credit card interest rates

[sonoma1993]

Why are credit card interest rates so high compare to like car loans, personal loans, mortage loans. Alot of credit card companies are starting of with that 0% apr deal but then when that over they jack your rate to like 20%-30%. Were as your personal, car and etc are like 4%-7%

 

[Heisenberg]

Because you're paying for the convenience.

 

[EyeMNathan]

If you keep your CC paid off each month, you'll never even see interest charges, so they are gonna get the people who dont pay it off every month for every penny they can. It's impossible to do this with a big loan, so they can get away with charging relatively small interest.

 

[kranky]

Car loans and mortgages are low because they are secured by the items. If you don't pay, they take the item back. So the risk is lower to the lender.

Credit cards have much higher risk because they aren't guaranteed squat. And personal loans aren't 4-7%, they are a lot higher than that.

And remember that credit card rates vary with the credit record of the borrower. The only people paying 30% are the ones who have no other place to go. Some issuers like to give low rates and wait until people with less than wonderful credit ratings charge up a big balance. Then they raise the rate, figuring they won't be able to move the account to another lender.

The key is that with a credit card the rate can be whatever the issuer decides to charge (within the law).

 

[Pepsi90919]

who cares what the interest rate is. just pay the thing off.

 

[dionx]

Credit cards are revolving accounts, meaning you pay them as much or as little (at least the minimum) as you want over the period of time that you determine.

With car loans and mortgages, the montly payment may vary with interest, but the life of the loan is fixed. For cars, its usually between 2-5 years. For homes, it's typically 15 years or 30 years.

 

[DaveSimmons]

High-risk, unsecured debt.

But like everyone else noted, if you don't carry a balance the rate is 0%.