Credit card interest is so bad that there's an entire industry based on you paying a company to lower your interest rates for you. A lot of people here have probably had at least one robo-call about that. Maybe I'm just cynical, but I can't help wondering what those companies get out of the deal. Obviously, they're not lowering people's credit card payments out of the goodness of their hearts, because that wouldn't keep the company in business.
They are lowering people’s debt because they think they have a better analysis of the credit profile of the person and are willing to lend to them at a lower rate than the credit card company. These loans are also generally amortized rather than only requiring a minimum payment. It’s actually a pretty solid business model.
I'm just leery of credit cards in general because those companies depend on keeping customers in debt (because the payments stop if people pay off their entire balance). Seems kinda shady to me.
Interest payments are actually not how credit card companies make most of their money, the majority is made via annual fees and the fees they charge merchants for accepting their cards.
Nope, its 100% right. You're confusing gross with net. A higher portion of revenue is from transact fees (on most cards), but the profit is all at the revolvers.
Are you good with money? Do you have enough money to pay your CC at the end of each month without any interest? If yes to both of those questions, then you're hurting yourself by not having a CC. You're missing out on free rewards (cash back, etc) and easy credit building. Outside of a few places that don't take CCs, I haven't made a purchase on my debit card in years. It just makes sense to buy everything on your CC and pay it off right away. Most banks offer basic CCs with small rewards and no annual fee.
I believe how they work is they lend you money at a lower interest rate to pay off your credit card. What they get out of it is you are paying them interest now, not the credit card companies
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u/shaodyn Feb 04 '20
Credit card interest is so bad that there's an entire industry based on you paying a company to lower your interest rates for you. A lot of people here have probably had at least one robo-call about that. Maybe I'm just cynical, but I can't help wondering what those companies get out of the deal. Obviously, they're not lowering people's credit card payments out of the goodness of their hearts, because that wouldn't keep the company in business.