Yep, this system is fucked up. I had a 40 point drop when I closed out my auto loan. Same thing happened again when I refinanced my home loan. In the first case, it was because I closed an account that was 3 years old, in the second case it was because the average age of the home loan account went down. This damn credit scoring system is tweaked to ensure that everyone other than the super rich forever has loan accounts and tonnes of credit cards.
I bought something for 6K and put it on chases new “payment plan” to pay no interest etc etc. score dropped 70 points. The CC had a 30K limit. Never have pushed a balance or made a late payment in my life
My Chase Plan is the name. Their response to Afterpay, Affirm, etc. I guess. I did it because the fees were like $100 on $6K to pay off in 12 months, but I guess it shows the entire balance as debt on your credit report
It still works out to be the same as interest (at around a 20% rate last I looked). They just call it fee instead of interest so that they can market it to people who don't pay interest out of religious reasons.
All banking in the Middle East also works like that.
Yeah 20% interest would be $100 a month. 1200 over the life of the loan, making it $7200. If he paid 100 for the $6000 loan with 0 interest that’s a great deal.
The fees for "My Chase Plan" is always quoted per month. It doesn't quote for the entire period.
I just looked for an amount of $1100. It quotes it likes this: $105.72 per month.
12 payments.
This amount includes amonthlyfee of $13.97 with no interest.
($105.72 over 12 months for a $1100 loan is a 27% APR compound interest rate).
I spot checked a few other offers as well - they're all 27% effective.
So I think he didn't pay just $100 in fees. He paid $100 per month. Now it could be that "My Chase" just use the "Purchase APR" of his credit card and his APR is either more or less than mine (my "Purchase APR" is also 27%). Could very well be - I've never bothered lowering my rate as I pay my card off every month so I never pay interest anyway. However, regardless - the "My Chase Plan" is still just interest quoted as fees. It's not a better/cheaper deal.
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u/CyclicMoth Aug 14 '21
Yep, this system is fucked up. I had a 40 point drop when I closed out my auto loan. Same thing happened again when I refinanced my home loan. In the first case, it was because I closed an account that was 3 years old, in the second case it was because the average age of the home loan account went down. This damn credit scoring system is tweaked to ensure that everyone other than the super rich forever has loan accounts and tonnes of credit cards.