I used a credit card that is at 22% interest - but have only...

I used a credit card that is at 22% interest - but have only been caught and paid interest once on it though - but the banks have made heaps on the merchant fees. 48% interest is a massive rate. However as long as the parties are consenting adults, I feel it is reasonable to offer it. You would hope for competition to gradually whittle away at that rate, if it is super profitable, after taking into account overdues, impairments and UCCC or whatever it is called these days.

In another life i worked in the finance industry. A woman (with a perfect Aussie accent) came to me for advice, of a sort, with over $300k in credit card limits that were all maxed out - pre GFC. She didn't seem very financially savvy, but she was a highly paid professional. Her accountant later told me she had jumped on a plane and had gone back to HK, and didn't leave him (or presumably any body else) with a forwarding address. She was obviously incredibly financially savvy.

Some people can manage these kinds of credit, and have no other credit option, if events haven't turned out well for them, or if they have done stupid things in the past. Some people don't have anybody to fall back on but themselves. If their car breaks down, they may not be able to work, or to have their kids looked after etc. If you borrow $1k for a month at 48%, and then repay it in full, that costs you $40, $20ish if you pay a quarter every week. That is two hours of pay. That is far better than making 10 desperate phone calls to family and charities etc, and having to beg. We can't just focus on people who can't manage credit. If somebody with a bad history manages something like that well for a few years, the lenders will give them better credit as well, even a home loan at normal rates, if there is a good story told about how the initial problem arose.

If a client has a credit limit or limit approval, and knows it is there, and it is seldom drawn upon, then it provides valuable optionality. Payday lending is different, as it requires you to negotiate from a position of extreme weakness, and probably under duress as well. Payday lenders extract a deal from you that you would never negotiate if you were in a calm state. That is the big difference between the two from my perspective. Obviously lawyers might well disagree with my view based on the legislation that is in place, but I don't think it is a bad way of looking at it.