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Banks are bracing for consumers to stop paying off their credit cards, delinquency rates hit 12-year high (qz.com)

submitted 3 months ago by [email protected] to c/[email protected]

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[–] [email protected] 0 points 2 months ago* (last edited 2 months ago) (1 children)

Sure, they don't need the full $100k, but they will need to make sure they can cover that full $100k if you end up using it. There's a lot of statistics behind it, but in general, the higher your credit limit, the more cash they need to keep on hand, and if you're only using like $100 of that, you're a much less attractive customer than someone spending $100 on a $1k limit. There's a cost to that limit, and the banks wants to make a profit from any limit they extend.

Also, fractional reserve banking doesn't come from "thin air," they are based on strict regulatory rules and statistics to make sure both the regulators and the bankers are comfortable with the level of risk. If they need additional cash, there are mechanisms for that (e.g. borrowing from other banks at a given interest rate).

[–] [email protected] 0 points 1 month ago

It is still extremely far from the old days when money lent, was money/gold in the vault

I have a easier time accepting 8% interest charge when someone actually took money out of their pocket to lend me versus a ponzi like scheme with "strict regulatory rules and statistics blah blah loan loss provisions" (which sounds wonderful and for our good and safety).

They make a shit ton of money..

The models are just risk and likelihood based to determine cash requirements and how much they can lend out (way more than cash they have) yet they charge the same fee as if they had the funds.

I'd rather borrow from my grandma and pay her 8% since she deserves it for parting with her money.