Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
Editorials & Other Articles
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Latest Breaking News
In reply to the discussion: Trump calls for one year cap on credit card interest rates at 10% [View all]
BumRushDaShow
(165,979 posts)25. What has happened since the Raygun '80s, was banking deregulation
I.e., a number of banks that actually host/issue those credit cards, will domicile/charter their card entities in states with no cap or a high cap. The most common state is South Dakota, where you will see this -
Fact brief: Is South Dakota one of the friendliest states for credit card companies?
Yes.
South Dakota landed several major credit card companies after 1980 because of the state’s lack of laws restricting interest rates.
In the 1970s, credit card companies were losing money with every swipe because most states had laws that capped interest rates.
The lack of a usury law in South Dakota combined with a Supreme Court ruling that said companies could use the state’s laws where the company was headquartered led to a financial boom. Even if a card was used in another state, South Dakota laws governed interest rates.
(snip)
Yes.
South Dakota landed several major credit card companies after 1980 because of the state’s lack of laws restricting interest rates.
In the 1970s, credit card companies were losing money with every swipe because most states had laws that capped interest rates.
The lack of a usury law in South Dakota combined with a Supreme Court ruling that said companies could use the state’s laws where the company was headquartered led to a financial boom. Even if a card was used in another state, South Dakota laws governed interest rates.
(snip)
The linked article lists 3 big issuers - Wells Fargo, Citi and First PREMIER Bank - who established their cards there (and many small orgs with cards in their own names, are actually issued by banks like those, through an agreement).
The unanimous SCOTUS ruling that established this -
Marquette Nat. Bank v. First of Omaha Svc. Corp., 439 U.S. 299 (1978)
(snip)
MR. JUSTICE BRENNAN delivered the opinion of the Court.
The question for decision is whether the National Bank Act, Rev.Stat. § 5197, as amended, 12 U.S. C § 5, [Footnote 1] authorizes a national bank based in one State to charge its out-of-state credit-card customers an interest rate on unpaid balances allowed by its home State, when that rate is greater than that permitted by the State of the bank's nonresident customers. The Minnesota Supreme Court held that the bank is allowed by § 85 to charge the higher rate. 262 N.W.2d 358 (1977). We affirm.
(snip)
(snip)
MR. JUSTICE BRENNAN delivered the opinion of the Court.
The question for decision is whether the National Bank Act, Rev.Stat. § 5197, as amended, 12 U.S. C § 5, [Footnote 1] authorizes a national bank based in one State to charge its out-of-state credit-card customers an interest rate on unpaid balances allowed by its home State, when that rate is greater than that permitted by the State of the bank's nonresident customers. The Minnesota Supreme Court held that the bank is allowed by § 85 to charge the higher rate. 262 N.W.2d 358 (1977). We affirm.
(snip)
So this means a card holder needs to REALLY research where their card issuer's credit card unit is domiciled, otherwise years after some low "introductory interest rate", that rate can suddenly change to the max rate of the state where the card is issued from, not from the state where the holder resides.
Edit history
Please sign in to view edit histories.
Recommendations
3 members have recommended this reply (displayed in chronological order):
37 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
Trump calls for one year cap on credit card interest rates at 10% [View all]
BumRushDaShow
Friday
OP
He's just trying to increase the repuglican pac donations from the credit card carriers. It will never pass.
mdbl
Friday
#2
One of our local trolls is going to be very concerned about why "We Dems" didn't think of this first
Prairie Gates
Friday
#21
The little people can't take advantage of tax deductions. They are taking the standard deduction and getting money...
Ol Janx Spirit
Friday
#15
Before the mid-terms, Trump will promise us all a new car and a Trump phone.
RedWhiteBlueIsRacist
Friday
#13
This is what he does: he says it--expecting credit for it. And it is probably true more often than not...
Ol Janx Spirit
Friday
#16
Credit Card Companies would have to cancel some people's cards.................
Lovie777
Saturday
#26
Hey while we're spouting populist pablum why not raise the minimum wage by ten percent for a year or until after the...
Hugin
Saturday
#30