how do peop[le get to super high intrest rates of 20% and higher?

Question

i see a lot of people gettign to those high apr's. is this becuase they didnt pay ontim or went over theier limit? am i safe from this provided i pay on time and never go over limit?

Answer 1

It is because they have a low credit score. Even if you make payments on time with one company, if you are late with a payment to another company, both companies can raise your interest rates. It's important to read all the fine print.

Answer 2

20% interest rates are for people who have funky credit like lower credit scores but you can read the back of the credit card application. It will say what your interest rate will be. Look for key terms like "fixed APR" fixed APR means when interests rates go up yours wont unless you default (pay late). I had a credit card with a variable APR and it went from 11% to 17% and I never defaulted. A good card to get has things like 0% for 12 months then a low fixed APR after that. Don't ever get a credit card with a monthly fee or yearly fee! Those are just going to rob you!

Answer 3

There are a few ways, one of which is if you have no credit history, or bad credit history you might be slapped with a 20% or higher interest rate.

Speaking of bad credit history, here is my story. With most credit card companies if you are late for two payments in a row they can hike your rate to the maximum legal limit. My BOA card went from 9.99 to 34.5% interest for six months because I paid late two months in a row. After six months of outrageous interest rates I finally got it back down to 9.99 fixed.

The lesson is this, don't ever be late. They'll get you good for that one.