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I can't get over these rates! Before my credit took a nose-dive, I had excellent credit and impressive cards with limits 4x's my income with interest rates that were single digits. Getting back into the credit scene has me in shock at these rates...today's lowest rates were considered high back in my day....
Hoping the higher rates encourages more people to PIF and use responsibly.
I know it’s not always possible, but if people paid in full, they wouldn’t pay any interest. That might also shrink the GDP, because people wouldn’t be spending beyond their means.
While I do wish I'd picked up some of the fixed rate cards from back in the day (though some of them will probably be closed by credit grantor in the future) there's a cap on what rates can rise to realistically.
I'm sort of expecting rates on CC's to come down and rewards get pared and SUB bonuses go away... we'll see, the aggregate debt figure is still increasing as of the end of last year according to Fed data, will be interesting to see further reports of where that winds up.
Well, I'm old enougth to remember the 1970s, because I was in my 20s then. What is the highest the Federal Reserve Rate has ever been? 20% in 1979-80. My credit card APRs were around 18% then and I remember joking that is was cheaper to put it on a credit card then to borrow from the Fed. I bought a house in San Diego in late 1977, back then in California you could assume the seller's first mortgage, so my purchase was assuming the current 1st mortgage which was only around 8% (cheap back then) and the sellers carried back a large 2nd mortgage with interest only payments but a 2 year balloon payment. So late 1979 I had to refi to payoff the sellers and I got a bank to lend me a 2nd mortgage - at 18%!!! A secured 2nd mortgage about the same rate as my credit cards.
But if you dig deeper into that CNBC article you find some pretty logical reasons for the high CC rates:
Boockvar said the main reason for the higher-than-average spike in card rates is because of post-financial crisis regulation. In 2009, Congress passed the Credit Card Accountability, Responsibility, and Disclosure Act. Among other things, it limited the flexibility banks would have to raise interest rates on credit card holders.
“The unintended consequence, which there always is when restrictions are placed on the free market, was that banks then started off the credit card rate at a higher level than otherwise”.
And:
Another reason for higher borrowing costs from banks is a need to pay for those flashy rewards. Banks are luring in customers with travel and spending offers, or the occasional a cash bonus to sign up. They need to be paid for, somehow.
“Who do you think pays for all the rewards we receive by utilizing our charge cards? Banks recoup the costs via higher card rates,” Boockvar said.
I love my CC SUBS and rewards, so keep 'em coming, high interest rates be damned. But I was fortunate to learn early on that carrying a balance and paying credit card interest rates was a losing proposition. When I'm approved for a new CC I look at the SUB and rewards and/or 0% intro and usually don't even check what the APR is because they're never get it from me. My CC with the lowest APR is from a local credit union, 12.5%, and my highest is an old Merrick Bank Visa that I keep because no fees, 27.5%. They're both my least used cards because no rewards, I force myself to make small charges every few months to keep them active. My most used cards are BBVA Visa with 3% & 2% reward categories and Paypal Cashback MC with flat 2% rewards, and I'd have to look what their APRs are because I don't know.
LOL my local CU CC card plays 2% cashback on everything so the money has to come from other people's interest.
The APR is 12.5 which is still better then the big banks. I probably have cards at 18% or more but I don't use them or at least would never revolve a balance on them.
It takes work but you can still find good interest rates for CCs at local CU's or for store purchases 0% finance. Having a good FICO score is still your best bet to finding the credit you need at the best rates possible and while it may be harder to find them, you still can. PayPal, Bread and others still provide cheap alternative financing as long as you play by their rules.
You are still wet behind the ears (so to speak)! This old Dinosaur goes back even farther. Home Mortgages were around 4% near the end of WWII. But, I do remember having CDs paying 17.75% in the '70s and home mortgages about as high. The win in my geographic area was buying houses and holding them for three years then flipping them to pickup the appreciation gain (about double there original purchase prices). The appreciation gains were out of site.
Actually, glad to know someone on here has lived almost as long as I have. Seen a lot over the years and have a few stories. Credit Card interest rates were easily 15.9% and much greater back then with NO REWARDS. You could get a gold card maybe if you earned $35K to $50K annual income and that was big money back in the day. The Gold Cards came along and did offer a few benefits but very few and rewards were unheard of.
Revelate talks about Fixed Rate Credit Cards and there were many in the old days. Today, many have gone through the 45 day notice provisions and become Variable Rate Cards (can't imagine why a bank would not want Variable Rates).
Well anyway, I will grab my walking stick, respirator and toddle along
@DaveInAZ wrote:I love my CC SUBS and rewards, so keep 'em coming, high interest rates be damned.
+1
Since I always PIF, I cannot tell you the APR on ANY of my cards. Not even the slightest clue.
Don’t be surprised if we see the grace period from cards start to disappear.
@Spotsy wrote:Don’t be surprised if we see the grace period from cards start to disappear.
😝 I bet you’re right even though I never thought of it. If this happens, I really will do what my parents did—save for it.