3 ms·

Double digit percentages. 15-20%. Sometimes more. Interest charged to people who do not pay down balances is the primary way the banks behind CCs (not Visa, mc

Double digit percentages. 15-20%. Sometimes more. Interest charged to people who do not pay down balances is the primary way the banks behind CCs (not Visa, mc, etc, they just take tiny slices of every transaction) have a business.

jb775 6y ago
It's crazy to see the interest rates we've come to accept as a society considering that "interest" (otherwise known as "usury") has been considered illegal in many periods throughout history.
- imtringued 6y ago
  That's a perfectly reasonable interest rate. Imagine you borrow $1000 at an APR of 15% and for some reason decide to only pay $22 per month. You have 68 months to pay the full amount back until you pay $500 in interest. If you had decided to pay $100 per month you'd pay $75 in interest in total. Meanwhile payday lenders will let you borrow $1000 for 3 months. You have to pay back $500 each month and if you can't pay it off within three months you will have to pay additional fees. That is basically a 500% APR. There is no need to hate credit card companies. They are doing a perfectly fine job. They obviously have higher rates than regular loans simply because buying something with your credit card doesn't require approval from the company. When you apply for a regular loan it is often tied to a specific purchase that can be repossessed or directly increases your income and therefore ability to repay the loan.
samsonradu 6y ago
But when exactly do these get applied? If you can’t settle at the end of a month you go into the next one with 115% of the debt?
- kccqzy 6y ago
  No the double digit percentages are annualized interest rates, not monthly. For mine, interest starts accruing from the date of purchase for each purchase, except if you pay your new balance in full in the first statement. Generally the bank calculates it on a daily basis. You should read your account agreement to figure out how your bank calculates this. Mine is here on page 11: https://www.chase.com/content/feed/public/creditcards/cma/Chase/COL00083.pdf https://www.chase.com/content/feed/public/creditcards/cma/Ch...
  - samsonradu 6y ago
    Thank you for the link. We mostly have debit cards in this part of the world. It’s hard for me to understand laying any interest for consumption goods purchases. It is still not fully clear when does the settlement happen? At the end of each month, with a ~1.5% interest applied on the negative balance?
    - kccqzy 6y ago
      That depends. For some like the Apple credit card they have a simple due date that's the end of every month. For others they often allow you to choose a day of the month as a due date (perhaps aligning with your paycheck date) and is shown on your statement, which gets produced about a month before the due date. And if by the due date you didn't pay off the entire new balance, the interest charges will then appear on the next statement. Now you can see that for reasonably well off people credits cards offer a nice interest-free float. For example you make a large purchase of $1000 on January 15, but your statement gets produced on February 10 with a due date of March 4. Et voilà you can pay for that $1000 on March 4 with zero interest.

jb775 6y ago

It's crazy to see the interest rates we've come to accept as a society considering that "interest" (otherwise known as "usury") has been considered illegal in many periods throughout history.

imtringued 6y ago
That's a perfectly reasonable interest rate. Imagine you borrow $1000 at an APR of 15% and for some reason decide to only pay $22 per month. You have 68 months to pay the full amount back until you pay $500 in interest. If you had decided to pay $100 per month you'd pay $75 in interest in total. Meanwhile payday lenders will let you borrow $1000 for 3 months. You have to pay back $500 each month and if you can't pay it off within three months you will have to pay additional fees. That is basically a 500% APR. There is no need to hate credit card companies. They are doing a perfectly fine job. They obviously have higher rates than regular loans simply because buying something with your credit card doesn't require approval from the company. When you apply for a regular loan it is often tied to a specific purchase that can be repossessed or directly increases your income and therefore ability to repay the loan.

samsonradu 6y ago

But when exactly do these get applied? If you can’t settle at the end of a month you go into the next one with 115% of the debt?

kccqzy 6y ago
No the double digit percentages are annualized interest rates, not monthly. For mine, interest starts accruing from the date of purchase for each purchase, except if you pay your new balance in full in the first statement. Generally the bank calculates it on a daily basis. You should read your account agreement to figure out how your bank calculates this. Mine is here on page 11: https://www.chase.com/content/feed/public/creditcards/cma/Chase/COL00083.pdf https://www.chase.com/content/feed/public/creditcards/cma/Ch...
- samsonradu 6y ago
  Thank you for the link. We mostly have debit cards in this part of the world. It’s hard for me to understand laying any interest for consumption goods purchases. It is still not fully clear when does the settlement happen? At the end of each month, with a ~1.5% interest applied on the negative balance?
  - kccqzy 6y ago
    That depends. For some like the Apple credit card they have a simple due date that's the end of every month. For others they often allow you to choose a day of the month as a due date (perhaps aligning with your paycheck date) and is shown on your statement, which gets produced about a month before the due date. And if by the due date you didn't pay off the entire new balance, the interest charges will then appear on the next statement. Now you can see that for reasonably well off people credits cards offer a nice interest-free float. For example you make a large purchase of $1000 on January 15, but your statement gets produced on February 10 with a due date of March 4. Et voilà you can pay for that $1000 on March 4 with zero interest.