Instant Cash Loan Today

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When you need money quick you may be willing to do just about anything to get it, but be careful of the consequences for fast cash.  Credit cards are a very popular source of cash, but that cash can cost you a lot more than you may think.

Cash advances often are charged higher interest rates and a transaction fee.  If you are unable to be the credit card off in a timely manner you may be paying for that quick cash for years to come.

Current law is being discussed to protect consumers from outrageous credit card practices, but don’t think you will get off easy for using your credit card. There are many other ways they can charge you to make up the difference in money they lose from the higher interest rates.

Why Credit Card Interest Rates Won’t Be Capped

What happens if you cap credit-card interest rates at 16%? Yes, at the margin, the amount of credit extended on credit cards would fall. That’s a feature, not a bug. But would it fall dramatically? Pamela Yip quotes Odysseas Papadimitriou:

“If you cap the interest rate, it’s not like people are going to have lower interest rates than they do now,” said Odysseas Papadimitriou, chief executive and founder of Evolution Finance Inc., which operates CardHub.com. “Instead, everyone who has an interest rate below 16 percent will continue to have the same interest rate and everyone who has above 16 percent will not have access to credit any longer.”

Papadimitriou previously was senior marketing director at Capital One, so he has some insight into how card companies work.

This isn’t really true.

For one thing, credit-card companies make substantially all of their profits from people paying more than 16% interest on their cards. The rest of us generate a certain amount of cashflow in terms of interchange fees, but mainly we’re option value: so long as we have a credit card, there’s a chance that we’ll start running up large balances on it, miss a payments by a couple of days, and suddenly we’re a high-value customer.

Capping interest rates at 16% would force credit-card companies to move away from the current soak-the-poor sweatbox approach, and move instead towards a much more equitable system without bizarre cross-subsidies from the poor to the rich. Chances are that annual fees would rise and loyalty rewards would shrink — and as a result the people who pay off their cards in full every month — the people who use credit cards mainly for payments convenience, rather than because there’s a credit line attached — would start using credit cards less and debit cards more. Again, feature, not bug.    –more