PSA: Apple Card's Interest Rate is Rising as Fed Battles Inflation

[thefourthpope]

You might want to recheck your facts. There are several countries where credit cards are more popular than in the U.S.

Credit card penetration by country | Statista

Credit card usage generally increased across the world between 2021 and 2017, although penetration remained below 50% in most countries.

www.statista.com

Percent people with credit cards by country, around the world | TheGlobalEconomy.com

The average for 2021 based on 121 countries was 22.26 percent. The highest value was in Canada: 82.74 percent and the lowest value was in Afghanistan: 0 percent. The indicator is available from 2011 to 2021. Below is a chart for all countries where data are available.

www.theglobaleconomy.com

Fascinating list (though I did note these lines from your first link: “Some counties have a culture of credit card usage. For example, the leading credit card companies in the United States have issued hundreds of millions of credit cards, more than the number of U.S. citizens.”)

I wonder what makes Canada’s rate of credit use so high?

 

[thefourthpope]

I get a huge benefit using credit cards. If you don’t go back to cash. I think the cards are amazing. If they started charging me fees I would probably pay them…which some premium cards do despite “no benefit”.

I pay the relatively exorbitant AA annual fee but more than make it back in perhaps, especially admirals club visits. All of these are transaction decisions. Pick what works for you.

 

[PinkyMacGodess]

And they built all those transaction fees into the markup in the first place its such a racket and the consumer doesn't ultimately benefit.

And yet a had 33 comments, and most are thumbs down on that one thing. IT'S A SCAM PEOPLE!!!

 

[PinkyMacGodess]

I wouldn't consider it a con. If you pay your balance off every month (don't also pay interest), the cash back is 100% yours assuming the credit card doesn't have an annual fee. Yes, you have to buy something first but that is how discounts, coupons, rebates, cash back offers, etc. work. What is the "con job" here?

Getting you to spend more money. They WANT you to be over extended and not able to pay off the balance every month.

 

[PinkyMacGodess]

It's not a con. Pay your bills on time and whatever rewards you get, are yours to keep. If you keep a balance, you've already negated the rewards because of the high interest rate you're paying. It's an extremely simple concept and not complex at all to understand.

I can see the IRS calling that 'income', and taxing it. Like benefits of frequent flyer mile programs for some people. They are taxable.

 

[Bawstun]

Actually, raising interest rates is a proven way to fight inflation.

Not really. Out of 11 times the Feds have tried to curb inflation in this way, it has only avoided a recession 3 of the 11 times.

And in those 3 successful times, inflation was lower than where it is today.

Get ready. We are going into a financial crisis.

 

[JosephAW]

Not sure how long Apple will offer this card. Maybe it’ll be discontinued after they release an Apple Crypto

 

[szw-mapple fan]

I’m sure Apple’s lawyers have a better argument but I know for a fact none of my (much older) credit cards do this, and I read the agreement as variable based upon credit rating, and not exceeding the agreed upon APR at signup. Not constantly variable over the life of the card, and even if it were it’s now above the maximum APR range they quoted.

I’m sure “terms and conditions are subject to change at any time and by continued use of the card you agree to accept them.”

Looks like I was only partially right. There are both fixed rate and flexible rate credit card APRs. Flexible rate credit cards became the overwhelming majority of new cards after the CARD act in 2009 because the consumer protection it introduced made it much harder for banks to raise rates on fixed rate cards, so it makes sense that your older cards are all fixed rate. My credit card use doesn't go back far enough to know how common fixed rate cards were. These days fixed rate cards are quite rare and a lot come from credit unions.

 

[Scoob Redux]

The card companies take on the risk of not getting paid back. No one forces people to overspend on their card and not pay back when the bill is due. If you want a lower interest loan, then get a loan from a bank; do not charge it to a credit card.

The people being preyed upon by ruthless corporations don't have the credit to get a bank loan. They need the protection of regulations to prevent these egregious rates. You can say it's about the "risk" the lender is assuming, but record corporate profits tell the real story.

 

[avz]

Actually, raising interest rates is a proven way to fight inflation.

Not when you are dealing with the structural crisis.
The problem is that the FED don't even understand or have a concept of the structural crisis.
Kristalina Georgieva(a chair and a managing director of the IMF) who studied "political economy" during Soviet times understands this situation much better.

 

[0924487]

I use all my credit cards as charge cards, and I never paid a cent in interest. They can make interest 500% and it won’t affect me.

 

[0924487]

As is common with most credit cards, the Apple Card's interest rate on overdue balances is steadily rising as the Federal Reserve continues to raise its benchmark overnight interest rate in an attempt to slow inflation in the United States. As of July 1, the Apple Card's variable APRs now range from 12.49% to 23.49% based on creditworthiness, compared to 11.74% to 22.74% previously. This is in line with the Fed's 0.75 percentage point increase to its overnight rate in June.

Just for reference, the current Federal Reserve Fed Funds rate is 1.58%, which includes all the recent interest rate increases. Yet credit card rates are 12% to 23%. This isn't unique to Apple's card but demonstrates how twisted and corrupt the financial industry is in our country. Cheap money is handed out but only to banks and they in turn lend that out at 20%. Must be nice to be one of the chosen financial businesses who are virtually guaranteed by the Fed to make a profit.

The default rate for banks is different than retail credit card holders. Credit card is an unsecured loan. If I spend 50K+ on an AMEX charge card, and decided to give up my citizenship and move to Russia, there is nothing AMEX can do to recover that money.

 

[BootsWalking]

The default rate for banks is different than retail credit card holders. Credit card is an unsecured loan. If I spend 50K+ on an AMEX charge card, and decided to give up my citizenship and move to Russia, there is nothing AMEX can do to recover that money.

The entire banking system would've defaulted in 2009 had the Federal Resetve not intervened and inject trillions of dollars of reserves into their accounts at the Fed.

 

[ProfessionalFan]

Not sure how long Apple will offer this card. Maybe it’ll be discontinued after they release an Apple Crypto

I need a Craig NFT asap.

 

[applesith]

The people being preyed upon by ruthless corporations don't have the credit to get a bank loan. They need the protection of regulations to prevent these egregious rates. You can say it's about the "risk" the lender is assuming, but record corporate profits tell the real story.

Preyed upon? No one forces someone to spend more money than they have and to use a credit card. Where is your proof they can’t go to a bank? The high rates are to cover the many that will default and not pay their balance.

 

[PBG4 Dude]

I’m sure Apple’s lawyers have a better argument but I know for a fact none of my (much older) credit cards do this, and I read the agreement as variable based upon credit rating, and not exceeding the agreed upon APR at signup. Not constantly variable over the life of the card, and even if it were it’s now above the maximum APR range they quoted.

I’m sure “terms and conditions are subject to change at any time and by continued use of the card you agree to accept them.”

Most cards tie their interest rate to LIBOR. Try searching your T&C for “LIBOR”.

 

[webkit]

Getting you to spend more money. They WANT you to be over extended and not able to pay off the balance every month.

Perhaps but that doesn't make it a con job. That's like saying every discount, coupon, rebate, free trial, etc. is a con because they WANT you to buy buy buy.

No one is being deceived here. Cash back offers are legitimate.

 

[compwiz1202]

I think this is a widely held myth. I don't know where it came from but I would recommend always paying in full.

The only think that can possibly hurt you is paying stuff off right after you charge it without letting any balance get reported and your usage shows 0% constantly

 

[Somian]

You may want to check on that. I use whatever card gives the best rewards - Eg Apple Card for its 3% where available. Other cards like 2.62% minimum. But pay it off every month and my score is 839-850 depending on where I look.

I expect that just charging and paying it off in full will help your score.

Even though that BofA card gives you slightly less cashback, I’d still recommend buying apple products with 2.62% instead of the 3% because the Visa cards also give you a warranty extension.

This saved me when my iMac Pro broke a few weeks after apple Care expired. Visa paid an almost $2000 repair bill to replace the logic board.

I’ll gladly take this over the 0.38% extra cashback.

 

[compwiz1202]

850 is the highest possible, right? Impressive!

832 here. Never had a late payment, don't have too many inquiries. I guess it maybe is just a lack of a longer history (20 years) holding me back from a perfect score.

Or you may not have a varied enough history. house car installment cc....

 

[compwiz1202]

Actually the financial institutions do privately consider folks that pay off their balances in full every month dead beats.

Why?

Simple.

We are getting "free" use of the bank's money for perhaps 45 days depending on the billing cycle and when the charge was made to the credit card. Some affinity cards have annual fees that more than off set interest charges. A late payment still gets the clock running. It is really easy to get behind the power curve for repayments at 35% interest.

If one carries a balance, the interest on that purchase made two minutes ago is earning interest for the bank as soon as the transaction hits their system. A delay of only a few seconds before the 20 to 35% actual interest starts accruing .

But they still get merchant money. The ultimate deadbeat would be someone who gets credit and never uses it.

 

[compwiz1202]

Let's fight inflation by imposing more financial hardship on people. Great idea.

I get what people say, "don't spend money you don't have, yada yada". Life isn't that simple.

Thank you! Sick of these judgemental pricks who never has bad fortune fall on them. Not everyone is using credit for shinies. Could be medical food gas etc which all the prices for are skyrocketing

 

[svish]

Should not be a huge issue, if dues are paid on time.

 

[compwiz1202]

Sure, it has nothing to do with an influx of free money paired with the ongoing scarcity of resources. You know, basic economics.

You realize inflation is bad for corporations too, right?

Even CC cause it. If there were only loans for stuff like houses and cars, people would be forced to use cash and be more frugal instead of just saying I have credit I don't care how much it is. And then businesses would have to be more competitive

 

[compwiz1202]

The people being preyed upon by ruthless corporations don't have the credit to get a bank loan. They need the protection of regulations to prevent these egregious rates. You can say it's about the "risk" the lender is assuming, but record corporate profits tell the real story.

And even if can get a loan, the interest is already sky high from your dropping credit, so the payments are worse than the cards. Even if it is a lower total balance, the monthly payment is unaffordable