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An aside to his point about Google. 400%? In the UK we've got companies charging over 2500% a year for payday loans. While I accept these are high risk, ther

An aside to his point about Google. 400%? In the UK we've got companies charging over 2500% a year for payday loans. While I accept these are high risk, there surely has to be a limit?

retube 16y ago
I used to rage at these rates. But but - they are often cheaper than incurring an overdraft penalty at your high street bank. Barclays charge £22 a day for going up to £150 over your overdraft limit. God knows what it is if you exceed £150 over.
- Tyrannosaurs 16y ago
  May I suggest another bank? I get a £400 authorised overdraft limit on which I only pay interest (at a pretty fair rate) and no annual fee and in the UK that's not a deal that's too hard to find (First Direct in my case but I'm sure similar deals are available through others). Seriously, there's no reason to put up with that sort of thing and if you can get an account with Barclays you're unlikely to be turned away by too many others. I used to be with Barclays too but this sort of thing is one of the reasons that I'm not any more - that and their general air of not giving a <expletive deleted> about my custom.
  - retube 16y ago
    Oh sure. I have an authorised overdraft, with some fairly standard rate of interest. It's when you exceed that you get hit with exhorbitant fees. Most high street banks charge ~ £30 pounds for exceeding this as far as I am aware. And it's when you're gonna exceed your overdraft that suddenly 2000% apr doesn't look so bad.
scotty79 16y ago
Amazing. And is that legal? In my country there is limit on how high interest rates can get. Maximum credit interest rate is ... 20%. Of course loan sharks are circumventing this rule in every way they can by requiring from you to buy additional services and insurances.
- Tyrannosaurs 16y ago
  That sort of law was being proposed by the previous government but it doesn't seem to be on the new government's agenda.
  - gaius 16y ago
    The alternative to expensive credit isn't cheap credit. It's no credit at all.
    - Tyrannosaurs 16y ago
      Personally I'd see that as a good thing for people who are likely enough to default that expensive credit is all they can get.
      - Robin_Message 16y ago
        I'd rather, for their own sake and for the good of society that they couldn't get credit at all. It's too easy and tempting and it doesn't help for more than a few days.
        gaius 16y ago
        So how much interest is "too much"? Also I think you may misunderstand who these people are. Take wonga.com for example, they're on ads on TV with their iPhone app. How many truly poor people have iPhones?? Their customers are people who need (want) cash for the weekend before payday to go drinking/clubbing/partying. It's a luxury (of sorts) and people always pay a premium for luxury.
        Robin_Message 16y ago
        I don't know, but most jurisdictions have a view on that and most ethicists would to. I can tell you it's less than 400%. I think "these people" are not a homogeneous group, so defining them as truly poor is tricky. I would argue though that it is still a social negative to lend to anyone who has an iPhone but doesn't have the money to go on a night out before pay-day. I can't think of a better example of socially-useless lending. I think that is bad for the state to allow that, but I can see not everyone would agree. There are however definitely much worse off people using such services, and they should be prevented from doing so [1]. The other issue thing I want to mention is that the state schooling system is woefully inadequate in the area of personal finance. Maybe it's the parent's job, but budgeting and managing your finances is too important a skill to be left to them, and schools waste plenty of time teaching "personal, social and health education" — it'd be easy to shove money management in there. [1] With the possible proviso of a proper social emergency loan or payment system for people living below the poverty line with unexpected non-discretionary spending [2], e.g. car breakdown which prevents them getting to work. [2] Don't even get me started on medical bills here. Pay-day loans are a third-level kludge on a totally broken system there.

An aside to his point about Google. 400%? In the UK we've got companies charging over 2500% a year for payday loans. While I accept these are high risk, there surely has to be a limit?

retube 16y ago

I used to rage at these rates. But but - they are often cheaper than incurring an overdraft penalty at your high street bank. Barclays charge £22 a day for going up to £150 over your overdraft limit. God knows what it is if you exceed £150 over.

Tyrannosaurs 16y ago
May I suggest another bank? I get a £400 authorised overdraft limit on which I only pay interest (at a pretty fair rate) and no annual fee and in the UK that's not a deal that's too hard to find (First Direct in my case but I'm sure similar deals are available through others). Seriously, there's no reason to put up with that sort of thing and if you can get an account with Barclays you're unlikely to be turned away by too many others. I used to be with Barclays too but this sort of thing is one of the reasons that I'm not any more - that and their general air of not giving a <expletive deleted> about my custom.
- retube 16y ago
  Oh sure. I have an authorised overdraft, with some fairly standard rate of interest. It's when you exceed that you get hit with exhorbitant fees. Most high street banks charge ~ £30 pounds for exceeding this as far as I am aware. And it's when you're gonna exceed your overdraft that suddenly 2000% apr doesn't look so bad.

scotty79 16y ago

Amazing. And is that legal? In my country there is limit on how high interest rates can get. Maximum credit interest rate is ... 20%. Of course loan sharks are circumventing this rule in every way they can by requiring from you to buy additional services and insurances.

Tyrannosaurs 16y ago
That sort of law was being proposed by the previous government but it doesn't seem to be on the new government's agenda.
- gaius 16y ago
  The alternative to expensive credit isn't cheap credit. It's no credit at all.
  - Tyrannosaurs 16y ago
    Personally I'd see that as a good thing for people who are likely enough to default that expensive credit is all they can get.
    - Robin_Message 16y ago
      I'd rather, for their own sake and for the good of society that they couldn't get credit at all. It's too easy and tempting and it doesn't help for more than a few days.
      - gaius 16y ago
        So how much interest is "too much"? Also I think you may misunderstand who these people are. Take wonga.com for example, they're on ads on TV with their iPhone app. How many truly poor people have iPhones?? Their customers are people who need (want) cash for the weekend before payday to go drinking/clubbing/partying. It's a luxury (of sorts) and people always pay a premium for luxury.
        Robin_Message 16y ago
        I don't know, but most jurisdictions have a view on that and most ethicists would to. I can tell you it's less than 400%. I think "these people" are not a homogeneous group, so defining them as truly poor is tricky. I would argue though that it is still a social negative to lend to anyone who has an iPhone but doesn't have the money to go on a night out before pay-day. I can't think of a better example of socially-useless lending. I think that is bad for the state to allow that, but I can see not everyone would agree. There are however definitely much worse off people using such services, and they should be prevented from doing so [1]. The other issue thing I want to mention is that the state schooling system is woefully inadequate in the area of personal finance. Maybe it's the parent's job, but budgeting and managing your finances is too important a skill to be left to them, and schools waste plenty of time teaching "personal, social and health education" — it'd be easy to shove money management in there. [1] With the possible proviso of a proper social emergency loan or payment system for people living below the poverty line with unexpected non-discretionary spending [2], e.g. car breakdown which prevents them getting to work. [2] Don't even get me started on medical bills here. Pay-day loans are a third-level kludge on a totally broken system there.