Two very old credit card interest rates

[Lubener]

From what I can remember the cards with the low rates also had a monthly fee tied to it.

 

[PandaBear]

If I make the minimum payment of $50.00, the balance will decrease only by $17.00. The rest all goes to paying interest.

In strict mathematical sense, there is no problem paying perpetual interest if you are using the money to invest in a return that yields better than the interest.

The problem is, there aren't any guarantee investment that pays you 15-30% with no risk. Also many people spend money on enjoyment rather than investment so that's 0% return on investment.

I am currently looking at some credit card with 21 month 0% APR on balance transfer. It has an intro balance transfer fee of 3%. I think the current T-Bill has a 3.5% yield per year and that 3% 21 month after tranfer fee is about 2% annual cost that I can deduct, and the 3.5% yield after paying federal tax would be about 2.5%, and after I deduct that 2% would make me 0.5% free money.

I am on the fence whether a 0.5% yield on some 5k of balance transfer (I only have about 5k balance from a 0% APR on purchase deal that is soon to be expiring), that is $25, is worth all that trouble. Anyways having free money no risk sound tempting but the paperwork and the amount makes it more a game than a real return. It is probably better to get a card that has an intro $600 in points for signing up instead.

 

[GON]

Earlier this morning I received by USPS an unsolicited pre approved credit card offer from AAA.

Usually I just throw these in the garbage unopened. Rainy day in New Mexico, so sitting around and decided to open.

Blown away, up to 31 percent interest rate. 32 percent cash advance rate. Five percent fee for a cash advance. Minimum interest charge of $3.

I know a handful of BITOGERS make money on using their creole cards. When I read these rates, all I think about is exclusively using cash and check, and not playing with these so called bankers.

 

[CKN]

They are all high rates. I make too much money from my credit cards not to use them.

I just pay them off before they are due-no interest charges.

 

[tbm5690]

They are pretty much identical other than sometimes Costco only take one but not the other.

Usually, I found Master Card having better rebates and Visa has more "no interest for N months" deal. A lot of which bank has which card are about their business relationships than anything else. I like Capital One not having foreign transaction fees, I know a lot of people don't like them but for this reason I will always have at least 1 Capital One in my wallet when I travel.

It really depends on the tier of Visa or MC. Visa Infinite is superior to MC World Elite, for example. Many don't realize that Visa or MC themselves provide additional benefits/perks on top of whatever the issuing company is providing.

Example - my Cap1 Venture X is a Visa Infinite. I get Hertz President's Circle status through Cap1, and National Executive status through Visa. Same card, different sources of bennies.

 

[PandaBear]

I don't think anyone who has those 25%-33% interest credit card actually have a continuous debt at those interest for that long. Typically if they didn't pay, they would have either balance transfer out to a lower rate card at the 3-5% balance transfer fee to another 0% for 6 month (that makes it 10% a year one time) to 12 month (that makes it 5% a year one time), or another no perk card that charges maybe 10-15% a year.

I know, paying one time 10% or 15% a year is still loan sharking, but my point being those 30% rate is really there as a deterrence to stay for too long. I know I may sound too rational and normal people aren't, but money is still money and if you are in a 30% card you probably should balance transfer out asap instead of staying. I would look at them more as a penalty for staying pass your welcome, like a bridge loan in business banking, than a real evil interest rate.