Saturday, August 25, 2012

Consumer Debt in Canada, Low Interest Home Equity Lines are surging in popularity.

The Wall Street Journal in Canada is reporting that rising consumer debt is a bad thing because it is based on low interest rates on home equity lines. I guess the message there is it's better to just charge higher interest rates and make the lower classes poorer while risking less money.

Here's a question to ponder, how come there are all types of regulations to qualify for any type of loan, but there are no regulations on how to spend the loan money?

Why not cap the amount the homeowner can draw every month? Or, those who agree to a monthly cap get a lower rate, those who want all of their equity available instantly pay a higher interest rate?

Lets say a homeowner gets a 100,000 dollar home equity line. Why not tie in the interest rate charged based on how much they "draw" every month. The less the homeowner draws per month, the lower the interest rate, the more they draw per month, the higher the interest rate. 

For credit cards, why not tie the interest rate into what percentage of the total due is paid back? Pay back 10% of what is owed every month, get a 5% interest rate charge. Pay back only 2% of what is owed, get a 13% interest rate charge. 

Of course these ideas have to be incorporated from the time the card is started, and not suddenly changed. This incentive could be offered to existing credit credit cards if nobody is suddenly being charged more interest for making the 2% minimum charge.

It appears as if the banks, wall street and the government want risk free interest rate profits, so anybody who is paying high interest rate charges on low monthly payments is left alone, then turned into an indentured servant for life if they go into default.

Please consider viewing and then signing the Debt Neutrality Petition by clicking here.

No comments:

Post a Comment

Please consider signing the Debt Neutrality Petition by clicking here.