'Today the paradigm is that banks rip off consumers and do not lend for the expansion of productive capacity.'
By Dr. Paul Craig Roberts: Banks with credit card businesses are currently charging an annual
interest rate of 19.24 percent on purchases. If you use their card for
cash advances, the interest rate you pay is 29.99 percent. If
I remember my medieval history, 30% is higher than the usury Jews
charged that led to pogroms and is higher than the percentage of serf
labor to which feudal lords had claim..
I got to wondering what percentage of banks’s profits came from credit card interest and bank fees. In
other words, does it pay banks to finance new investment in plant and
equipment when they can get 20% or 30% from lending to hard pressed
Americans living on their credit card?
I did a search, and there is not the information you would suspect. I did learn that credit card companies make more money from interest on unpaid accounts than from transaction fees on purchases. Interest charges on outstanding balances are paid by the card user. Transaction fees on purchasers were formerly paid by merchants. However,
today many merchants have shifted these charges to their customers.
When you use your credit card today, you, not the merchant, face the
transaction charges.