I am not a money-savvy person. I usually read my statements each month, and try to pay all of my bills on time (online banking helps with that considerably). Years ago, possibly even when I was battling mammoths on my way to school, I remember learning that the maximum allowable interest rate was in the neighborhood of 21%. I know that a recent change was made requiring a larger minimum payment for credit card holders, but I'm not sure what else changed at that time. Is there no longer a maximum interest rate allowed? Are there other exceptions that might raise the effective APR?
I'd appreciate whatever enlightenment you folks can share. I have my strengths, but money management isn't one of them.
Posted by Dagonee (Member # 5818) on :
quote: There are 26 states that have no limit on what bank credit card issuers can charge for interest rates, according to the American Bankers Association. Issuers in 27 states have no limit on what they can charge for annual fees.
...
Credit card issuers scored a sweeping victory in 1978 when the Supreme Court ruled in Marquette vs. First Omaha Services that it was legal for nationally chartered banks to export more costly terms of their cards to states where the laws regarding interest rates restricted such practices.
The card issuer need only follow the law of the state in which its credit card operations are located.
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there is no federal cap on rates. "The federal government only requires that whatever rates, fees or terms are set by issuers be disclosed to the consumer in accordance with the Truth in Lending Act," said Farley.
Posted by GeronL (Member # 9674) on :
Probably get a better rate on a loan and use debit cards instead.
just a thought, one I should have just let go.
Posted by Belle (Member # 2314) on :
Credit cards are evil.
We got rid of all of ours, and when we looked into re-financing our house, the loan officer said our credit score would improve if we had some. I hate that about our credit system - you actually get more points for having credit cards than if you only ever spend what you have in the bank like we try to do. Irritating.
At any rate, he advised us to get a credit card and use it every month but we refused. Not going to go down that road, at one time we had credit cards and mis-used them and it took years to recover financially. I will not go down that road again. They're evil, pure evil, I tell you!
Posted by scholar (Member # 9232) on :
I like my credit card. I get cash back on all my purchases. I pretend it is a debit card and pay off the balance in full every month, so no interest. So, it is possible to have them not be evil. Of course, they can completely and utterly destroy you if you let them.
Posted by King of Men (Member # 6684) on :
If you use a credit card correctly, as scholar does, you are basically living off all those poor fools who misuse them. The credit card company is not making any money off you, in fact it's lending you money at no interest. (Well, actually, sooner or later you'll make a mistake or go off on vacation or something and miss a payment, and they'll make quite a bit back; but we can assume you are perfect.) They have to get that money back, and they do so by hiking up the interest rates on the idiots. A credit card properly used, then, is basically a redistribution of money to those who can handle math and home economy, from those who can't. (Much like a lottery is a tax on being numerically challenged.) It is of course entirely up to you whether you respond to this with "Oopsie, that's rather naughty, I shan't do it anymore" or "BWAH-HAH! EAT CREDIT CARD DEBT, PEONS!"
Posted by Jon Boy (Member # 4284) on :
Well, they also get money from merchants who take credit cards.
I use my card the same way scholar does. I have never paid any interest or late fees, and I get 5 percent back on purchases from grocery stores and gas stations 1 percent on everything else, so I get a check for over $100 every few months.
(This probably doesn't help answer the original question at all, but oh well.)
Posted by maui babe (Member # 1894) on :
I agree that credit cards are evil, and I've had a pretty nasty history with them in the past. I only have one right now, which I got to re-establish my credit after it was trashed in my divorce (my ex-husband's bankruptcy 6 months after the divorce was final being on my credit report didn't help). I don't have a huge balance on it, but I noticed recently that my "effective APR" is in excess of 30%
My credit is fine now, so all the more reason to get rid of the card. I almost always use the debit card anyway.
Posted by Dagonee (Member # 5818) on :
Debit cards scare me. If there's a disputed charge, I'd much rather they be trying to get the money from me rather than vice-versa. Plus, they can cause problems when you use them to buy gas or stay in hotels where they reserve a block prior to purchase.
Posted by pH (Member # 1350) on :
I don't use my credit cards often. Sometimes I pay them off all the way, but I always at least pay a large chunk of the money. Then again, one of my cards isn't used much (mostly for emergencies, so I don't charge a lot on it unless I have to), and the other has a ridiculously low limit and is pretty good with interest. Being able to pay my bills online is really, really helpful.
They keep offering me a Buckle credit card, but I think that would be a bad idea. Buckle is so tempting already.
You know, I don't think I've ever had that much trouble getting my money back from disputed charges on my debit card, but it's only happened, like, twice, and one of those times, someone had stolen my card.
-pH
Posted by Kasie H (Member # 2120) on :
I'm with Dags. They don't have the legal obligation to give you your money back, and it freaks me out.
I use one credit card, though I have another one open that I don't use. I keep it in a drawer for emergencies, plus I don't want to damage my credit rating by closing it.
The other credit card was the cheapest/best rewards card I could find; I get a point for ever dollar spent and a point for ever three miles I fly on tickets I buy with the card. Since I fly a lot to see my family, this works out well. Every 25,000 points (the *vast* majority of which come from milage, not spending) I get a free domestic airline ticket.
I put *everything* on the card because it earns miles, even $2 coffees at Starbucks or what have you. I use it to pay my cable and insurance bills...basically everything except my rent. But I also pay the balance in full every month, treating the CC like a debit card. I set up automatic payments directly from my checking account. Citi also has this nifty feature that sends me my balance in in a text message every Friday, so I know exactly where I stand and how much I need to cut back on spending (if at all), to stay underneath my monthly credit card spending ceiling, which is always the same.
Posted by King of Men (Member # 6684) on :
quote:Well, they also get money from merchants who take credit cards.
Which presumably gets passed on to their customers; so this is just another way in which credit card users exploit people. In this case it's all credit card users rather than just the smart ones doing the exploiting; essentially, everybody pays for the users' convenience.
Posted by Dan_raven (Member # 3383) on :
Dag, I am so glad someone else feels that way. Whenever I pay for something on my card, and they say Debit or Credit, I answer Credit, and they look at me as if I'm the idiot.
![[Eek!]](eek.gif)