WTF: Credit card charges of 59% APR?

[$5 submissions]

Damn. Talk about high ass interest rates.

Source: http://money.cnn.com/2011/01/28/pf/c...%2059%% 20APR

NEW YORK (CNNMoney) -- Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

That's because while the CARD Act helped crack down on certain fees and requires more disclosures, it didn't cap every credit card holder's worst enemy: interest rates.

Sure, the new rules prevent banks from raising most interest rates retroactively, but there's no limit on the rates they can charge new customers.

[CYF]

59.9% is fucking highway robbery.

[Due]

I'm new to USA so I have no credit history. I had my SSN for 5 months now, I got one of those to build my credit. I pay it in full every month so I'm not charged any interest. Seems to be working nicely as now I got a score of 700+

You really can't do shit in USA without a credit score

[L-Pink]

Tony Soprano had lower rates.


.

[wild johnny]

Originally Posted by CYF

59.9% is fucking highway robbery.

I agree What a rip off!!

[LiveDose]

That's nuts.

[epitome]

Originally Posted by Due

I'm new to USA so I have no credit history. I had my SSN for 5 months now, I got one of those to build my credit. I pay it in full every month so I'm not charged any interest. Seems to be working nicely as now I got a score of 700+

You really can't do shit in USA without a credit score

How do you have 700+ when one of the factors is length of credit? Things must have really changed. The reason someone turning 19 can't have a 700 is because they do not have enough history.

[$5 submissions]

Originally Posted by L-Pink

Tony Soprano had lower rates.


.

And a lower default rate.

[DBS.US]

Originally Posted by Due

I'm new to USA so I have no credit history. I had my SSN for 5 months now, I got one of those to build my credit. I pay it in full every month so I'm not charged any interest. Seems to be working nicely as now I got a score of 700+

You really can't do shit in USA without a credit score

Only suckers pay interest

[EddyTheDog]

There are 'PayDay' loan company's in the UK with rates over 3000% APR.

All legal and above board......

[V_RocKs]

Originally Posted by Due

I'm new to USA so I have no credit history. I had my SSN for 5 months now, I got one of those to build my credit. I pay it in full every month so I'm not charged any interest. Seems to be working nicely as now I got a score of 700+

You really can't do shit in USA without a credit score

1) Charging $300 a month and paying it off each month before incurring interest doesn't do anything to "build" your credit. Having a card is only beneficial on how much money you have available to you. Your daily balance, payments, etc aren't individually reported to the credit agencies. So they have no way of knowing if your $300 balance is carried, charged and paid monthly, etc. They just know one number that is reported by the issuer and whether or not you are late. Your score is adjusted according to a ratio of how much credit in total is available to you and how much you are currently using. In this example having a $2000 limit and $300 balance makes you worse off than the guy that doesn't use it at all and have $2000 out of $2000 available.

2) You can do all kinds of shit with bad credit in America. It is called.... wait.... wait for it... Make a shitload of money! Then you can buy cars in cash. Or at a higher interest rate and pay it off on an accelerated payment plan to avoid actually having to pay the interest while still showing your ability to pay a loan. Rent. Done correctly it provides the same monetary advantages as owning a home in the long run. Put down a cash deposit. When I first got started on my own I had shitty credit. It didn't stop me from doing anything because I made plenty of cash. I didn't need credit.

So your statement is false...

[sojproductions]

Originally Posted by EddyTheDog

There are 'PayDay' loan company's in the UK with rates over 3000% APR.

All legal and above board......

I hadn't been back to the UK for some time, I saw many of these adverts, 2 week loans etc, I was fuckin disgusted that these people are able to get away with it, and what's worse is that you can guarantee the banks own these companies. They simply prey on people being at rock bottom.

[Some Guy]

I saw a website the other day that offered personal loans with an interest rate of 139%. Yes, you read that right. 139%! I feel sorry for whatever sucker gets a loan from them.

[Antonio]

Originally Posted by sojproductions

I hadn't been back to the UK for some time, I saw many of these adverts, 2 week loans etc, I was fuckin disgusted that these people are able to get away with it, and what's worse is that you can guarantee the banks own these companies. They simply prey on people being at rock bottom.

That's one way to look at it - it was so profitable and if the lenders are making gazillion pounds per day, then everybody would've been doing it. The massive APR %-age doesn't sound so impressive when you trnalsate it to monetary amount - you borrow 200 pounds for two weeks and you pay back 250 pounds, which is 625% APR. These are short-term and high risk loans, which explains the high fees and interest rates....

[$5 submissions]

Originally Posted by EddyTheDog

There are 'PayDay' loan company's in the UK with rates over 3000% APR.

All legal and above board......

No wonder Payday loans = hot mainstream niche

[iamtam]

59.9% would hit the usury laws in most states.

[Mutt]

Originally Posted by iamtam

59.9% would hit the usury laws in most states.

that's what i am thinking - there are usury laws and i can't believe anywhere near 60% interest is legal.

payday loan industry is going to get regulated - sad that government has to try to save people from their own stupidity.

[Spudstr]

I thought the law capped it at like 29% or somewhere around that neighborhood?

[selena]

Originally Posted by Due

You really can't do shit in USA without a credit score

Yeah, you can. It's called paying cash.

[IllTestYourGirls]

More unattended consequences from the governments meddling.

[EddyTheDog]

Originally Posted by $5 submissions

No wonder Payday loans = hot mainstream niche

These shits advertise on mainstream TV - We have ads here during our prime time ad slots promoting 3000% + APR loan companies.

It makes me sick.....

[u-Bob]

Originally Posted by CYF

59.9% is fucking highway robbery.

Originally Posted by wild johnny

I agree What a rip off!!

Originally Posted by LiveDose

That's nuts.

If you don't agree with their rates, don't use their services. No one is forcing you...


"Save your money first, then buy things"....

[Barefootsies]

Originally Posted by $5 submissions

Damn. Talk about high ass interest rates.

Source: http://money.cnn.com/2011/01/28/pf/c...%2059%% 20APR

I call bullshit for headlines.

Many states cap the limit that can be charged. For example, in Michigan it's like 20 something percent. While other states may not have this law, that is an issue for their legislature.

[ottopottomouse]

Originally Posted by EddyTheDog

There are 'PayDay' loan company's in the UK with rates over 3000% APR.

All legal and above board......

wonga.com APR 4214%

it's high risk though. lending money to the sort of person who is quite likely to be permanently borrowing from a new place to pay off previous debts. or vanishing.

[96ukssob]

wow that is jacked. sad part is, i can be there will be a few million people willing to max out a credit card and pay the minimum with 59% interest rates

[Ross]

Originally Posted by Due

I'm new to USA so I have no credit history. I had my SSN for 5 months now, I got one of those to build my credit. I pay it in full every month so I'm not charged any interest. Seems to be working nicely as now I got a score of 700+

You really can't do shit in USA without a credit score

I had the same problem in Canada. Luckily with some letters stating my income, I got a $500 Visa card with 19.9% interest rate. Been using it in full then paying it off in full when due. We also got a car loan but had to put down 25% deposit, as well as 10% on our new house we bought.

We're paying our car off in 3-4 months tho, so I'm hoping my Credit rating will be good

[$5 submissions]

High risk = high rates

But... high risk = high rewards, right?

[Deputy Chief Command]

What are the charges?
The payday loan and cash advance charges are simple. For every £100 that is lent, you will need to pay back £25 in interest. So if you wanted a cash advance of £200 to tide you over we would charge you £50 interest. And remeber, there are no admin charges and no other hidden charges.

http://www.loanadvances.com/charges.html


that does not sound real bad to me ? but because you have to pay it back in a very very short time frame, the APR is going to be real hight on that ? am I right ?

[Due]

Originally Posted by V_RocKs

1) Charging $300 a month and paying it off each month before incurring interest doesn't do anything to "build" your credit. Having a card is only beneficial on how much money you have available to you. Your daily balance, payments, etc aren't individually reported to the credit agencies. So they have no way of knowing if your $300 balance is carried, charged and paid monthly, etc. They just know one number that is reported by the issuer and whether or not you are late. Your score is adjusted according to a ratio of how much credit in total is available to you and how much you are currently using. In this example having a $2000 limit and $300 balance makes you worse off than the guy that doesn't use it at all and have $2000 out of $2000 available.

Credit card companies report available balance, I'm using it to avoid paying fees on it, I'm paying it off in full to avoid paying interest. Now my credit score is 718, I don't know how they come up with that number but it is

Originally Posted by V_RocKs

2) You can do all kinds of shit with bad credit in America. It is called.... wait.... wait for it... Make a shitload of money! Then you can buy cars in cash. Or at a higher interest rate and pay it off on an accelerated payment plan to avoid actually having to pay the interest while still showing your ability to pay a loan. Rent. Done correctly it provides the same monetary advantages as owning a home in the long run. Put down a cash deposit. When I first got started on my own I had shitty credit. It didn't stop me from doing anything because I made plenty of cash. I didn't need credit.

So your statement is false...

That's what I thought too, I came to the USA when the credit crisis hit. You can do a lot but there is still tons of things you can't do.
For our office I had to put down extra cash deposit, had to drop an extra month of rent for the rental house I currently live in, for my payroll plan to our employees I had to go with corporate account paying more rather than a small biz plan as I had no credit history, at first there was no "miles debit cards" so I couldn't get airline miles / points etc, credit cards provided insurance on rental cars debit cards didn't.

Ohh and a shitty credit is better than no credit.

[Ron Bennett]

Originally Posted by Barefootsies

I call bullshit for headlines. Many states cap the limit that can be charged. For example, in Michigan it's like 20 something percent. While other states may not have this law, that is an issue for their legislature.

State interest caps do NOT apply to nationally chartered banks - they can pick and choose to operate from a state, such as South Dakota, that has no interest usury limit for such financial institutions.

http://en.wikipedia.org/wiki/Marquet...a_Service_Corp.

On a related topic, individuals / small business are often far more restricted in what they can legally charge in interest than financial institutions. In many states, even possibly including those with no usury limits for banks, limit rates to around 6-10% for individuals and 18-21% or so for small businesses.

In short, credit card companies, effectively, operate under a separate set of laws that allows them to charge interest rates as high as they want, as well as, engage in other abuses.

Ron