Why don't credit card companies cut their interest rates?

the_big_al

I see that the BofE has just cut interest rates, shouldn't credit card companies cut their rates by at least a similar rate? I can't remember the last time I saw a credit card rate cut. If more people can't pay their mortgages because of debt problems, as regular news items seem to imply, then I'd guess that they can't pay their credit card bills either.

Wouldn't it be a help to every one if they had less interest to pay on their credit cards?

normanmark

Credit card companies aren't here to help people. They're here to make money.

clio

More chance of newcastle winning the league than CC company's doing that.

Any

Credit card companies DO cut rates - when they want you to shift more debts to them and the moment the offer runs out, they slap you over the face with it!

YorkshireBoy

The BOE rate cut has no bearing whatsoever on the 'risk' involved in providing a credit facility.

Indeed, in the current economic climate (recession looming, unemployment, etc) it wouldn't surprise me if 'typical' rates actually climbed.

The lowering of BOE rates may enable a reduction in BT fees (which have been climbing over the last year or so), but the better deals (now more than ever) will still go to the less risky customers...as identified by credit scoring.

moonrakerz

The banks need more money ! They have been selling worthless loans to each other for years and now penny has just dropped - or the chickens have come home !

That nice Mr Brown has just offered them hundreds of billions of YOUR money to get them out of the mess that they got themselves into.

Just who is running this asylum ??

lisyloo

then I'd guess that they can't pay their credit card bills either

Perhaps they shouldn't have bought whatever it was they bought on credit then?

Wouldn't it be a help to every one if they had less interest to pay on their credit cards?

Yes, but personal responsibility comes into it too.
If people didn't buy things they couldn't afford or waited to save up for them (shock, horror) then they wouldn't be in this mess.

I'm not a total dragon though , people who have fallen on hard times through no fault of their own have my sympathy.
Those who've overspent or planned badly do not.

When I was a kid (yeah I know ) I used to save up for something if I wanted it.
Guess what ............I never had a problem with credit.

Whilst I understand that sometimes we need to take risks (like buying a house), the "want it now" culture and living beyond your means is not sustainable.

Whatever you think of my views or how I've expressed myself it's a fact that people cannot spend more than they earn and this is why we are in the place we are in now.

the_big_al

Thanks for your responses.

There was a time when credit card rates and unsecured loan rates did come down after a base cut rate (it usually took a lot longer for the credit cards than anything else) but it did happen and mortgage rates still do come down (in the main) after a cut. I think that if the CC rates remain high then those who can't pay will probably never be able to and so the companies will cut their own throats because they'll end up getting nothing. If they lower the rates there are going to be some people who will be able to continue paying.

I also think we're now in a new, different era when it comes to the bankers (sic), I suspect there will be more legislation coming their way and they need to be seen to be helping out punters. I don't think that it will last for ever but I think it will happen.

Ref Gordon Brown, I'm no great lover of Gordon but I didn't see too many political parties predicting the things that are now happening although I don't think it was too hard to see. Ref the Billions that are now being handed over to the banking system I think there are many more billions of tax payers money which have been wasted on other things in the past by both parties.

I understand the feeling that people shouldn't have bought things they couldn't afford but they have so let's help them out by cutting CC interest rates.

lisyloo

but they have so let's help them out by cutting CC interest rates.

Well firstly, none of us are in a posistion to change interest rates.

Secondly, are you prepared personally to take a hit on your pensions from less profitable companies to bail out people who've made mistakes?
I think a lot of prudent hardworking tax payers might be getting fed up of bailing out other less prudent people.

But very chairtable of you to be so generous with money of others

the_big_al

lisyloo wrote: »

Well firstly, none of us are in a posistion to change interest rates.

Secondly, are you prepared personally to take a hit on your pensions from less profitable companies to bail out people who've made mistakes?
I think a lot of prudent hardworking tax payers might be getting fed up of bailing out other less prudent people.

But very chairtable of you to be so generous with money of others

I was suggesting that the Credit Card companies should reduce their interest rates as I actually knew that none of us could..

I'm not quite sure who the less profitable companies are who you mention, my thoughts were that the credit card companies would become more profitable by carrying on taking payments because of the reduced interest rates rather than losing business altogether from someone who may, for instance, go bankrupt.

normanmark

the_big_al wrote: »

I was suggesting that the Credit Card companies should reduce their interest rates as I actually knew that none of us could..

I'm not quite sure who the less profitable companies are who you mention, my thoughts were that the credit card companies would become more profitable by carrying on taking payments because of the reduced interest rates rather than losing business altogether from someone who may, for instance, go bankrupt.

The interest is where they make the money, so i don't see how taking payments would mean they would be more profitable. All that does is mean they have payments coming in, not making money. Speculating to accumulate. There's a small percentage of people who claim bankruptcy in comparison to a lot of customers who have a balance but not paying it off in full every month.