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Established Contributor
wollepopolle
Posts: 545
Registered: ‎09-12-2010

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?

 


 

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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

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%!  :smileyvery-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
Frequent Contributor
ficonightmare
Posts: 423
Registered: ‎10-25-2010

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.:smileysurprised:

So much for credit worthiness.

 

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

 


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Established Contributor
Ulan
Posts: 790
Registered: ‎09-09-2008

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.

Valued Contributor
scottwagnon
Posts: 1,333
Registered: ‎02-07-2010

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.

EX BankCard 8 FICO 820 (250-900) 04/08/14
TU FICO 806 (350-850) 04/10/14
EX VT 3.0 805 (300-850) TU VT 2.0 891 (501-990)
Credit.com score 798 (300 - 850) TU transrisk 772
card line up here: http://ficoforums.myfico.com/t5/Credit-Cards/How-Many-Credit-Cards-Do-YOU-have/m-p/1034512#M290859
Valued Contributor
scottwagnon
Posts: 1,333
Registered: ‎02-07-2010

Re: Interest rate based on "credit worthiness"

[ Edited ]

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.

EX BankCard 8 FICO 820 (250-900) 04/08/14
TU FICO 806 (350-850) 04/10/14
EX VT 3.0 805 (300-850) TU VT 2.0 891 (501-990)
Credit.com score 798 (300 - 850) TU transrisk 772
card line up here: http://ficoforums.myfico.com/t5/Credit-Cards/How-Many-Credit-Cards-Do-YOU-have/m-p/1034512#M290859
Valued Contributor
scottwagnon
Posts: 1,333
Registered: ‎02-07-2010

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)

EX BankCard 8 FICO 820 (250-900) 04/08/14
TU FICO 806 (350-850) 04/10/14
EX VT 3.0 805 (300-850) TU VT 2.0 891 (501-990)
Credit.com score 798 (300 - 850) TU transrisk 772
card line up here: http://ficoforums.myfico.com/t5/Credit-Cards/How-Many-Credit-Cards-Do-YOU-have/m-p/1034512#M290859
Established Contributor
Ulan
Posts: 790
Registered: ‎09-09-2008

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).

 

Valued Contributor
scottwagnon
Posts: 1,333
Registered: ‎02-07-2010

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! :smileyhappy:

EX BankCard 8 FICO 820 (250-900) 04/08/14
TU FICO 806 (350-850) 04/10/14
EX VT 3.0 805 (300-850) TU VT 2.0 891 (501-990)
Credit.com score 798 (300 - 850) TU transrisk 772
card line up here: http://ficoforums.myfico.com/t5/Credit-Cards/How-Many-Credit-Cards-Do-YOU-have/m-p/1034512#M290859
Senior Contributor
MattH
Posts: 3,245
Registered: ‎04-03-2008

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 do:smileywink:

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
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