Subject:
|
Re: questions on current events
|
Newsgroups:
|
lugnet.off-topic.debate
|
Date:
|
Tue, 18 Dec 2001 21:54:21 GMT
|
Viewed:
|
489 times
|
| |
|
|
In lugnet.off-topic.debate, Fredrik Glöckner writes:
> "Kirby Warden" <inourimage@msn.com> writes:
>
> > You've pretty much answered your own question, although the creditors
> > would pay less, they could still charge the same to their own
> > customers.
>
>
> Do you mean that the _difference_ between the federal interest rate and
> the interest rate charged by the credit card companies is fixed,
> i.e. that the payment charged for the service remains the same?
>
>
> Or do you mean that the credit card interest rate remains the same, even
> with the decrease of the federal interest rate? It is not quite clear
> to me what you mean.
>
>
> In the first case, it is only fair that the credit card companies make
> the same amount of money, even with a fluctuating interest rate. In the
> second case, I would say that the competition on the marked cannot be
> functioning properly, as the lowering of the federal interest rate does
> not benefit the customers.
>
>
> Fredrik
I've read about the shear basics on this subject so what I say about it is
certainly arguable, however, maybe I can better clarify what I think I know.
A bank can borrow from the federal reserve. There is interest tacked on to
what the bank must pay back. Obviously, how much money the bank gets to
keep will have an affect on its customers, but the federal interest rate has
little or no influence on a bank's customer's interest.
Example:
I'm a bank.
I borrow from the fed.
I offer credit to my customers.
The fed lowers *my* interest.
I do not have to lower my customers interest.
In theory, I should *want* to lower my customer's interest, however, in
practice, I will only do so if it is truely the only way to get money from
those customers. In truth, I have the option of lowering my customer's
interest any time I want, but why bother?
|
|
Message has 1 Reply:
 | | Re: questions on current events
|
| (...) This is probably true. But in a market in which the competition works well, I would say that that the federal interest rate _should_ affect the rate offered to the customers. In Norway, there are always some banks which lower their interest (...) (23 years ago, 19-Dec-01, to lugnet.off-topic.debate)
|
Message is in Reply To:
| | Re: questions on current events
|
| (...) Do you mean that the _difference_ between the federal interest rate and the interest rate charged by the credit card companies is fixed, i.e. that the payment charged for the service remains the same? Or do you mean that the credit card (...) (23 years ago, 18-Dec-01, to lugnet.off-topic.debate)
|
10 Messages in This Thread:
  
 
- Entire Thread on One Page:
- Nested:
All | Brief | Compact | Dots
Linear:
All | Brief | Compact
This Message and its Replies on One Page:
- Nested:
All | Brief | Compact | Dots
Linear:
All | Brief | Compact
|
|
|
|
