Subnostr

I'm surprised these 0℅ APR guaranteed for 15+ months credit cards are still on the market. Still, dozens; every single bank or cc company.

How can it be cashflow positive for them? They have to end up with +5% each year to justify it. Arguably at least +6-7% accounting for the administration cost.

Given the average APR on the actual balance then is around 23%, they have to estimate that +40% of customers fail to repay the balances on these in the intro 15month period and will be able to keep paying the 23% for at least they year.

Sounds like a big gamble to me, and something doesn't add up.

What am I missing?

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Discussion

ShiShi21m 2y ago

People load em up, and then can't pay.

End up with 20+% interest compounding MONTHLY.

Mark Camper 2y ago

Oh, monthly compounding! I missed that!

nikotsla 2y ago

Are you taking into account that most people don't know about finance? a few will use it well, the rest... just keep spending more than they earn.

Jacob (Organix Farms) 2y ago

It works out well for financially smart people. The problem is most people aren’t and fall victim to the quick satisfaction a CC brings.

I used my CC with 0% for 12mo to pay for a $5k truck years ago that no bank would provide lending. I made myself pay off that CC balance (over the monthly minimum) before the rate went back up. Finished the payments with $0 lending fees plus got $500 cash back from card promo. Most would’ve paid the minimum CC payment for the next 10yrs.

They play the odds because the odds are in their favor.

Mark Camper 2y ago

Yea, they keep approving me for all these; plenty of 0-3% balance transfers available too. So that you can literally play this no payment game for years if you maintain positive cashflow. The finance math isn't even that complicated here...

I just feel disgusted that they make me feel like I am the goverment here, and we all know who's gonna have to pay for all this game again.