Thursday, April 23, 2009

pay day loans and expensive credit cards

Here's the problem, there is millions of Americans who don't qualify by typical lending standards. There are subprime lenders willing to offer them credit in various forms but for higher costs. Since these people have limited choices they are often faced with difficult circumstances or worse ones.

Should the government curtail the amount of fees and interest that can be charged? If the regulations are too much the subprime lending might dissappear and then many people will have no loans available to them.

What to do?

The government should construct rules that severely limit the abuse but allow for a healthy profit that makes the risk worth it.

Those on the left have to understand that there is a high rate of default, and therefore the cost of the credit must be higher to make any sense. But there should be an overall limit that automatically closes the account and then help people with good terms to pay their debts.

This way, the people can get loans, the companies can earn a profit, but it won't be taking advantage of ignorant consumers or those with bad financial habits.

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