If you get a credit card from a store like Macy’s, Kohl’s, or Lowe’s, interest rates are even higher. Stores like these are charging customers an average interest rate of more than 27 percent. And many of the stores rely on these high-interest-rate cards for more than a third of their revenue. Incredibly, Macy’s earned almost 40 percent of its revenue from these cards and Kohl’s recently made 35 percent of its total profit from high-interest-rate cards.
What this means is that if you buy a $500 refrigerator from Lowe’s or Home Depot on one of their credit cards, you will likely owe an additional $136 in interest.
Before I begin, this article got 1.3k "claps.
Sounds like 1 300 people can't see the error in this quote.
Ok. Let's get on with it.
The left have a problem with high interest rates equating it with predatory practices and loansharking. Hence. Bernie's Loanshark Protection Act.
Sounds nice right? It always sounds nice with left-wing socialists. Hey, credit card companies are ripping you off suckers and we're here to help!
Until you consider the damn details.
In Bernie's Clown Finance World, companies charge 27% on a purchase per month. Ergo, his $136 mistake. How did he arrive at this? Like a simpleton he multiplied 500 x .27. Look ma! I did it!). Except that's not how it works.
It's 27% for the year - hence the term ANNUAL PERCENTAGE RATE. Thus, an extra step is needed to arrive at how to get the correct amount. I know. One step too far for commies like these two numskulls.
So. 27% divided by 12 gives you 2.25 % per month. Which on $500 comes out to $11.25 interest on the month.
The key in paying the balance on credit cards to avoid getting caught in the interest payment trap is to pay off the balance in full when the statement comes in. People don't always do so the next best thing is to pay more than the minimum balance required. If they ask for $20. Put $40 that way it goes to both the principal and interest. As you pay down, the interest declines as a declining balance.
It's really not rocket science.
Now, if you find yourself in a credit card debt far exceeding your cash flow, that's on you. Not the credit cards. They didn't force you to sign on. If you buy a $2000 item you have to be responsbile enough to understand affordability and how it relates to debt payments.
A functional and responsible individual acquainted with how basic interest principles work will have spotted what I'm about to point out.
The thing is. The majority of people are not ignorant and understand precisely what they're signing on to. The left like to make it sound like it's chronic problem affecting the masses (and the poor. Always gotta pile on the poor) but it's not accurate.
The fact is, credit card companies and Pay Lenders must disclose all sorts of pertinent information. So much so it's almost idiot proof if you bother to read it. Most people don't and then get themselves all tied up in a mess and then demand others pay for their foolishness.
Another thing. Interest is high for a couple of reasons. One, theft. It helps to offset fraud often committed by people. Two, interest is business. They're allowed to charge a profit.
On the surface, it resembles loansharking but anyone with a sensible head (or had actual experience with it) will tell you, er, no. Not the same.
To equate legitimate credit cards to loansharking is preposterous and should anger the industry. Which is why Mastercard and Visa should stop playing the 'woke' game and pay close attention to the lefties who would put them out of business.
Last, government charges interest as well. Be it on penalties or loans they make. More often than not, at higher rates offered in the private market. Imagine a world where Bernie and Alex where your only choice is through the bureaucracy. Something they're angling to accomplish by - smh - handing over banking services to the....Post Office.
Imagine having to deal with a unionized teller.
What a fantastically depressing pile of nonsensical ideas these two pimp out.
It's a problem because they're committing a financial mistake that earn them a failing grade in math class and are at the highest fricken level of government selling these pack of lies.
Ocasio-Cortez sits on: Committee on Financial Services and Subcommittee on Consumer Protection and Financial Institutions.
Oh, she holds an economics degree from Boston University. AOC from the Bronx thinks $15 min. wage comes with no unintended consequences.
Imagine holding a degree in finance and working in banking having to listen and forced to answer question from this illiberal ignoramus.
Think of it. These two false-crusaders want to gain the purses of the most powerful nation in human history but don't understand simple interest.
Like they exaggerate climate change to scare people, they're doing it here as well.
OMG OMG OMG! Credit cards and Pay Lenders are charging you 25!%!%@%@ REEEEEE!
Any person going along with this - including economists - is an idiot.
There's no excuse to not understand how credit cards work.
Bernie equates this to a moral issue. Like Pelosi thinks immigration is a moral one.
It's not.
But there is a moral play at work here. The immorality of Bernie's ignorance - or more troubling, he knows how it works but is lying about it - and misleading people about financial services and financial tools that helped revolutionize our economies in the West. Just like Pelosi is immoral for refusing to work a deal in securing the borders and achieving comprehensive immigration reform.
Both don't serve the people right in my view.
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