APR limit?

Dorsetmike

Member
APR limit?
I've just seen an ad on ebay for a new credit card - LUMA "for poor credit" "good for credit building or poor credit" "Credit limit up to £1.500"

APR 35.9%


Methinks that is way over the top, especially for somebody desperate for money &/or who doesn't understand interest rates.

Is there not a limit on the APR% that can be charged? If not, why not?

What does the team think? Should there be a limit if so at what level, my feeling is it should be less than 20% or even below 15%
 

DrBen

New member
The U.K. had a usury law from 1660 until it was repealed in 1854. It was passed during the reign of King Charles II to lower interest rates from 8% to 6% a year. There is currently no usury law in the U.K.
 

teddy

Duckmeister
A few years ago I found a local company selling from vans on an established round (what used to be known as a tally man). They where charging between 100 and 200%. This was a reputable company with a well known local store. 35% is not particularly high for a credit card being offered to people with a poor credit rating.

teddy
 

Dorsetmike

Member
I would suggest most of those with a poor credit rating should not be allowed a credit card anyway, and an interest rate of 35% or more is likely to be way way more than they can afford so making them worse off than before.

As Br Ben said above, from 1651 a usury law in England limited interest to 6%, that was repealed in 1854, we need a law like that again, maybe not as low as 6% but definitely no higher than 20%, 10 - 15%, would be better; the rate and amount of the loan would be to some extent dependant on the purpose of a loan, House purchase would obviously be a higher amount but a lower interest rate than say buying a car; a cooker or refrigerator would be higher amount but lower rate than a TV or camera.

The legislators could really have fun working that lot out!
 
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teddy

Duckmeister
It is worth remembering that no interest is charged on a credit card if the balance is paid on demand. This can mean up to six weeks free credit. I have used this facility myself to ease over tight spots and it has been very helpful. I still use it to pay for fuel etc and it does not cost me a penny. The criteria on lending is a lot stricter than it was five years ago before the financial crash but it is true that too much is lent to people who can not afford to repay it.

teddy
 

Krummhorn

Administrator
Staff member
ADMINISTRATOR
I have credit cards too ... I always pay them off before the cycle ends (when interest is added), so I don't pay interest either, as Teddy does not also as noted above.

I have wondered though about the justification of the exorbitant interest rates a card user would pay in relation to the interest rate the banking institution pays us for storing all of our money with them. Most banks here pay less than 1% interest to account holders. So why do they need to rake in 35% when they only pay back less than 1% for the use of our money while it is stored in their vaults. Doesn't seem fair at all.

The interest rate on our home mortgage is 4.125% ... and only 9 years to go until it's paid off - yea!
 

JHC

Chief assistant to the assistant chief
CC payment before due date is the only auto payment that I have so Visa then becomes a very useful tool and makes no profit form me but remember that they do make money out of the retailer, in NZ the retailers are now trying to charge the card holder a fee for using it Ha ha ha tell em get stuffed and go somewhere else.
 

teddy

Duckmeister
Just had a flyer through from a mail order company with an APR of 64,5%.

Interest rates are poor here with short term rates for cash as low as 0.4% It has been my argument that mortgage rates should only be about 2% above Bank of England rates which would be 2.5% over here.

Lars, it is certainly a wonderful feeling when that mortgage is finally paid off. Mine finally went when I had an inheritance, and the first thing I did was get shot of it. The second thing I did was open some wine to celebrate.

teddy
 

JHC

Chief assistant to the assistant chief
Just out of interest: due to recent events in the share market I now use Bank Term Deposits as my form of investment/saving but the interest rates are very poor @ 3.85-4.2% for 12 month how do your rates compare?
 

teddy

Duckmeister
My wife says that to me! Of course she may have been referring to something else.......

teddy
 
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