Why are credit card issuers so flexible on card rewards these days, but inflexible on APRs?

[galahad15]

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@Anonymous wrote:
Simple, CC co use rewards to entice people to run up a balance. Once they carry a balance, combined with APR they watch the money flow in. It's all about profit...pay in full to beat them at their own game.

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I hear your message and that is indeed quite good advice to be sure, but if the ultimate and primary financial purpose of a credit card is for the card issuer to extend a revolving loan or line of credit, why are a lot of people so big on the whole "PIF" concept?  (If it was a personal loan, an auto loan, or a mortgage loan for example, I don't think as many people would be insisting on "PIF"?)

[kdm31091]

The problem with not PIF on a credit card is that interest eats up your rewards. Not the case with a mortgage etc.

There are exceptions of course. zero percent promos. Non rewards cards (though obviously ideally you wouldn't carry a balance) make it a bit less important, as you aren't eating up rewards but you're still paying interest.

In general you don't want to spend more than you can afford. Emergencies can happen but you shouldn't want or need to carry a balance all the time. Just my opinion

[Callandra]

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@galahad15 wrote:

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@Anonymous wrote:
Simple, CC co use rewards to entice people to run up a balance. Once they carry a balance, combined with APR they watch the money flow in. It's all about profit...pay in full to beat them at their own game.

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I hear your message and that is indeed quite good advice to be sure, but if the ultimate and primary financial purpose of a credit card is for the card issuer to extend a revolving loan or line of credit, why are a lot of people so big on the whole "PIF" concept?  (If it was a personal loan, an auto loan, or a mortgage loan for example, I don't think as many people would be insisting on "PIF"?)

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Well, unless you have a promo 0%, interest will eat away at any rewards. There are times where you may have to carry a balance, but that's what 0% promos and low APR cards are for! 

Well, loan rates tend to be much lower on cars/mortagages/etc. My car loan has 1.99% APR. My lowest CC interest rates are 13.99% APR (BBR and Sallie Mae). Plus my car costs wayyyy more than I have available in revolving credit. Cars/mortgages/SLs tend to cost quite a bit more than what the average person would charge in a month in general (and if you can charge that much and PIF, then you can probably PIF a car/house/etc! But most people cannot so that's why there are loans with low rates). 

[steel_string]

Didn't the CARD Act also include provisions making it harder to raise rates? If it's hard to raise rates, issuers are going to be reluctant to offer low rates or lower an existing rate.

[Anonymous]

The biggest reason car loans and mortgages have much lower APRs is because if you don't make payments the bank can repo those items. This inherently makes those types of loans less risky. On the other hand I can buy a ton of junk with my credit card and not pay, all they can do is sell it to collections at a loss.