Credit Woes

[earl colby pottinger]

Real rates

The stores do this because they make boatloads of money on it. You'll never balance out what you saved on that initial discount, even if it was on an expensive item, with what you'll pay in interest charges.

I don't know if they do this anymore, but I paid off my store cards after calculating how much I was really paying in interest.

At the time the stated interest was 26% per year, but the interest charges were computed monthly so you paid 2.66..% per month, but interest was compounded monthly too so your real interest rate was 29.33% per year!

That adds up fast.

[taxguykarl]

Truth. You know what credit card companies call people who pay their bills on time, in full, every month?

"Deadbeats."

Also freeloaders.

[notalwaysright]

"Do you know that every card you open affects your credit score?"

It's people like that who make dream of saying, "Oh, I'm sorry! This is clearly the first shopping experience of your life! Let me explain. We underlings are required to say specific things by our bosses. We have zero control over anything. So if you came in tomorrow I'd ask you the same thing. Got it?"

[Sapphire Silk]

This. You only pay interest charges if you don't pay your bill in full. I think too many people view credit cards as an excuse to buy more than they can afford, rather than a more convenient way to pay. (And just to be clear, I'm not talking about people who find themselves in financial straits due to things outside their control like losing a job or having high medical bills.) I'm sure my Visa company must love me because I always pay in full, on time.

I absolutely agree.

Your Visa company hates you; you are a deadbeat in their eyes because they make no money on you.

Carrying a small balance, oddly, can help your credit score. It shows you are using your credit and maintaining a reasonable balance and debt to income ratio.

[Ironclad Alibi]

Even though you pay no interest to the credit card companies by paying off your bill every month, the credit card companies are still getting about 3% of your bill from the fees they charge the merchants.

[Catwoman2965]

I can still recall, a couple years back, in the employee area in the back of my store, there was some memo that actually stated how much we, the company, made in interest from store charges. It was quite a bit!

[bankworking]

Truth. You know what credit card companies call people who pay their bills on time, in full, every month?

"Deadbeats."

Which makes no sense as the banks still get money from the merchant interchange charges... not as much as they used to, and fraud eats up a lot of it, but it's still a profit.

[Primer]

What interest charges?

I'm sure my Visa company must love me because I always pay in full, on time.

You know what credit card companies call people who pay their bills on time, in full, every month?

"Deadbeats."

Also freeloaders.

I have one of those old fashioned "cash back" Discover cards. Plus, every quarter, they choose a different category on which to pay 5% back. So they really lose money on me.

I love trying to explain to the "we can lower your interest rate" phone calls that they would have to pay me more than 5%. Yeah, I usually get hung up on.