29% Credit card rate is insane!
By Daniel at 17 December, 2009, 3:17 pm
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It’s almost mathematically impossible to pay off a card charging 29%. It is seldom noted that consumer debt interest is paid with after tax dollars. So, it effectively costs someone 50% of a debt - per year - just to keep up with interest. That is what Tony Soprano would call a point (i.e. a percent per week.)
Anyone who could afford to pay off their debt in two years should qualify for favorable terms on the credit lines. With 29% interest, you need a before tax amount equal to your debt every two years just to keep up with the interest.
29% would be an exploitative rate if that were the terms up front. It’s criminal when the terms are changed to that. Someone taking on debt at say 10% interest rate, with the ability to pay it off in 5 years, become effectively bankrupt when that rate is arbitrarily raised to 29%
Unless you’re in a position to pay large chucks towards principal in addition to interest (which almost no one would be), you need to STOP PAYING any charge card charging more that 15%. Forget your credit rating, you can’t afford more debt anyway. In a few months most creditors, including Citibank, will put you on a low interest pay off plan.
- FTAX
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