I agree, there should be a set limit that people can charge. It can be fixed to the fed's rate, but no more than 10%. There is no reason I should be making 0.0025% on my savings but being charges 19.5% on my credit.
> There is no reason I should be making 0.0025% on my savings but being charges 19.5% on my credit.
Technically there is a good reason.
You make so little interest on your savings because you are lending money to the bank, which means due to the banks credit rating and CIDC insurance that you are very unlikely to loose your money.
When the bank loans money to you via your credit card, they are taking a much much larger gamble. If you go bankrupt there is no CDIC insurance to protect them and give them their money back.
Hence the higher interest rate.
How big should the spread be? That's an entirely different question:)
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Nobody is forcing you to pay 19.5% interest. My rate is lower than that, but I never carry a balance, making my rate 0 (but with all the conveniences of a credit card). If I overspend, which sometimes happens, then I pay for it out of savings. That money is doing anything for me (1.5% interest, or whatever), so I might as well pay off the credit card with it.
