Of Credit Cards and APR.

Sheep

I know it stands for Annual Percentage Rate, but everybody I ask about it tells me that's it's <B>monthly</B>.

I gotta buy a new computer and some bass gear. Probably put about 2000$ on an American Express Blue.

The APR on it is 17.24% Standard and 27.24% Default. I don't know the difference between these two things.

I can't see how a credit card company expects me to pay an interest rate of 350 bucks a month if I put two grand on a card.

Secondly, I'm supposed to be APR free for an entire year, but it says things like Balance transfers posted by 5/21/09 have an APR of 2.99%.

Finally, if anyone can offer any Credit Card deals that are better, I'd appreciate it.

TIA.

matt has a problem

APR is the amount of interest charged in a single year. It's divided by 12 and charged monthly, so a 17.24% rate means each month you pay 1.43% of whatever balance you're carrying. Default is the rate you get if you miss payments or go over your limit. Balance transfers are done differently than purchases, and will have different (and most likely higher) APR's than ones for purchases. If you have a 0% APR for a year, it just means you pay no interest on your purchases for a year. Make sure it's a 0% APR on purchases though, a lot of credit card companies are putting "on balance transfers" in small print lately. And 17% is about the best APR you're going to get right now, pretty much every company raised them just recently.

Scrublet

Standard APR - This is the interest rate you pay when you go to a store with your card and make a purchase. It is NOT NECESSARILY the same rate you will pay on balance transfers (say, if you had a card and moved its balance to the new card) or cash advances (which will almost certainly be at a higher rate).
Default APR - If you aren't making your minimum monthly payments, you are in default, and will start being charged this rate. On top of being stupidly high, defaulting on a card or anything is awful for your credit card rating.

I feel that 17.24% may be a bit high. Check with your bank and see if you can do better...I'd think you could at least get down to 13%.

Sheep

I'm gonna go let my mom know that one.

Thanks!

Sheep

I feel that 17.24% may be a bit high. Check with your bank and see if you can do better...I'd think you could at least get down to 13%.

My bank cut out credit cards for people. Only businesses.

Unknown

This content has been removed.

Sheep

Can they bump it if it's fixed?

-Phil-

Yes they can. As long as they give you sufficient notice as is required by law.

Edit: They usually give you an option to accept the new rates or close that account in question. If you close the account, the rates stay the same until the balance is paid; however, you can no longer use the card.

Unknown

This content has been removed.

matt has a problem

-Phil- wrote: »

Yes they can. As long as they give you sufficient notice as is required by law.

Edit: They usually give you an option to accept the new rates or close that account in question. If you close the account, the rates stay the same until the balance is paid; however, you can no longer use the card.

Yep, and your credit score takes a hit from closing a line of credit.

jclast

matthasaproblem wrote: »

-Phil- wrote: »

Yes they can. As long as they give you sufficient notice as is required by law.

Edit: They usually give you an option to accept the new rates or close that account in question. If you close the account, the rates stay the same until the balance is paid; however, you can no longer use the card.

Yep, and your credit score takes a hit from closing a line of credit.

Not always. If you have a bunch of accounts closing one can raise your score.

Scrublet

matthasaproblem wrote: »

-Phil- wrote: »

Yes they can. As long as they give you sufficient notice as is required by law.

Edit: They usually give you an option to accept the new rates or close that account in question. If you close the account, the rates stay the same until the balance is paid; however, you can no longer use the card.

Yep, and your credit score takes a hit from closing a line of credit.

Generally speaking, this is more of a big deal if you're repeatedly doing it. Like frequently opening store cards and closing them, or playing the balance transfer no-interest game.

Viscountalpha

Sheep wrote: »

I can't see how a credit card company expects me to pay an interest rate of 350 bucks a month if I put two grand on a card.

Oh they can and they will. its another game credit card companies play. I would advise against this course of action.

DON'T PUT 2k on a credit card unless you can pay it off quickly.

mcdermott wrote: »

Sheep wrote: »

I feel that 17.24% may be a bit high. Check with your bank and see if you can do better...I'd think you could at least get down to 13%.

My bank cut out credit cards for people. Only businesses.

Two months ago we had a 6.99% fixed APR.

Our bank just bumped it to a 15% variable. Nothing about us changed.

Rates are stupid high right now.

They are putting the credit crunch on people with GOOD credit standing which I figure is gigantically retarded. It has to be some paper pusher and some corporate greed asshats out there where this looks great on paper but is just makes the average consumer furious.

snorepez

Scrublet wrote: »

Generally speaking, this is more of a big deal if you're....playing the balance transfer no-interest game.

Can you elaborate on that? I'm curious.

Six

snorepez wrote: »

Scrublet wrote: »

Generally speaking, this is more of a big deal if you're....playing the balance transfer no-interest game.

Can you elaborate on that? I'm curious.

1. Have a balance on a credit card.
2. Open a new card which has a balance-transfer promotion, something like 0% for 12 months.
3. Transfer balance from card 1 to card 2
4. After 12 months, go to step 1.

It's a legitimate way of avoiding balance charges, but it will hurt your credit because you have to keep opening up new cards.

Unknown

This content has been removed.

Viscountalpha

OP,

If you need to buy a new computer, we can help you make one or show you someone who can do it for you. Its not as hard as one would think but it does take a bit of skill and learning.

I would set aside the bass gear unless you absolutely have to have it. Don't spend what you don't have in this economy.

ASimPerson

Do you really need bass gear? You can get a new computer relatively cheaply. There's no reason to pay that kind of interest on $2000 right now (or any time, really) if you don't absolutely have to.

Docken

mcdermott wrote: »

They are putting the credit crunch on people with GOOD credit standing which I figure is gigantically retarded. It has to be some paper pusher and some corporate greed asshats out there where this looks great on paper but is just makes the average consumer furious.

It's also retarded because the quickest way to turn somebody from a good credit risk into a bad one is to triple their fucking APR. I make well above minimum payments, mind you, but a lot of people carrying pretty big balances can't necessarily afford for their payments to double or triple. Same thing that happened with mortgages, really. Well, except in that case the loan was for a piece of property that was no longer worth the amount owed.

But seriously, doubling or tripling people's payments isn't going to help your default rates. Dumbasses.

Plus you're going to lose longstanding customers, which can't help matters.

Yeah that's all true, but there is a very good reason why they are doing this.

Credit card companies securitise virtually all of their outlays to customers - its how they get the funding.

Only at the moment spreads on CC debt notes have blown way, way out. So much so that CC companies have to be very careful that they don't lose money on the securitised deal - thats if they can even get a deal up at all. If they can't then extra customers will just cause them to go bankrupt faster.

So they are rationing credit.

They don't want your business, unless of course you will pay through the nose for the privilege of having their card (then at least they make margin on your debt).

matt has a problem

Docken wrote: »

mcdermott wrote: »

They are putting the credit crunch on people with GOOD credit standing which I figure is gigantically retarded. It has to be some paper pusher and some corporate greed asshats out there where this looks great on paper but is just makes the average consumer furious.

It's also retarded because the quickest way to turn somebody from a good credit risk into a bad one is to triple their fucking APR. I make well above minimum payments, mind you, but a lot of people carrying pretty big balances can't necessarily afford for their payments to double or triple. Same thing that happened with mortgages, really. Well, except in that case the loan was for a piece of property that was no longer worth the amount owed.

But seriously, doubling or tripling people's payments isn't going to help your default rates. Dumbasses.

Plus you're going to lose longstanding customers, which can't help matters.

Yeah that's all true, but there is a very good reason why they are doing this.

Credit card companies securitise virtually all of their outlays to customers - its how they get the funding.

Only at the moment spreads on CC debt notes have blown way, way out. So much so that CC companies have to be very careful that they don't lose money on the securitised deal - thats if they can even get a deal up at all. If they can't then extra customers will just cause them to go bankrupt faster.

So they are rationing credit.

They don't want your business, unless of course you will pay through the nose for the privilege of having their card (then at least they make margin on your debt).

They're going for short-term gain at the expense of long-term growth. They figure once they've bent everyone over and become nice and profitable again, they can just lure all the suckers back with low introductory rates.

And the cycle continues...