Monday, January 2, 2012

Interesting story

Read this part :
"Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible."
I didn't know that debts had a statue of limitations from 3 to 10 years. So after that time they had to stop collecting from you. So the lenders say borrowers have a moral obligation? What if the roles were reversed? Does a lending company have any moral obligations to do something once the statue of limitations has run out? Would they do it?
It's interesting that some people feel the need for a credit card rather than a debit card, it must be a cultural thing because I still hate using a credit card to pay for stuff because I know I'm increasing my debt.
Also interesting is those rates, 19% for these new cards, and a national average of 13%. Even with the high rate that cards is still lower than the one I recently got to consolidate my debt, which is 22%. Everytime I hear those rates in the US I wonder if people here in Honduras ever get out of debt or just move it from one place to another until they leave the country or disappear into the informal sector of the economy.
I hope you are starting 2012 with no debt or at least on your way to debt free life.


La Gringa said...

I don't know how Hondurans can ever get out of credit card debt at those high rates. That's why I rail about the banks being evil so much.

But I'm sure that part of the problem with the high rates is the large number of write-offs that the banks have to do as a result of the generally bad credit worthiness of many people, who don't feel a moral responsibility to repay their debts, just like they've been taught from their government! ;-)

But again, on the other hand, the banks don't seem to take much responsibility for checking the credit worthiness of their credit card applicants either, so the whole thing is a vicious circle. Everyone pays for those who don't pay their debts in the form of higher interest.

La Gringa said...

Regarding the Yahoo article, I think the moral issue comes into play in the disclosure from the credit card company. If applicants are fully aware that in order to get a credit card, they must pay the amount they owed from the past. They aren't legally required to do so, but if they want a new credit card badly enough, they pay it, and that seems fair to me. Why should any company grant credit to someone who has already proven that they aren't responsible? That is a stupid business decision.

If the credit disclosure is not clear and people are being tricked into accepting a new card, then that is morally wrong and probably illegal in the US.