Does. the interest rate matter to you?

[wacdenney]

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@Anonymous wrote:

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@wacdenney wrote:

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@Anonymous wrote:

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@EdMan63 wrote:

I agree with others that it really points a finger at your credit worthiness more than anything else and probably has a lot to do with low or hight SL. So in that regard a high APR is probably limiting your growth with the card. But since we should never be paying interest on a reward card its not really important to me in that regard. 

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+1 

IMO ideally we should never be paying credit card interest at all, on any card. If you think about it, paying interest is like buying a $100 pair of shoes for $120. I can't think of any good reason for doing that.

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Every portfolio should have a card designed for carrying a balance.  There are many reasons why a person would want to make purchases strategically.  If your $100 pair of shoes is on sale NOW for $70, then it makes sense to buy them now and pay $75 for them instead of paying $100 on pay day when the sale is over and that's only one example. 

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By "carrying a balance" do you mean "paying interest on a balance" ?  Everything I have read here has suggested that the ideal is all cards except 1 reporting zero balance, and 1 card reporting between 1%-9% utilization. This does not seem to mandate carrying a balance month-to-month to incur interest...

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Yes.  I have a balance still left over from Christmas currently.  I haven't persoanlly ever had to use my CU cards yet, but I maintain them in case I need them.  They are simply a part of a well rounded portfolio.  Currently, my balance is parked on my Fidelity AMEX.  It is sitting at 0% APR for 18 months (16 now) on a balance transfer offer which cost me 3%.  I made most of my Christmas purchases on Discover for the 2% this year and 5% in category then transfered the balance.  I paid 3% to park it for 18 months and I can now pay it off whenever I feel like it before the promotional period runs out. 

It made more sense for me to make the purchases then at Christmas time when I needed the stuff and when all the stuff was on sale.  Yes I paid 3% on it across however long I decide to let it sit.  It's about 2.5k on a 17k limit whatever utilization that works out to.

The APR on the Discover that I used to make the purchases made no difference AT ALL.  The normal APR on the Fidelity card made no difference AT ALL.  All that mattered was the balance transfer offer 0% and the transfer fee 3% and when I needed to make the purchases when things were on sale and when I decide to pay them off.  Strategic purchasing...  The APR on the Discover and Fidelity cards could have been 50% and it wouldn't have made any difference AT ALL.

[wacdenney]

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@smc733 wrote:

I might like to play a little devil's advocate here...

To everyone saying it is better to pay interest for a pair of shoes or a Macbook if it is on sale.  I would counter that with if you do not have the cash to pay off a $100 pair of shoes at $100 or $70, you shouldn't be spending that much on shoes.  Same thing for a Mac.  Just playing devil's advocate here, but this is what CC companies want you to do.  

To live the best way financially is to live slightly below your means.  For what it's worth, I understand the need for low APRs, and personally for me, it's a telltale sign of an issuer's relationship with the customer.  Chase's unwillingness to lower my 15.49 lands my freedom in the SD, while my BofA 10.24 gets daily use.  It's a "good to know" if I ever fall on hard times (and my e-fund runs dry, which I've hopefully padded enough).

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There are any number of reasons to make strategic purchases.  Buying things when they are on sale is only one example.

Here's another...  My work sends me to about 4 conferences per year.  Roughly one per quarter.  Yes, I could submit the paperwork and get a check from the business office to pay for the travel expenses in advance.  However for me it makes more sense to put the hotel bill on my Marriott or Hyatt card.  It makes more sense to put my meals on my AARP Visa at 3%.  It makes more sense to put the milage (gas) on my Sallie Mae at 5%.  I then take all the reciepts and turn them in with a form and get a check for the total in a few weeks.  NO I didn't necessarily have the money just sitting in my checking account to make those purchases, however it still makes sense even if it takes longer than normal to get reimbersed to put those charges on my cards.

So while I may not have the cash to pay for $70 shoes or a $400 hotel room today, I will have the money tomorrow and there's no way I'm not going to make either purchase to my greatest advantage.

[Anonymous]

I appreciate all the input.  The various views are helpful and give me something to think about.  I didn't believe in credit for years.  If I couldn't pay for something, I didn't need it.  If I wanted it, I saved for it.  This is what my dad drilled in my head.  It definitely didn't help me when I wanted to buy a home.  That is why my credit journey began.  I did buy the home but I also learned the importance of a good credit score and file.  This forum has been invaluable to me!

I am aware that I am still considered a higher than some due to my AAoA.  I find it interesting though that Chase gave me their lowest APR while Citi gave me their highest.  Citi also sends me the most offers in the mail.  My other accounts are somewhere in between.  Citi just seemed extreme to me and it hurt my credit feelings lol  It had nothing to do with carrying a balance or PIF'ing.  I didn't have a choice on what the APR was when I first started.  I had to build.  Since I have established some credit, I can now be choosier.  APR is definitely a factor to consider for me in the future.  That lead me to ask how others view their apr offers. 

I have my own "credit plan" in mind.  My intention is to keep a card in my pocket for the next 2-3 years that has a 0% intro APR in the event I have to carry a balance.  During that time, I will work on building my score and let my AAoA grow.  My current 0% card is Amex until November.  I will get a new cc then.  As far as rewards go, I am using Discover for matching rewards until August.  I will be working on a rewards card strategy and decide what to do then.

I know people in the credit world gasp when others talk about carrying a balance.  In the real world, it happens. We all know it is ideal to PIF monthly.  It is up to each individual to know their limits and how to repay what they charge.  Credit card rewards didn't used to be the norm and they have changed how people use credit cards.  People used to get credit cards for emergencies or to help out in tough times.  I am trying to learn how to make the most of my cards.  If I "have" to carry a balance, I will do my best not to pay interest.  Bottom line, use your credit responsibly.