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I feel like I haven't seen appreciably high interest rates from the fed since the 90s. It feels like we're in a boom right now like in the dot com era, so I'd

I feel like I haven't seen appreciably high interest rates from the fed since the 90s. It feels like we're in a boom right now like in the dot com era, so I'd like to see rates in the 3-5%+ range so they have room to take the brakes off in a recession. The real problem to me though is that the fed interest rate no longer reflect reality. Who cares if it's 2% when people are paying 15-30% on their credit cards. If we really wanted to help the middle class, we should tie bank and credit card interest rates to a maximum multiplier, say no greater than 2:1 or something for secured debt, and 4:1 or something for unsecured debt. So a mortgage could only be 5% if the fed rate is 2.5% and a credit card could only be 20% if the fed rate is 5%.

linuxftw 8y ago
This would simply limit lending to riskier borrowers who would then seek financing through other, less desirable means (title loans, or even loan sharks). Credit Card interest rates can be 1000%, as long as you pay off your statement balance in full before due date, it doesn't matter (cash advances notwithstanding).
prewett 8y ago
Treating the symptom won't fix the problem. The middle class could help itself by refusing to finance consumption with debt. The middle class could just quit taking on debt at 15%. And before you say that they have to just to survive, no, the definition of middle class is people who actually have enough money to live on. What would help the middle class is getting them to learn some basic financial sense. That said, I do think that credit card interest rates are unconscionable and should be capped much lower. As it is, credit card debt is financial slavery and people should treat it like crack cocaine--just say no.
pkaye 8y ago
If people stop using credit cards for long term debt the rates would be less of a concern.

linuxftw 8y ago

This would simply limit lending to riskier borrowers who would then seek financing through other, less desirable means (title loans, or even loan sharks). Credit Card interest rates can be 1000%, as long as you pay off your statement balance in full before due date, it doesn't matter (cash advances notwithstanding).

prewett 8y ago

Treating the symptom won't fix the problem. The middle class could help itself by refusing to finance consumption with debt. The middle class could just quit taking on debt at 15%. And before you say that they have to just to survive, no, the definition of middle class is people who actually have enough money to live on. What would help the middle class is getting them to learn some basic financial sense. That said, I do think that credit card interest rates are unconscionable and should be capped much lower. As it is, credit card debt is financial slavery and people should treat it like crack cocaine--just say no.

pkaye 8y ago

If people stop using credit cards for long term debt the rates would be less of a concern.