Why are people afraid of interest??

[Josh2942]

I had put my vacation on my Hyatt card at 15.99 it cost $1736
I put 200 on it but then paid it in full the next month. But the interests was only 20 dollars. Than once I payed it off the final accumulated interest was 12 dollars. I got a cash advance of 3500 on my arrival card. The fee was 175 and after a week the interest was 20 dollars. Really it's not that bad for taking a cash loan. Unless you are carrying multiple high balances paying interest isn't the end of the world. I think 15.99 is great and even 25.54 isn't terrible. 0% is always great but that little interest payment got me an auto cli of 1k to my Hyatt so I can't complain.

[juggar]

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@Josh2942 wrote:
I had put my vacation on my Hyatt card at 15.99 it cost $1736
I put 200 on it but then paid it in full the next month. But the interests was only 20 dollars. Than once I payed it off the final accumulated interest was 12 dollars. I got a cash advance of 3500 on my arrival card. The fee was 175 and after a week the interest was 20 dollars. Really it's not that bad for taking a cash loan. Unless you are carrying multiple high balances paying interest isn't the end of the world. I think 15.99 is great and even 25.54 isn't terrible. 0% is always great but that little interest payment got me an autocli of1k to my Hyatt so I can't complain.

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I'm certainly not scared of interest... you just have to use credit responsibly. I honestly dont care what interest rate im given on my cards, since I dont ever plan to carry a balance. But if the time comes that I do, then you can bet your bottom dollar ill be putting it on the CSP with 15.99 % APR... LOL

[Anonymous]

People just want to get the most bang for their buck.. that's all.. Interest is extra money out of my pocket.. so of course i want to avoid it at all costs. Also, there may be situations where interest cannot be avoided because we cant afford to pay off the entire balance as quickly as we would like.. in which case people should not throw a fit.. It's a part of the CC agreement.. It's just how the credit card game goes!

[Josh2942]

Definitely I never plan to but it's a good interest rate

[takeshi74]

People aren't afraid of interest.  They just don't want to give away money while sliding into debt.  A lot of people here are looking to maxmize rewards and interest kills any rewards earned.

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@Josh2942 wrote:
Really it's not that bad for taking a cash loan.

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According to your OP you paid out $227.  You have no better use for that $227?

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@Josh2942 wrote:
Unless you are carrying multiple high balances paying interest isn't the end of the world.

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It's not about "the end of the world".  It's about the slippery slope that many have already been on.

[longtimelurker]

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@takeshi74 wrote:

People aren't afraid of interest.  They just don't want to give away money while sliding into debt.  A lot of people here are looking to maxmize rewards and interest kills any rewards earned.

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@Josh2942 wrote:
Really it's not that bad for taking a cash loan.

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According to your OP you paid out $227.  You have no better use for that $227?

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@Josh2942 wrote:
Unless you are carrying multiple high balances paying interest isn't the end of the world.

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It's not about "the end of the world".  It's about the slippery slope that many have already been on.

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Yes, I agree, especially with the first point.   Quite a large segment here justify the use of credit cards (vs paying cash) for the rewards, as you "are throwing away free money" etc.  If that is your goal, any interest you pay is a waste and undoes much of your reward accumulation.   If you need the money, much better off with a non-rewards lower APR card if you don't have a 0% period.

And why is getting a $1K CLI worth anything?  That's the bit I never understand, and certainly not worth $200+!

[Josh2942]

That wasn't what I got it from. I took out a cash advance of 3500. That's alot for a cash advance it's 5% of the total. So it's actually 188 for the total cash advance fee. The other interest was a separate occurrence. I wasn't throwing money away but when you need a large cash advance. Also the purchase on my Hyatt card was 32 dollars on a 1500 balance. It's really not bad to have an instant loan

[Josh2942]

And for those that asked in the grand scheme of things I've wasted more than 227 on multiple occasions. I needed a cash infusion into my business because the company that pays my business. I was waiting for a 30k pay for the week and the company's payment processing was working but I needed to do payroll. So all I'm I saying is its not a big deal and the notion that some people have about paying a couple bucks in interest isn't going to make a break you.

[Gunnar419]

But your question was why are people AFRAID of interest, and people are telling you they're not.

I don't think anybody's judging you for paying interest. I sure wouldn't, as I sometimes pay interest on credit cards myself. I just try to do it strategically, which is what you also appear to have done.

Sure some people try to always avoid interest and consider it a waste of money FOR THEM. Also, interest can be a trap for the unwary who end up paying large amounts of interest over time because they just aren't paying attention. But you asked about fear and I don't think FEAR of interest is a factor for most people, even most dedicated credit watchers.

[Anonymous]

Is having a balance on a CC for 1-2 months bad? No. I have had occasional balances due to being too lazy to transfer investments to pay off the balance. I earn over twice what I spend most months and keep a very small emergency fund, so on occasion if I overspend, I can wait a month or two and pay off my balance. 

With that said, for most people, getting into the habit of not PIF every month is a bad idea. People get mired in debt they cannot pay and keep building more debt while making low payments. Carrying a balance for several months can quickly snowball into significant interest payments. For people who use credit responsibly and plan their finances/budgets responsibly, carrying some short-term debt on a CC is fine. 

However, most people are not responsible. People tend to overspend and use credit cards like a cash advance to spend money they don't have. People also tend to carry long-term debt on cards. Moreover, some people even carry high percentage of their credit card limits in credit card debt (i.e. high utilization) which also effects their score and puts them at risk for CLDs. 

I am by no means afraid of paying interest. I have six figure student loan debt and pay nearly 2k a month on it on the 10 year plan. We live in a society where carrying debt is common and often the only option or even advantageous. However, CC debt rarely falls in the "good debt" category and rarely makes sense. I doubt too many people consider floating a small percentage of your overall credit limit in CC debt for a few months is a problem. It's those who tend to carry debt that takes them many months or even years to pay off who are financially hurting themselves.