cancel
Showing results for 
Search instead for 
Did you mean: 

Interest rate based on "credit worthiness"

tag
wollepopolle
Established Contributor

Re: Interest rate based on "credit worthiness"

 

Sorry, in hindsight I didn't want to appear rude with this last comment. I just want to clarify: I don't carry balances and I am interested in the best rewards cards. I've never seen great rewards cards with most CUs (and I didn't really want to apply with PenFed). I have nice rewards cards and I really like them. I just was wondering why I always got the worst APRs with them. It is inconsequential to me but I wanted to figure out in the long term how to obtain slightly better APRs just in case. Right now, I also have 5 CC accounts, and I don't want any more in addition that.


@wollepopolle wrote:

 


@marty56 wrote:

Look at a CU.  They have much lower rates.  Also you should not revolve balances on a CC unless it is at 0% or because of some great financial need.


Did you even read my post?

 


 

Message 11 of 23
haulingthescoreup
Moderator Emerita

Re: Interest rate based on "credit worthiness"

Well, it's possible that very few people actually get those great APR's, especially with rewards cards. Maybe they're reserved for the elite? --or long-term customers.

 

Rewards cards issuers love it when someone does carry a balance, because those much higher APR's help make up for the rewards they issue. And so maybe they also think that those who are younger and/or newer to credit are more likely to get impulsive and carry a balance. Even the good guys are going to play this version of gotcha, I suppose.

 

I just looked at the October statement for my Chase Freedom --19.24%!  Smiley Very Happy

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 12 of 23
ficonightmare
Frequent Contributor

h Re: Interest rate based on "credit worthiness"

We have a CITI dividend card.(cashback), lowest APR they offer on that card is 12.99%. DH has a 9 year history with CITI, perfect payments, FICO over 800, PIF most of the time, even does his banking there.

His rate from day one was 15.24%. While they keep raising his CL, they wouldn't lower his APR this whole time. So much for building history.

 

It wasn't until he called, and even then had to go through various people, that they lowered it to 9.99%, but get this- only for 6 months.Smiley Surprised

So much for credit worthiness.

 

I would really love to know what makes someone qualify for those low rates.

 


Starting Score: 600s
Current Score: EQ 08 798 on 5/28/14, TU 792 on 5/27/4 via Barclay, EX 798 on 5/28/14
Goal Score: 760


Take the FICO Fitness Challenge

.
Message 13 of 23
Anonymous
Not applicable

Re: Interest rate based on "credit worthiness"

 


@haulingthescoreup wrote:

Well, it's possible that very few people actually get those great APR's, especially with rewards cards. Maybe they're reserved for the elite? --or long-term customers.


 

I have been with Wells Fargo for nearly 8 years now, and last year, they decided to raise my APR on their card (my oldest) to 19.60%. If I remember correctly, that was a 6% increase. It doesn't matter, as I always PIF, but I was really pissed off. Not so much angry, but very disappointed. Of course, I have a short history and even smaller AAoA.

 

I don't use their card very much anymore. I got the "generous" offer of 1.5% cashback during the holiday season. I signed up for it. I don't intend to use the card.

Message 14 of 23
scottwagnon
Valued Contributor

Re: Interest rate based on "credit worthiness"

i think is just simply banks look at how much money you have pushed through your cards over time, the speed of rollover, the utilization at which money was pushed through, and how many times you haven't paid on time.

earth air water fire master visa express discover
Message 15 of 23
scottwagnon
Valued Contributor

Re: Interest rate based on "credit worthiness"

i believe banks love it when those make small puchases on their cards. LOTS AND LOTS OF small purchases. it costs the stores more, and increases the banks favor towards those that do. i speculate that banks factor this in to their decision making.

 

banks obviously look at all customers, based on how profitable they are, to the banks and to themselves. the more profit they bring to the bank, the bigger better deals they will get.

earth air water fire master visa express discover
Message 16 of 23
scottwagnon
Valued Contributor

Re: Interest rate based on "credit worthiness"

my wells fargo rewards card (my second oldest card), is 15.99 percent apr. i just cashed in on my card with a 100 dollar gift card. my apr was 13.99 percent before this took place. in early 2008, it was 11.99 percent apr. (lowest apr i've ever had)

earth air water fire master visa express discover
Message 17 of 23
Anonymous
Not applicable

Re: Interest rate based on "credit worthiness"

 


@scottwagnon wrote:

my wells fargo rewards card (my second oldest card), is 15.99 percent apr. i just cashed in on my card with a 100 dollar gift card.


A 100 dollar gift card? How many points did you need for that? Did they suddenly get any reasonable rewards offers (besides the cashback)? Anyway, Chase decided to give me 2% on everything this quarter (3% on dining and drugstores, 4% at amazon).

 

Message 18 of 23
scottwagnon
Valued Contributor

Re: Interest rate based on "credit worthiness"

10000 points (thats like 1% cash back). i pushed alot of money through the card, so i got it in a years time. used it to buy a RUG DOCTOR! Smiley Happy

earth air water fire master visa express discover
Message 19 of 23
MattH
Senior Contributor

Re: Interest rate based on "credit worthiness"

I strongly suspect the APR offered to a low risk customer is determined in large part by an internal behavioral scoring model that is more about maximizing profits than about avoiding risk.  My wife and I have excellent credit and before the great credit crunch had correspondingly low rates on our credit cards.  All of our cards have raised our rates substantially in recent years, and I do not believe these decisions were risk-based since nothing has changed in our finances (also, they do continue making low-rate balance transfer offers which to me seem like evidence our rate increases were not driven by risk considerations).  I suspect their internal behavioral scoring models have noticed that we are heavy convenience users who put nearly everything we purchase on plastic and pay the full balance every month.  Therefore, we are not going to roll over a balance unless we really have to do so, and thus a low APR is unlikely to tempt us into carrying a balance.

 

It might be interesting for me and other convenience users to try the experiment of rolling over modest balances for a few months: will this make the credit card companies think we are in greater financial difficulty and therefore higher risk meaning they raise the rate, or will this make them think lowering the APR might tempt us into rolling over a bigger balance?  Anybody wanna try this experiment, which my wife and I ain't gonna doSmiley Wink

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 20 of 23
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.