If their rates really were lower, then the stricter enforcement of repayment could help explain how the loan sharks were able to be profitable at a lower interest rate than the payday places. If the rates really were lower.

Do you lend any money to banks? That would be bank accounts getting interest, by the way. If you do, which bank are you going to lend money to? I'm going to bet you'll put your money in the bank that gives you a higher interest rate.

Now imagine that your bank doesn't operate like any other banks, and doesn't worry about risk. At best, they'll make less money than other banks, and won't be able to afford to pay you as much. Before long, they'll see people like you move to other banks. They won't stay in business that way.

In the U.S. we're having problems right now with banks that took too many chances. Some banks probably won't survive their mistakes.

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I say there is an invisible elf in my backyard. How do you prove that I am wrong?

Disclaimer: Avatar is not an official NASA image and does not imply any specific interplanetary or interstellar capability.

The Leif Ericson Cruiser

Surely he puts his money in the bank that needs it the most, not the one that offers him the highest interest rate

Here's a picture of a whole bunch of illogical people queued up to take their money out of a troubled financial institution, so they can go deposit it in a sound institution, when they know full well that the troubled institution would benefit from their deposits more than the sound one.

Can't get the picture to display. Here's the link.

http://en.wikipedia.org/wiki/Image:1...17eb7212_o.jpg

Yes evil banks providing access to capital for people who want to get stuff. How dare they? The people should be made to eek out a subsidence living in perpetuity without hope of aspiration.

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2 good 2 need 4 engines

Reading this made me perspire and want aspirin

Personally I am in favour of, "I am an idiot," laws. Basically before taking a payday loan a person would have to sign a piece of paper that states, "Unless I am taking out this loan because of a severe financial emergency I am almost certainly an idiot." Advertising for payday loans would also carry a similar warning.

I agree. And in application to much more than PayDay Loans.

Although maybe not make it a law- just a regular general awareness- instead of the current "Let's all deny personal responsibility and blame everyone else with a lawsuit" mentality.

Interesting! Do folks just read the last
sentence of my posts? Certainly stops them
reading any awkward points of view! I am in
favour of extensive training of children in
school of all possible financial ripoff
techniques they may face in their future.
This has been the main problem of the past
few decades I think. And is the word
"aspiration" a term for wanting more than
other people by treading on them if need be?
No, they want the oportunity to work to get
more. Or perpetrate a few scams legally
perhaps.

Now let us consider how our main banks all
have interest rates of 0.1% on current
accounts without a squeak from the Monopoly
Commision. And why our "independant" financial
journalists keep floating the idea "free"
banking is not really appropriate!

Erm that's because the Bank of England sets interest rates. Wouldn't be much potency to monetary policy if they couldn't.

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2 good 2 need 4 engines

Absolute financial type deflection statement
seemingly with knowing brevity and gravitas
and complete you know what..in my well
informed opinion. I remember when the rate went
down half a percent in the nineties, so did
current account interest rates. Only these
rates were 1%. A law restricting minimum rates
to 1% is needed. And something to make the
blighters compete.

Money Market rates are generally low because banks are running the risk that money market customers could walk in at any time and demand their deposits back. Sometimes they will offer premium rates on these accounts to attract more deposits if their reserve requirements aren't being met. Or they might just want to get more people in the door who may be interested in borrowing as well (customers with strong deposits tend to make decent credit risks).

If you want a higher rate of interest, agree to allow the bank to hold your funds for a longer period of time via a certificate of deposit. The longer you agree to leave it there, generally speaking - the higher your rate of return.

The fed won't set a minimum interest rate because at times they want to encourage people to spend rather then save in order to bolster the economy. If I've got $20,000 in savings and the rate drops to 0.10% - I just might be encouraged to go out and replace that old car (which we did this year because savings rates were low and borrowing rates were low). This type of consumer activity gets the economy moving. When the economy is rolling along, rates may increase so it doesn't over heat and crash at some point. I might be encouraged to pay off that car early and start building up savings again.

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Spock Jenkins of the Vulcan Jenkins'.

Thanks for the link to the paper, mike. I'll try to read through it when I've got more time (and aspirin) on hand.

Going based on the article I originally linked to, the study consisted entirely of people who 'just missed' the cutoff criteria. The loan agency gave some of them loans anyway, specifically to facilitate the study. The only other way to get two generally-equal groups would've been to deny loans to some people who did qualify.

As I said, though, that's based on the article - I haven't read through your link to the original paper yet.

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SeanF

"Ask to understand, but don't challenge unless you have the knowledge."--NEOWatcher

The contents of this post are ©2008 by SeanF and may not be copied or retransmitted in any form without the express written consent of SeanF

Also - as somebody mentioned earlier. The study was done in South Africa. They indicated that those who received the loans experienced "Less Hunger" than those not approved. For the most part, in the US - even our poor are overweight. I don't think the two situations would really compare apples to apples very well.

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Spock Jenkins of the Vulcan Jenkins'.

So the lender did use some discretionary control regarding which apps were approved and limited their approvals to only the best of the worst - so to speak. They did not follow the truely random recommendations of the computer. For what it's worth.

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Spock Jenkins of the Vulcan Jenkins'.

The logic is, don't borrow what you can't afford. There are plenty of low to moderate income folks who also happen to have good credit. High risk borrowers (myself included as my credit score sets off alarms) are not victims of anything more than wanting more than they can afford. The solution: live cash on the barrel. Yeah, it's tough watching your friends go on whimsical shopping spree's and taking on the spot vacations on credit cards with maximums totalling more then thay make a year but hey, it is also nice not to stress that there is too much month at the end of your money.

Phew!..a base rate of 0.1%! Those would be
interesting times. It would be reasonable for
basic current accounts to attract interest at
20% of current base rate.(a fifth in case you
want to misinterpret). After all, people are
taking a risk in having their living money in
an account in spite of the mooted convenience.
But at the moment it might be unwelcome as the
government is helping itself to "dormant"
accounts that banks have had the use of since
heaven knows when.

Another scam is electricity utilities
installing key operated budget meters in
homes where payments not been forthcoming
on time. Its great for them as they get the
money in advance and cutoff is automatic.
And better than the old coin meters with no
collection costs. But I had some suspicions
companies where not sending bills to some
households to get them in difficulties then
offering to install these "key" meters. And
it is more expensive per unit!

Spitting Image play "Our House". Brilliant!

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"All your bias are belong to us." Ara Pacis
"A witty saying proves nothing." Voltaire

If those that are credit worther paid more as they are low risk (they can afford it) this would help those that are high risk to afford loans/mortgages at a cheaper rate.

If you can ill afford a loan or mortgage rate why should you pay more for it to supplement those on the opposite end of the scale ?

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Thank God for magnetism.