal USD so any transactions automatically pull from it.
The problem is finding them. I'm still chained to a credit union in another state years after I moved, just because I cannot find a local credit union in my city that will accept me. Plenty of ones for teachers, cops, firefighters, and veteran's, but they won't let a Joe Shmoe with an office gig store money.
You could join an online credit union such as Alliant Credit Union. It costs $5 for a membership that they'll pay for you, though there are other options that you can easily join yourself for membership.
The $20/mo ATM fee rebate is nice.
Have you tried talking to them? Almost every credit union I've talked to had some loophole type thing to join, like "Donate $5 to this organization, and now you fall under X."
Wild! I've got nearly 20 in my metro area to choose from. I assumed that was the case in most populous areas.
$8 fee but at 75% interest.
Monthly account fee of $40, waived for on time payments.
I love the bank system of charging you extra money for being broke. Have they capped overdraft fees yet or addressed how they run charges from highest to lowest to maximize fees?
I would like the nixing of closing account fee. You should not be allowed to charge folks to leave. Actually and no hiding with the contract crap.
The banks won't take a billions hit, they will simply start charging for something else.
It's not a "late fee", it's a "past due convenience charge"!
An account restoration fee.
Yeah, well, fuck lenders. I hope it's bad for them. It should be bad for them.
I got rid of my bank accounts after my direct deposit got messed up and they hit me with a "monthly maintenance fee" for being under their minimum.
Switched to a credit union super fast.
I've been with a credit union for over a decade now, never looking back.
it's not like they don't make that shit in interest in a day anyway
Peg it to the federal minimum wage.
I think it should be lower still. $5 max.
But really they need to go after interest rates. That's where the real theft occurs.
Make it like the new college debt rules. If you are making the minimum payment, then your total balance can't go up. Interest can't be higher than the minimum payment (which is also capped)
Compound interest is a ridiculous idea. When you get a loan, you should only owe a flat % on top of the loan amount. This % should be negotiated ahead of time based on the repayment schedule.
When you take a loan for {principal} over {n_periods} compounded by {frequency} at {percentage}; it turns out that there’s a mathematical formula that results in the exact cost of the loan. You can negotiate any of those parameters to achieve that flat-rate equivalent.
But watch out. Because lenders that will agree to flat-rate lending are also most likely to do so on an absolute cost-basis; meaning there is no benefit and perhaps even penalty for early payment.
Compounding isn’t all evil. Debt isn’t inherently evil, either. Like any instrument, it can be tool to improve your life and/or others’, or it can be a weapon to harm yours or others’.
I understand all of that. The way it is now, compound interest only serves to deepen the pit many people find themselves in financially. The system doesn't work, so just because it can be beneficial to a few people sometimes doesn't mean it's worth keeping around.
I don’t think we can just get rid of compound interest. It’s akin to “just get rid of F=ma”.
Compound interest is an economic law of physics. In every day, in every moment, we make choices. Big or small, those choices affect the next opportunity, which affects the next, and the next after next, and so on. A series of really good choices can lead to exponential growth, and vice versa to poor choices. Compounding interest is a mathematical model to represent that. It’s literally the opportunity cost of capital.
Sounds like a great low interest loan to me.
Should be 0. If you're late on a payment, you pay compounding interest. The idea that you can somehow charge a fee on top of that is absolutely insane.
Good
I actually think this is going to be bad for consumers.
I don't like exploitative fees, but this will reduce the amount of credit available to people through traditional means and that will push people on to exploitative Buy Now Pay Later companies instead.
BNPL aren't legislated like credit cards are, and can be more usurious.
The other option is a reduction of credit available results in reduced demand and mild to severe recession, which is also bad for poor people.
Ima be real with you:
It's not a bad thing for a person to live within their means.
Now, now, I understand it's not so cut and dry. Fuck me, I'm in poverty and have cancer, it's not exactly a situation I'm able to find "means" for, period. Trust me, I get it.
However, as a country, we've been living on borrowed time when it comes to the credit economy.
Abuse of credit by private companies is part of the problem and part of why price-gouging is so bad.
They hand out high-rate credit cards to anyone with a fucking pulse, and then have those cards maxed out shortly to help cover rising costs. As those costs continue to rise, people continue to offset their meager earnings with paying for things with credit, until soon enough, every paycheck goes entirely to paying credit bills while the credit cards keep maxing out to get bills paid.
It's not bad for a person to live within their means, and the US's easy credit system means plenty of credit companies don't care that they're handing out cards to people who can't really afford it, because that means they have a permanent, endlessly paying customer who they can sue the shit out of if they fail to pay up one day.
Part of the reason companies have been able to raise prices so high so fast is because of the prevalence of easy credit and US citizens willingness to turn to that to cover increases. The credit industry is really the wallpaper covering the cracked plaster of the wall that's about to fall, it's part and parcel to the reason why price increases were able to be handled by citizens. Not because they suddenly could afford it, but because they turned to easily accessible credit lines.
Credit isn't overall a bad thing, but the US credit system is out of fucking control, and Buy Now Pay Later is part of that, too. Our entire financial system is completely fucked, just ask the GameStop stock guys. (Don't buy gamestop stock, just ask them about it, and look at the proof, the fucking game is rigged.)
Anyway, that's my two cents, credit companies are why inflationary increases were able to be handled, not because people suddenly had higher purchasing power. In the end, that's a bad thing for everyone to be living endlessly off of credit.
What does 'live within your means' mean exactly? Because usually it seems to mean "if you're poor, eat beans every day and don't buy anything to make your life more enjoyable.'
A lot of people would say someone who is poor that buys a PS5 and a big TV is not living within their means. Sure. They aren't. They're just trying to eke a tiny bit of pleasure out of this miserable existence. And that shouldn't be criticized. The criticism should go to the people paying such low wages that you can't actually live within your means and have anything but a terrible life.
I literally only mean that the cost of living has spiked so dramatically that people essentially have to turn to credit to cover bills. They shouldn't have to do that. It should be reasonable for someone to live within their means, and credit shouldn't ever be for paying down necessary bills to stay alive.
I am in no way placing the blame on the consumer. Sorry if that didn't come out quite right. Like I said, I have cancer treatments that cost $16k a month without insurance. There is not a way for me to "live within means" without being a multimillionaire. I am not placing the blame on people in situations like this.
Fair enough. And I'm sorry to hear about the cancer. Fuck cancer.
Yeah, it sure seems as if the credit economy is being used to provide additional liquidity to cover a cost of living crisis. I mean, everyone always says that if companies don't pay a fair wage, there will be nobody to buy their products. Credit seems to be the capitalist's answer to that.
You're not wrong, education around credit cards is nil. But they are a useful tool that can keep people make ends meet.
I think that's exactly what they're criticizing. Having an economy where most people need that tool, where it's expected to be used that way, is not good.
And yet these types of predatory fees are a very American thing (and of course probably many parts of the world I have no experience with) for the comparison below I will focus on US vs Europe.
Most European credit cards debit the full amount at the end of the month. If you don’t have enough money in your bank account, there is no overdraft fee. The overdraft becomes a loan which you pay a couple percent interest. Then eventually if you don’t pay that for long enough and the interest rising a bit more, the bank reaches out to you, and offer to close your count and make a payment plan for you. Otherwise it goes to collections.
The above happened to me when I was a student. I was able to quickly open another bank account for like 2 euros with another bank as well, and eventually paid off my debt.
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