OT: Highest interest rate (112%) ever seen on an credit card

bossfan2000 · 07-22-2004, 08:32 AM

Hello fellas...delurking now to start posting here occasionally..

A coworker of mine just showed me a statement for her credit card from richs/macys. She had a 5 dollar balance on the card last month, misplaced the bill, so it never got paid. She expected some sort of late fee on her next bill, but what they did instead was raise her interest rate to 112%! I've never heard of such a thing. She called to complain and was told it was not an error. Of course, she will pay the balance, close the acct, and never shop there again...

Thought ya'll would find that interesting...she paid 21 bucks interest on a 5 dollar balance...incredible..

Radii · 07-22-2004, 08:43 AM

Sounds like time to talk to a manager, if they won't remove the insane interest charges and move her back to a lower rate than what it was before(assuming she has been a good long time customer), then she'll pay the charge and cancel the card.

Department Store cards are usually a terrible, terrible ripoff anyway, but 112% is damn impressive.

Samdari · 07-22-2004, 08:45 AM

First of all, each state has a maximum interest rate that lenders can charge, called the usury rate. In all states, this is below 100% annually.

Secondly, if she had not been charged a late fee (she obviously has) and they were charging her only the 112% interest, her current bill would be approximately $5.46, as it would take approximately 2 years of being charged 112% interest, with no payments or other charges, for the $5 balance to grow to $20.

Methinks she does not understand what happened here.

bossfan2000 · 07-22-2004, 08:51 AM

well, i looked at her statement and it did say the rate was 112%. I need to look at it again to see where the extra charge came from. Maybe they raised her rate and charged a late fee. It does sound illegal, though.

Samdari · 07-22-2004, 09:01 AM

Quote:

Originally Posted by bossfan2000

well, i looked at her statement and it did say the rate was 112%. I need to look at it again to see where the extra charge came from. Maybe they raised her rate and charged a late fee. It does sound illegal, though.

Interesting that they actually print that rate. I am astounded.

They did charge her something more than a 112% annual rate though. If it was only interest, they charged her 320% in one month. Ignoring the daily compounding (which means the actual rate would be higher) that figures roughly to a 3840% annual rate. If that is the case, I am going to quit my job and make my living exclusively by extending credit to your coworker.

albionmoonlight · 07-22-2004, 09:27 AM

Welcome to the world of posting Boss

If there is one thing this forum needs, it's a few people from Georgia.

VPI97 · 07-22-2004, 09:59 AM

Quote:

Originally Posted by albionmoonlight

Welcome to the world of posting Boss

If there is one thing this forum needs, it's a few people from Georgia.

...and Powder Springs, to boot. I've got a neighbor!

panerd · 07-22-2004, 10:29 AM

Quote:

Originally Posted by Samdari

First of all, each state has a maximum interest rate that lenders can charge, called the usury rate. In all states, this is below 100% annually.

Secondly, if she had not been charged a late fee (she obviously has) and they were charging her only the 112% interest, her current bill would be approximately $5.46, as it would take approximately 2 years of being charged 112% interest, with no payments or other charges, for the $5 balance to grow to $20.

Methinks she does not understand what happened here.

Sort of. Actually it is somewhere in between. Remember the company will charge her interest on the interest every month. So really it would take a little over a year, but definitly not 1 month.

Radii · 07-22-2004, 10:47 AM

Duh, I didn't even look at the math when I made my suggestion, but it still stands. If you're a customer in good standing and they try to take advantage of you the first time you make a mistake, call them up, point out how good a customer you've been, and get your rate reduced to at least what it was, if not better(many companies will actually do this for you if you threaten to walk). If they won't do this close the card immediately and pay off the balance. They'll bend for you.

If you've been late a ton before then you're probably screwed but you have the upper hand here, it's a small amount and you don't have to use their card.

tategter · 07-22-2004, 11:46 AM

My question is, what did she find at Macy's that was only $5? Every time my wife goes there we have to cash-out the equity in our home to pay the bill.

07-22-2004, 08:45 AM	#3
Samdari Roster Filler Join Date: Jan 2002 Location: Cicero	First of all, each state has a maximum interest rate that lenders can charge, called the usury rate. In all states, this is below 100% annually. Secondly, if she had not been charged a late fee (she obviously has) and they were charging her only the 112% interest, her current bill would be approximately $5.46, as it would take approximately 2 years of being charged 112% interest, with no payments or other charges, for the $5 balance to grow to $20. Methinks she does not understand what happened here. __________________ http://www.nateandellie.net Now featuring twice the babies for the same low price!

07-22-2004, 08:43 AM	#2
Radii Head Coach Join Date: Jul 2001	Sounds like time to talk to a manager, if they won't remove the insane interest charges and move her back to a lower rate than what it was before(assuming she has been a good long time customer), then she'll pay the charge and cancel the card. Department Store cards are usually a terrible, terrible ripoff anyway, but 112% is damn impressive.

07-22-2004, 08:51 AM	#4
bossfan2000 n00b Join Date: Jul 2004 Location: Nashville, TN	well, i looked at her statement and it did say the rate was 112%. I need to look at it again to see where the extra charge came from. Maybe they raised her rate and charged a late fee. It does sound illegal, though.

07-22-2004, 09:27 AM	#6
albionmoonlight Head Coach Join Date: Oct 2000 Location: North Carolina	Welcome to the world of posting Boss If there is one thing this forum needs, it's a few people from Georgia.

07-22-2004, 10:47 AM	#9
Radii Head Coach Join Date: Jul 2001	Duh, I didn't even look at the math when I made my suggestion, but it still stands. If you're a customer in good standing and they try to take advantage of you the first time you make a mistake, call them up, point out how good a customer you've been, and get your rate reduced to at least what it was, if not better(many companies will actually do this for you if you threaten to walk). If they won't do this close the card immediately and pay off the balance. They'll bend for you. If you've been late a ton before then you're probably screwed but you have the upper hand here, it's a small amount and you don't have to use their card.

07-22-2004, 11:46 AM	#10
tategter High School JV Join Date: Apr 2004 Location: Florida Swampland	My question is, what did she find at Macy's that was only $5? Every time my wife goes there we have to cash-out the equity in our home to pay the bill.

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