Why are people afraid of interest??

[Ragelog]

On the whole interest isn't a bad thing as long as it's within your budget to pay things back in a reasonable amount of time. Where people get in trouble with credit is they don't plan they just swipe the card with no plans on how exactly they will pay it back making minimum payments maxing out one card and moving onto the next. That is where interest starts to add up can get bad but it is more of a irresponsible use of credit issue than problem with interest. Interest even at 25% rates only really adds up if carrying large balances becomes a normal everyday thing with no plan to pay it off. 

You are using credit how you need it going in understanding  what you'll be charged for the short term loan. It allows you flexibility while waiting for payment or handling something unexpected. I think that is one of the very reasons to have credit and the peace of mind it offers. 

Most people treat it like money in the bank and that is where the problem is.

Personally I use it for the rewards and promo apr on large purchases but if I find a truly good deal on something I was planning to purchase I use it as a tool to save me money in that fashion as well.

[Anonymous]

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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 auto cli of 1k to my Hyatt so I can't complain.

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In a forum full of people who go cracy when they can get a rewards card that gives 2% on all purchases, instead of 1.5%, you really think it's odd they would have a problem paying interest 800% that much?!?  Duh!

[kkapdolee]

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@longtimelurker wrote:

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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+!

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1K CLI was worth a lot to me when the only card I had had a limit of $300.

It doesn't mean anything to me now. I think people eventually get over it as their limit rises.

[mtrsprt]

The key is to pay as little interest as possible, yet show the banks your willing to make them a few dollars each year.  Out of my 7 revolving accounts, I never pay more than $10.00/month in interest.  

[Anonymous]

@mtrsprt wrote:

The key is to pay as little interest as possible, yet show the banks your willing to make them a few dollars each year.  Out of my 7 revolving accounts, I never pay more than $10.00/month in interest.  

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That's $120 bucks a year, to be divided among seven banks.. Tha's $17 bucks a year in interest that each bank gets from you and you claim keeps them happy?  Do they send you a Xmas card and everything?  Maybe that's why don't smile at me when they see me, they resent I don't give them their $1.43 a month in interest...

[Anonymous]

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@Anonymous wrote:

@mtrsprt wrote:

The key is to pay as little interest as possible, yet show the banks your willing to make them a few dollars each year.  Out of my 7 revolving accounts, I never pay more than $10.00/month in interest.  

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That's $120 bucks a year, to be divided among seven banks.. Tha's $17 bucks a year in interest that each bank gets from you and you claim keeps them happy?  Do they send you a Xmas card and everything?  Maybe that's why don't smile at me when they see me, they resent I don't give them their $1.43 a month in interest... 

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And what I mean by that is that if you were to take that same little money you are throwing to the wolves, and that makes no difference to the wolves and instead save it in a little box, in four years, you can open the box and get a brand new iPad Air 6 for "free," which is way more than anything you can imagine the wolves will do for you for that money.

I suggest, you think more about yourself and less about the wolves...

[Anonymous]

A few points to drill home: 

1. Paying any interest to keep a credit card company happy is silly. 

2. Focusing on rewards cards when you consistently have a balance is silly since their APR tends to be higher. 

3. Having credit card debt over extended periods of time is really silly. 

4. Floating a credit card balance here or there for a month or two is not the end of the world. However, not the end of the world and optimal are not the same. I have occasionally floated a balance on a CC, but given my monthly positive cash flow, optimally I should never float a balance. 

5. I find myself agreeing with pretty much everything elPatitoFeo has said so far. 

[Anonymous]

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@Anonymous wrote:

A few points to drill home: 

1. Paying any interest to keep a credit card company happy is silly. 

2. Focusing on rewards cards when you consistently have a balance is silly since their APR tends to be higher. 

3. Having credit card debt over extended periods of time is really silly. 

4. Floating a credit card balance here or there for a month or two is not the end of the world. However, not the end of the world and optimal are not the same. I have occasionally floated a balance on a CC, but given my monthly positive cash flow, optimally I should never float a balance. 

5. I find myself agreeing with pretty much everything elPatitoFeo has said so far. 

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Well, duh!

p.s. I was going to give you kudos anyway by the end of your point # 4, I swear...

[longtimelurker]

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@Anonymous wrote:

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@Anonymous wrote:

A few points to drill home: 

1. Paying any interest to keep a credit card company happy is silly. 

2. Focusing on rewards cards when you consistently have a balance is silly since their APR tends to be higher. 

3. Having credit card debt over extended periods of time is really silly. 

4. Floating a credit card balance here or there for a month or two is not the end of the world. However, not the end of the world and optimal are not the same. I have occasionally floated a balance on a CC, but given my monthly positive cash flow, optimally I should never float a balance. 

5. I find myself agreeing with pretty much everything elPatitoFeo has said so far. 

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Well, duh!

p.s. I was going to give you kudos anyway by the end of your point # 4, I swear...

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I think the question is what is covered by "so far"   All EPF's comments in the thread?  Everything said on MyFico?  Every word EPF has uttered?

But 1-4 agreed without any question!

[Chris679]

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@Anonymous wrote:

A few points to drill home: 

1. Paying any interest to keep a credit card company happy is silly. 

2. Focusing on rewards cards when you consistently have a balance is silly since their APR tends to be higher. 

3. Having credit card debt over extended periods of time is really silly. 

4. Floating a credit card balance here or there for a month or two is not the end of the world. However, not the end of the world and optimal are not the same. I have occasionally floated a balance on a CC, but given my monthly positive cash flow, optimally I should never float a balance. 

5. I find myself agreeing with pretty much everything elPatitoFeo has said so far. 

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Totally agree with your first four points