Why your interest rate is so high as well as other fees?

[Anonymous]

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@CreditInspired wrote:

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@Andypanda wrote:

PIF and the cardholder will pay 0% intrest. Pay on time, and avoid the fees. Act responsible, and the banks hold loosens a lot.

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+100

OP, A bank cant have control over a person unless it's allowed. I personally dont care what fees or interest a bank charges because I have control over whether it will personally affect me or not. 

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OP,  card rates are so high because the debt is unsecured. Unlike car loans or houses, if you default, there isn't much they can do to get the money back. They can send a collection agency after you,  but with a car loan or a mortgage, they can repossess or foreclose, and get most of the value of the item they gave you a loan for.

So in order to minimize losses, they charge high rates and fees to make up for the defaulters. If they deem you less of a risk, your CC rate might be 11 or 12%, which is somewhat of a break until you miss a payment. Don't help pay for the defaults of other people by paying credit card interest or punitive fees. Charity is nice, but that's not the best way to do it.

[AverageJoesCredit]

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@Anonymous wrote:

If you're indebted to banks, they have leverage over you. Leverage is the key. The same can be said of employers, business relationships,  etc.

Get your scores sky high, which includes little indebtedness, and you run the show. They will treat you well, and you'll end up with good perks. I make money off of them, and they make money off of me, except I don't feel it. They make swipe fees, which I don't really feel.

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Scores really dont mean anything in the grand scheme of things. Having little debt helps alot since you wont be indebted lol but without the other factors like good  income and  such,  lenders  dont just roll out red carpet for everyone. The worse thing about credit is it only takes one mistake or life event to crash that high score

[EdMan63]

To be honest while I look at what the interest rate on a card is when I'm approved, I don't even think about again because I'm going to be paying in full. I haven't paid interest on a credit card in at least 5 years since I started accumulating cards and truly managing my credit profile. Like @AverageJoesCredit said one life event can change that. If you do plan to carry debt, screw a rewards card and work on your scores to qualify for a low interest credit card. 

[iced]

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@Andypanda wrote:

PIF and the cardholder will pay 0% intrest. Pay on time, and avoid the fees. Act responsible, and the banks hold loosens a lot.

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This.

If you think of credit cards as loans to pay now for things you can't afford now, you're thinking of them wrong. The same banks often offer actual loans with better rates and terms for the cases where you need to pay now for things you can't afford now.

Federal regulations to protect consumers from their own irresponsibility only go so far. Instead of focusing on furthering this protection, the direction we should be going in is educating the consumer so they don't fall into such crippling credit card debt in the first place. In other words, let's stop talking about the symptoms and start talking about the disease.

[CreditInspired]

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@AverageJoesCredit wrote:

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@Anonymous wrote:

If you're indebted to banks, they have leverage over you. Leverage is the key. The same can be said of employers, business relationships,  etc.

Get your scores sky high, which includes little indebtedness, and you run the show. They will treat you well, and you'll end up with good perks. I make money off of them, and they make money off of me, except I don't feel it. They make swipe fees, which I don't really feel.

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Scores really dont mean anything in the grand scheme of things. Having little debt helps alot since you wont be indebted lol but without the other factors like good  income and  such,  lenders  dont just roll out red carpet for everyone. The worse thing about credit is it only takes one mistake or life event to crash that high score

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And a lifetime, it seems, to put it back together. It's like Humpty Dumpty 

[galahad15]

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@iced wrote:

If you think of credit cards as loans to pay now for things you can't afford now, you're thinking of them wrong. The same banks often offer actual loans with better rates and terms for the cases where you need to pay now for things you can't afford now.

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I politely disagree -- yes the banks can and do have sky-high cc interest rates, but with the ultra-low rates on contemporary ccs offered by some CUs, you can get cc rates with even more favorable terms than many non-cc personal loans (some even with rewards).  Why pay 9.99%+ on a personal loan with a bank/CU when you can revolve a balance on a CU cc, possibly with rewards, with an APR of around somewhere between ~5% - 8% if you have the scores to qualify for the very best rates?

[Anonymous]

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@Anonymous wrote:

I have paid less than $20 in finance charges on credit cards since I started my rebuild in 2014. If anything, the high APRs actually push me to not carry a balance. My NFCU Platinum card got some bucks last year for a cash advance to move some balances around and I would never have done that with my cards that charge 20+% instead of 9.49% for one. Same thing goes with purchases APR. 7.49% is much more palatable than my ~22 average. 

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You forget as a consumer you need to help the banks keep rolling that dollar through the community (saw that in a commercial)

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I have paid less than $20 in finance charges on credit cards since I started my rebuild in 2014. If anything, the high APRs actually push me to not carry a balance. My NFCU Platinum card got some bucks last year for a cash advance to move some balances around and I would never have done that with my cards that charge 20+% instead of 9.49% for one. Same thing goes with purchases APR. 7.49% is much more palatable than my ~22 average. 

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You forget as a consumer you need to help the banks keep rolling that dollar through the community (saw that in a commercial)

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Banks can kiss my backside. I don't mind paying CUs interest here and there but I won't ever let a bank get me over a barrel again. 

[iced]

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@galahad15 wrote:

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I politely disagree -- yes the banks can and do have sky-high cc interest rates, but with the ultra-low rates on contemporary ccs offered by some CUs, you can get cc rates with even more favorable terms than many non-cc personal loans (some even with rewards).  Why pay 9.99%+ on a personal loan with a bank/CU when you can revolve a balance on a CU cc, possibly with rewards, with an APR of around somewhere between ~5% - 8% if you have the scores to qualify for the very best rates?

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The short answer is they shouldn't be buying that item at all if they can't pay for it, be it 5%, 9.99%, or 29.99%.

I see there being only a few things that warrant buying when you cannot afford to PIF them: a home, education, medical expenses, and a car if you don't live in an urban area. Taxes are a gray-area fifth item in that technically if you didn't underpay in the first place, you wouldn't need to finance their payments later. In every one of these categories, there's almost always a repayment or loan option available that comes in under even 5%.

In every one of the other types of purchases, reducing the interest rate is still speaking to the symptom of a problem rather than the problem itself. Need to replace your roof and you can't PIF? Where's the emergency savings? If that person didn't budget to save something in emergency savings before, they're certainly not going to be able to now that they're also carrying a roof repayment, even at 5-8% interest. That new iPhone/Samsung? If you can't PIF it, you can't afford it. It's on sale NOW and you must act NOW? It's on sale for a reason, and that reason isn't to your benefit. It, or the item that obsoleted it, will be on sale again soon enough anyway. You need to carry a balance to buy food? The problem has grown into a much larger and serious one if it's at this point, possibly even past the point of no return.

There likely existentially exists some legitimate reason for a handful of rare cases out there to do this, but that doesn't excuse or justify the hordes of transactions that people make that don't have a legitimate reason. And because it's so rampant, the discussion inevitably turns to how to best numb the harm these people are causing themselves - in the form of lower interest rates - rather than figuring out why people are so compelled to live beyond their means and dig themselves into a hole in the first place. If anything, the lower rates just enable people who are already in danger of going into debt to just more easily slide into debt, all while patting themselves on the back as if what they just did was clever.

Before it comes up, this doesn't apply to 0% interest (obviously, since 0% isn't interest). If one is able to leverage a lower interest rate loan to safely gain a higher return, great. Even at 5%, that's very difficult and risky to attempt though so it's not applicable here either.

[Anonymous]

@iced It gets really old seeing people judge others for their need to use credit. You aren't in the situation, you don't understand. There are plenty of people like myself that would be homeless if they didn't have multiple roommates that simply don't have the ability to pay for large expenses up front. Credit is a tool that enables people to take care of purchases and expenses they couldn't otherwise afford. With my situation right now, I could not survive without credit and I shouldn't need to feel like I have to defend myself because of situations out of my control. Life is hard enough without people judging you because you spend beyond your means once in awhile to make your otherwise miserable life somewhat more tolerable.