A Moral Limit on Interest

Because future inflation rates are unknown, an interest rate limit could mean that no loan money is available at all.

If I have money to lend and inflation is 5%, I won't lend it for 2% short term or medium term and lose money (except for family, 0%). I got to have 9% to cover the lawyer drawing up the documents where I can get blood if the borrower fails to pay, and to make a small profit.

When Nixon put a limit on the price of plywood soon none was available because nobody will make a product they know will lose them money.

Neither a borrower or lender be, and if you be, read what you sign (all the small print) very carefully.

 

They've been trying to create interest limits on credit cards, and say you can't be forced to pay back twice as much as you originally borrowed, but credit card companies have a powerful lobby and have prevented a lot of this legislation from going through, or made sure it got wattered down.

I remember at one point in 2006 I was getting unsolicited credit cards mailed to me in my name with a $1500 limit, and all I had to do was call a number to activate them. I never ordered those cards, I didn't even have a credit card at the time. Scary.
Got them in the mail from two different companies about every other month.
Tried to call the companies to have them stop sending them, but could never get through to a real person on the phone (all automated).

(These were real credit cards they were sending, with the magnetic strip and hologram)

 

Morally, I agree. I would consider more than 25% interest to be greedy in all but the most risky circumstances (I would feel like a total ****** charging more than that, so I think others should feel that way as well).

Legally, there should be no limit. I don't agree with restricting interactions to prevent stupid people from doing stupid things or to prevent evil people from taking advantage of that stupidity. Folks say the slippery slope argument is a non-sequitor, but people are very lazy and ignorant, and the precedents we set in law will eventually be misused by those we seek to protect ourselves from because we will eventually stop paying attention.

 

The military base near me finally took action and got the state government to place a limit on how much military employees could be legally forced to repay when they had borrowed from payday lenders.