Okay, Don. I'll concede that to you. Your earlier post appeared to be mixing two separate facts into one. My misinterpretation, my mistake.
>21% interest represents the lowest quality credit imaginable. The only reason a consumer accepts that high a rate is it's the only thing available to persons whose finances and credit history are a mess. Consumers with good credit use bank cards with interest rates around 9%.
True enough. Nonetheless, a large percentage of the buying public are members of the high-risk group. Damn near every "private brand" consumer credit card has a 21% interest rate, since that is the maximum rate allowed in most jurisdictions. If a lender can capture business (brand loyalty) by issuing such cards, and can mitigate the risk and create profit through the interest rate spread, more power to them.
Your concern appears to be the issuer's exposure to the debt portfolio. You feel that HD (and others) have a massive off-balance sheet exposure, and I don't. At this stage I haven't seen any hard evidence proving the positive, nor can I unequivocally prove the negative. Perhaps it will come to light at some point. As I stated before, I applaud your desire to know, but still contend that the absence of information doesn't not prove anything.
Regards,
David |
