2 ms·

One of the reasons so many people are borrowing is the low interest rates. I could afford to buy my last car cash but for 1% financing for 3 years I'd rather ha

One of the reasons so many people are borrowing is the low interest rates. I could afford to buy my last car cash but for 1% financing for 3 years I'd rather have the cash.

tempsy 7y ago
That doesn’t explain rising late payment/default rates. Also (holy shit) the average credit card APR is 15%, apparently a record high since 1994. I do not pay interest on my cards, but I have a very high credit score and my rewards cards are all >22% APR. Something is very wrong if banks are borrowing at record low rates and yet consumers are borrowing in record amounts at record high rates! Source: https://www.creditkarma.com/credit-cards/i/average-apr-on-credit-card/ https://www.creditkarma.com/credit-cards/i/average-apr-on-cr...
- User23 7y ago
  Credit cards are usury unless you have the cash flow and discipline to pay the complete amount due every statement. They're barely a step above payday and title loans (not in absolute effective APR, but morally). Personally I prefer to just use a charge card.
User23 7y ago
In the same vein, Interactive Brokers will give you 3.26% on a margin loan if you have over 100k in your account. At rates like that you're better off capitalizing the interest and letting the securities you bought on margin appreciate. Obviously don't do this if you don't know what you're doing, but it's actually perfectly safe with a proper options hedging strategy that ensures you don't get a margin call. To be clear this isn't financial advice, just an observation about what many people are doing due to the low rate environment.
- cobookman 7y ago
  It’ll be interesting if rates ever do rise. Right now you might as well buy a house just cause. At 3% interest. It’s basically free money. Especially if you view inflation at 2%. Plus rental income and property appreciation. Why not?
  - charlesdm 7y ago
    Because it can go down in value. Plus purchase and annual taxes. But yes, mostly correct. I don't really see rates rising in a long time.

One of the reasons so many people are borrowing is the low interest rates. I could afford to buy my last car cash but for 1% financing for 3 years I'd rather have the cash.

tempsy 7y ago

That doesn’t explain rising late payment/default rates. Also (holy shit) the average credit card APR is 15%, apparently a record high since 1994. I do not pay interest on my cards, but I have a very high credit score and my rewards cards are all >22% APR. Something is very wrong if banks are borrowing at record low rates and yet consumers are borrowing in record amounts at record high rates! Source: https://www.creditkarma.com/credit-cards/i/average-apr-on-credit-card/ https://www.creditkarma.com/credit-cards/i/average-apr-on-cr...

User23 7y ago
Credit cards are usury unless you have the cash flow and discipline to pay the complete amount due every statement. They're barely a step above payday and title loans (not in absolute effective APR, but morally). Personally I prefer to just use a charge card.

User23 7y ago

In the same vein, Interactive Brokers will give you 3.26% on a margin loan if you have over 100k in your account. At rates like that you're better off capitalizing the interest and letting the securities you bought on margin appreciate. Obviously don't do this if you don't know what you're doing, but it's actually perfectly safe with a proper options hedging strategy that ensures you don't get a margin call. To be clear this isn't financial advice, just an observation about what many people are doing due to the low rate environment.

cobookman 7y ago
It’ll be interesting if rates ever do rise. Right now you might as well buy a house just cause. At 3% interest. It’s basically free money. Especially if you view inflation at 2%. Plus rental income and property appreciation. Why not?
- charlesdm 7y ago
  Because it can go down in value. Plus purchase and annual taxes. But yes, mostly correct. I don't really see rates rising in a long time.