topic Re: Do you care about APR? in Credit Cards

Do you care about APR?

Anonymous — Sat, 31 Aug 2019 05:28:52 GMT

So I see a lot of people don’t like cards over 17% APR. My question is why do you care? I mean car loan or unsecured loan is one thing but when it comes to cc isn’t it better to pay off or spend what you can pay off in a month or so?
Would love to hear if people really care if they have 23% APR or not.

Re: Do you care about APR?

wasCB14 — Sat, 31 Aug 2019 05:37:08 GMT

0% is nice. I'll keep my cash a little longer and not PIF if it's a nice and simple 0%.

0% to maybe 2% or 4%...I might carry if I had a large enough balance and it was for a year. But there's probably not enough money or time involved to do anything complicated with the funds in the meantime, so I'll just PIF.

Over 4% definitely PIF.

I've never directly paid interest, but I have been putting spend on BCP for 18-24 month no-fee Plan It offers. Economically I'm paying a little interest since I'm earning sub-optimal rewards in exchange for additional time to pay.

Re: Do you care about APR?

SEAlifer — Sat, 31 Aug 2019 05:43:57 GMT

I wonder the same thing. I would never get a card and plan on paying those scary high interest rates. I only have 3 cards so far and luckily I have 0% intro APR on 2 of them so I can carry a balance and just take the points hit as my utilization is temporarily higher. If I’m a year I wanted to make a big purchases and repay over 12-15 months, I’d apply for a new card. 0% intros are a dime a dozen. In answer to your question, no I don’t care about whatever my APRs are.

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 07:27:59 GMT

I have a large limit, sub-10% APR card with NFCU for emergencies and BTs so I don’t care about the APRs on my other cards at all (although I still ask for reductions because why not?)

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 07:57:46 GMT

I’m going to keep my numbers centered on the US since I know those numbers and I’m too lazy to look up global numbers. 40% of households in the US carry credit card debt. Last I looked it was averaging about $6,000 per. That’s across all households. So if you take out the PIF people, the number jumps to $9,000 per person. The average household carry CC debt is carrying $9K! That 51M households. You still think APR doesn’t matter?

ok let’s assume you actually didn’t know that. But is it really so hard to fathom that there may be people out there not in a position to PIF? I’m not talking about wether they should, or wether they shouldn’t spend beyond their means blah blah blah. I’m just talking about awareness of the financial situation other people are in, that don’t live in the same brackets as other people. Have we reached that point? I would really like an answer to that. Because the question “it’s so mysterious that people care about APR” is the stunner.

Citi and Chase the two largest credit card issuers made over $100B just in credit card interest last year.

Re: Do you care about APR?

CreditInspired — Sat, 31 Aug 2019 08:43:34 GMT

Hi there

The only reason I didn’t care about APR in the beginning was because I didn't understand the ramifications of APR until I joined this forum in 2016.

I was just lackadaisically moving along paying my CC’s minimum payment not even realizing that the outstanding balance was getting larger, not smaller. All I cared about was making that minimum payment. In the long run that was great because I’ve never had a missed payment. However, I gave lenders quite a bit of dough. Never again!

Now I understand what APR means. So to answer your question, it’s really a 2-sided answer. (1) I don’t care what the APR is now because I PIF and/or (2) I only use 0% promo offers. So once that offer expires, that card gets minimum use for either recurring charges or category spend.

Also, it’s rare that I have a big spend than I can afford to pay. My goal is to use my cards organically. On those few occasions I do have a big spend (like when I put in hardwood floors), I put it on the CC for the rewards, not because I didn't have the funds.

So again, this forum taught me the value of not paying interest and not spending more than I could afford to PIF.

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 08:35:17 GMT

Nope. In fact, until recently, I didn't know what any of my APRs were and still don't know (or care) what some of them are.

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 12:44:00 GMT

@Anonymous wrote:
I’m going to keep my numbers centered on the US since I know those numbers and I’m too lazy to look up global numbers. 40% of households in the US carry credit card debt. Last I looked it was averaging about $6,000 per. That’s across all households. So if you take out the PIF people, the number jumps to $9,000 per person. The average household carry CC debt is carrying $9K! That 51M households. You still think APR doesn’t matter?

ok let’s assume you actually didn’t know that. But is it really so hard to fathom that there may be people out there not in a position to PIF? I’m not talking about wether they should, or wether they shouldn’t spend beyond their means blah blah blah. I’m just talking about awareness of the financial situation other people are in, that don’t live in the same brackets as other people. Have we reached that point? I would really like an answer to that. Because the question “it’s so mysterious that people care about APR” is the stunner.

Citi and Chase the two largest credit card issuers made over $100B just in credit card interest last year.

I assume the intent behind the OPs question was more like "For those HERE that usually/always PIF, does the APR impact your choice of card?", e.g. if an otherwise great card had a 29%APR, would you avoid it?

And in the bigger picture, I wonder if the general public who are carrying debt are that aware of the APR, as compared to just paying the bill when it comes. Do they shop around for lower APR cards (or, more importantly, is that a factor in selecting cards before the debt occurs). I would suspect not in a lot of cases, although fairly recent changes like the "if you pay only the minimum" box on the bills are meant to help.

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 13:09:58 GMT

I dont know the interest rates on my cards. Unless it is zero percent it doesnt matter to me. Amex is offering me plan it's with zero fees. I notice that. Otherwise pay in full. I deal with reward cards and interest rates are at loan shark rates.

Re: Do you care about APR?

frugal47374 — Sat, 31 Aug 2019 13:25:52 GMT

Since the question is what do I care about (and not what those in debt should care about):

I don't care about APR (unless it's 0%). If not 0%, I pay in full.

If I can get a 0% deal, I will put all my non-5% rewards charges on it and pay the minimum.

I have never asked for an APR reduction (unless it's to 0%).

Re: Do you care about APR?

AverageJoesCredit — Sat, 31 Aug 2019 14:53:29 GMT

I only care about MAY

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 14:57:19 GMT

Low APR are the last stage of credit perfection. It's the only thing a bored MyFICO'er can toy with after he/she has mastered everything else.

You are in the top 1% when your limits are above $20k, your scores are all above 800 and your APRs are sub 10%. The folks who never reach this elite status are the ones who keep self-sabotaging due to FOTM cards.

To me, the last stage of credit perfection is having cards with the absolute lowest APRs. This is why I began joining credit unions and cancelling big bank cards a few years ago.

Re: Do you care about APR?

pinkandgrey — Sat, 31 Aug 2019 15:25:00 GMT

I don’t really. I usually don’t carry balances, so I suppose it really isn’t a factor. Part of it, I think, is the personal success you feel when you qualify for a low rate lol

Re: Do you care about APR?

AverageJoesCredit — Sat, 31 Aug 2019 16:34:27 GMT

Elite Status is for elitist. Credit can be enjoyed at any level and most everything can be achieved with a mid 700 score . If one doesnt like FOTM, there are always FTMV.

Re: Do you care about APR?

wasCB14 — Sat, 31 Aug 2019 17:09:41 GMT

@Anonymous wrote:
Low APR are the last stage of credit perfection. It's the only thing a bored MyFICO'er can toy with after he/she has mastered everything else.

You are in the top 1% when your limits are above $20k, your scores are all above 800 and your APRs are sub 10%. The folks who never reach this elite status are the ones who keep self-sabotaging due to FOTM cards.

To me, the last stage of credit perfection is having cards with the absolute lowest APRs. This is why I began joining credit unions and cancelling big bank cards a few years ago.

There are a lot of good rewards cards that (AFAIK) don't go below 10%, or for which APR reductions (other than brief promotions) are impossible or rare. Chase Freedom, for example.

If I'm willing to pay up to 1.99% as an APR, then a 24.99% APR card with good rewards beats a 4.99% APR with mediocre rewards. The former I can PIF. The latter I wouldn't find useful for anything.

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 17:24:50 GMT

The reason I asked is because I see a lot of my friends who spend great deal on the latest smartphones, clothes, going out and then struggle because they’ve spent much much more in a month than they earned in the last 3-4 months. That was 2 years ago. I saw one of them yesterday and I asked about their financial situation, if they paid off their balances etc. He did not. And banks still give him money, car loan etc.
It got me thinking if it’s a trap when banks give you low APR card with 0% promotion period to have you spend more than you can pay? You spend so much that life become slavery to pay off debt.

Re: Do you care about APR?

digitek — Sat, 31 Aug 2019 18:08:02 GMT

Yeah I think you're seeing what credit is like for average American adult. If you are not financially literate you have no idea what credit interest is really costing you. Most people will spend up to the limit of what they can afford. In the case of credit what happens is they carry a balance that equates to a monthly payment they can afford. Continually carry a balance forever. It makes everything they buy more expensive in the long run.

My story that struck me as crazy was I went to NYC recently and saw a guy I used to know who was friends with the guy I was visiting. We were talking about work and he just got a new job that supposedly gives out huge yearly bonuses and he said "Yeah just one of those and I could pay off all my credit card debt." I was kind of floored because this dude is super smart and should know better, and I know he was practically sleeping on a pile of money at his old job and currently has no wife or kids. I didn't talk about how insane I thought that was...

Re: Do you care about APR?

Anonymous — Sat, 31 Aug 2019 18:17:37 GMT

@digitek wrote:
Yeah I think you're seeing what credit is like for average American adult. If you are not financially literate you have no idea what credit interest is really costing you. Most people will spend up to the limit of what they can afford. In the case of credit what happens is they carry a balance that equates to a monthly payment they can afford. Continually carry a balance forever. It makes everything they buy more expensive in the long run.

My story that struck me as crazy was I went to NYC recently and saw a guy I used to know who was friends with the guy I was visiting. We were talking about work and he just got a new job that supposedly gives out huge yearly bonuses and he said "Yeah just one of those and I could pay off all my credit card debt." I was kind of floored because this dude is super smart and should know better, and I know he was practically sleeping on a pile of money at his old job and currently has no wife or kids. I didn't talk about how insane I thought that was...

I guess the other side is just that people care about different things. If I can pay at least the min on my cards (or whatever I choose to pay), and expect to be able to continue to do so, the total cost might not matter that much, in the same way that the total cost of a 30 year mortgage can be huge, but it's just manageable pieces each month, and gets the results you want. So once you talk about PIF, and choosing reward cards etc, you might get written off as a credit card geek without a life, while friends are happily and successfully consuming!

Re: Do you care about APR?

Jnbmom — Sat, 31 Aug 2019 18:19:27 GMT

Well I am always thrilled to get a lower end APR, I usually PIF unless I got a BT deal running, but do I care, well yes I do.

While in the ideal credit world we can always PIF , earn our rewards and pay no interest, but sometimes "$$$$" happens and when it does I may need to have a balance , I do care about APRs very much so, and always want to have a low apr card if the need arises.

Re: Do you care about APR?

iced — Sat, 31 Aug 2019 19:55:03 GMT

@Anonymous wrote:
I’m going to keep my numbers centered on the US since I know those numbers and I’m too lazy to look up global numbers. 40% of households in the US carry credit card debt. Last I looked it was averaging about $6,000 per. That’s across all households. So if you take out the PIF people, the number jumps to $9,000 per person. The average household carry CC debt is carrying $9K! That 51M households. You still think APR doesn’t matter?

ok let’s assume you actually didn’t know that. But is it really so hard to fathom that there may be people out there not in a position to PIF? I’m not talking about wether they should, or wether they shouldn’t spend beyond their means blah blah blah. I’m just talking about awareness of the financial situation other people are in, that don’t live in the same brackets as other people. Have we reached that point? I would really like an answer to that. Because the question “it’s so mysterious that people care about APR” is the stunner.

Citi and Chase the two largest credit card issuers made over $100B just in credit card interest last year.

To answer the OP's question, no I do not care about my APR because I do not carry balances, nor will I ever need to. If I do carry a balance, it's voluntary and on me to pay the penalty for my failure to budget appropriately.

To answer the above question, yes it is that difficult to fathom. How many of those 51 million households carrying debt drive home from their job in a SUV, into their garage of their 2,000+ square foot suburban home, take off their shoes, and go crash in their big comfy couch or recliner in front of a LED flat screen HDTV and watch 4k movies on Netflix while waiting for their pizza or McDonalds to arrive? Sounds to me like those families are the ones who lack an awareness of the financial situation they're in, not us. We're hung up on whether or not they care about the APR they're paying for this deluded fantasy while ignoring the much bigger problem of why they put themselves in the situation where they became dependent on carrying debt in the first place.