Prime + 5%
= Federal Funds + 8% basically.
And that should be the max credit card interest rate allowed, is an idea, unless
anyone is against it.
The Prime rate is presently 3.25%: https://institute.jpmorganchase.com/about/our-business/historical-prime-rate
Prime is the rate charged to the most credit-worthy borrowers, on secured property.
And the Federal Funds rate is presently 0%-.25%: https://tradingeconomics.com/united-states/interest-rate
Federal Funds is the rate the Fed lends at, to Banks to meet their overnight reserve requirements.
When the Federal Funds rate changes in the future, the max allowed credit card
rate would change, but only for new purchases.
Banks already repackage credit card balance and risk and sell them to other lenders, so they can get out of the fixed rate.
The most subprime CCC Bonds presently pay about 11%, with a 50% default rate, which equals 5.5%, so this would be less than credit cards, which are unsecured.
Reduce Max Credit Card Rate To Prime + 5%
Currently 3.25% + 5% = 8.25%
Likewise Federal Funds + 8%
Currently 0.25% + 8% = 8.25%
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