Originally Posted by redGT
The difference is a bank is not loaning you money out of kindness or based upon your "need", they are doing it as a business, especially for young people that are just starting out trying to build "credit" charging 25% interest rates.
But credit by it's very definition is not really "real" money. It's like an IOU scribbled on a piece of paper. If they loan you $1 worth of an IOU, you pay them back $1.25 of "real" currency. Banks are essentially loaning money they do not have on hand all day in the form of "credit". With car loans, mortgages, business loans and credit cards, there is noway a bank has the cold hard cash on hand to even "loan" you that money which is why our economy depends so much on interest for those IOU's.
Which is another reason why banks limit so called "bank runs" during times or crisis. Even your savings accounts only exist as numbers in a system. If every American right now went to their banks and withdrew every penny they have...the banks actually would not be able to comply because they themselves do not have the money!
So if you look at it like they loaned you "money" that they themselves didn't even have anyway....why would you feel obligated to pay them back?
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