PSA: Apple Card's Interest Rate is Rising as Fed Battles Inflation

[szw-mapple fan]

To fight the inflation, Apple could just increase the Apple Cash rewards incentives.

That's the opposite of what this is trying to accomplish. The Fed is trying to fight inflation, not the credit card companies.The credit card companies are just trying maintain the same profits as before despite the rate increase.

 

[BootsWalking]

Responsible people pay 0% and use token cash rewards to pay a bit toward cost or other bills. Use CC as cash or comply with interest free monthly payments for up to a year. That’s a sweet deal for me.

It's a sweat deal until you consider the 2-3% transaction fee merchants have to pay gets factored into the price of the product you're buying. At best you're getting your money back.

 

[szw-mapple fan]

I thought that once the card was established the APR was fixed. But now I look in the wallet app and see that the APR has indeed gone up. That's pretty shady.

APR can be fixed for a certain period of time as a sign up perk but they have always been flexible.

 

[smaffei]

Primary factor in the current global inflation crisis is excessive corporate profits.

Sure, it has nothing to do with an influx of free money paired with the ongoing scarcity of resources. You know, basic economics.

You realize inflation is bad for corporations too, right?

 

[jimmysalg]

...Kind of funny that this announcement came out the same day Apple Card raised my credit limit LOL. I know neither of those things are related just funny

 

[szw-mapple fan]

Actually the financial institutions do privately consider folks that pay off their balances in full every month dead beats.

Why?

Simple.

We are getting "free" use of the bank's money for perhaps 45 days depending on the billing cycle and when the charge was made to the credit card. Some affinity cards have annual fees that more than off set interest charges. A late payment still gets the clock running. It is really easy to get behind the power curve for repayments at 35% interest.

That's pretty much a myth. Your credit score doesn't improve if you carry a balance. You might be confusing a balance with revolving utilization.

If one carries a balance, the interest on that purchase made two minutes ago is earning interest for the bank as soon as the transaction hits their system. A delay of only a few seconds before the 20 to 35% actual interest starts accruing .

Not how it works. The credit card company only starts earning if you do not your balance in full at the end of the month. After that there will be 1/12 of the APR applied at the end of each month to your next statement on what you didn't pay from your previous statement.

 

[ScottishDuck]

Sure, it has nothing to do with an influx of free money paired with the ongoing scarcity of resources. You know, basic economics.

You realize inflation is bad for corporations too, right?

Inflation is only bad for an entity if their net income is growing slower than it. You know, basic economics.

There is also no scarcity of resource, there is a scarcity of supply which is a very different thing.

 

[SenorWhyMe]

no issue for me ; i buy what I can actually pay for

 

[smaffei]

Inflation is only bad for an entity if their net income is growing slower than it. You know, basic economics.

There is also no scarcity of resource, there is a scarcity of supply which is a very different thing.

Sorry, misspoke I meant supply.

 

[smaffei]

That's the opposite of what this is trying to accomplish. The Fed is trying to fight inflation, not the credit card companies.The credit card companies are just trying maintain the same profits as before despite the rate increase.

Actually, it's more of the Prime lending rate thing. When the Fed raises rates banks raise loan rates. A credit card (issued by a bank) balance is a loan you pay interest on. All non-fixed loan rates go up. And, also that's why the bottom is starting to fall out of the housing market. Higher mortgage rates have now priced many out of the market. So, housing supply will increase.

 

[BeefCake 15]

Call Apple and tell them to waive the interests. Many times they have honored me without a hassle. They have a limited amount of credits available that can be applied towards the balance.

Cool, didn't know they do that.

 

[applesith]

This credit score concept is really strange to me. Here in Belgium, they will look at your income to see if you can get a credit opening, or loan or whatever. and credit card interests are capped at around 11.5%.

having to pay > 20% is plain criminal

Credit card debt =/= Loan

You should go to a bank to get a loan; not charge it to your card. Income to debt ratio is part of the credit score. Credit score is a way to standardize someone's financial history that can be used across industries and institutions. Otherwise it is much more subjective which can be bad for both parties involved.

 

[Kar98]

Never finance purchases unless you have no other choice. If you do, aim to pay it off in 3 months, not 10 years.

Unless it’s 0% interest on the purchase; in which case, if you have the full amount, put it into something interest bearing and pay of the zero interest loan as scheduled.

 

[4743913]

Primary factor in the current global inflation crisis is excessive corporate profits.

posting this in an apple forum is made sweeter because you believe it.

 

[icwhatudidthere]

It's a sweat deal until you consider the 2-3% transaction fee merchants have to pay gets factored into the price of the product you're buying. At best you're getting your money back.

Better to get my money back than to not get it back. Short of an update to the whole system, unless you get that money back, you're paying higher prices by default.

On your original point, banks give free money to consumers all the time. I’ve got 2500 financed on my Apple Card at zero percent for 1-2 years. Amex keeps giving me free zero interest payment plans up to 20k for 2 years max.

 

[Gasu E.]

As is common with most credit cards, the Apple Card's interest rate on overdue balances is steadily rising as the Federal Reserve continues to raise its benchmark overnight interest rate in an attempt to slow inflation in the United States. As of July 1, the Apple Card's variable APRs now range from 12.49% to 23.49% based on creditworthiness, compared to 11.74% to 22.74% previously. This is in line with the Fed's 0.75 percentage point increase to its overnight rate in June.

Just for reference, the current Federal Reserve Fed Funds rate is 1.58%, which includes all the recent interest rate increases. Yet credit card rates are 12% to 23%. This isn't unique to Apple's card but demonstrates how twisted and corrupt the financial industry is in our country. Cheap money is handed out but only to banks and they in turn lend that out at 20%. Must be nice to be one of the chosen financial businesses who are virtually guaranteed by the Fed to make a profit.

These are unsecured, high risk loans. People with good credit have other sources and don't run up debt at these rates. People with bad credit are likely to default. Yes, the banks do make a solid profit; but given the default rate, it's nowhere near as high as you believe. If you can't get funds at a lower rate, and you don't like credit cards, by all means try the "free market"; a/k/a "loan sharks".

 

[Gasu E.]

I owe a little bit and pay the interest on it in order to increase my credit score. Whenever I pay in full, Apple and Credit Institutions think of me as a dead beat and it hurts my score. After I pay off what I owe though I’m just going to switch to my debit card for August.

Total misconception.

 

[_Spinn_]

This happened last time the Fed increased rates as well.

 

[CarAnalogy]

Um, that's how credit cards have always worked. It's in the card agreement you chose not to read. Nothing shady about it.

I did read it actually and none of my other credit cards do this. I specifically remember reading “variable up to 12.99%” which is why I agreed.

Not that it really matters, even for a good rate that’s still insanely high, not carrying a balance anyway.

 

[CarAnalogy]

APR can be fixed for a certain period of time as a sign up perk but they have always been flexible.

I’m sure Apple’s lawyers have a better argument but I know for a fact none of my (much older) credit cards do this, and I read the agreement as variable based upon credit rating, and not exceeding the agreed upon APR at signup. Not constantly variable over the life of the card, and even if it were it’s now above the maximum APR range they quoted.

I’m sure “terms and conditions are subject to change at any time and by continued use of the card you agree to accept them.”

 

[lartola]

Yes, those 'rewards' are crazy. Spend $100 and get 2% back? Hey, and you pay 100% of that cost first. What a con job...

No you don’t pay 100% of the cost first. As opposed to other credit cards, where cashback isn’t available until the end of the billing cycle, with Apple Card cashback becomes available immediately as soon as each transaction clears and it can be applied to the Apple card balance.

 

[Musocat]

If you really want to bump your score, pay your cards such that your statement shows a $0 balance on all but one, and on that one pay it so that your statement shows a balance under ten bucks (that's all it takes to show "usage").

 

[siddavis]

Sure, it has nothing to do with an influx of free money paired with the ongoing scarcity of resources. You know, basic economics.

You realize inflation is bad for corporations too, right?

Yup, the duck needs to check out the producer price index.

 

[thefourthpope]

This has been my philosophy with credit since the beginning. The only addition I have to it is to always maintain a bank balance equal to a month's expenditures, or if your bank offers it, prevent overdraft by pulling from a tied savings account.

Don't overspend just to have shiny toys or indulge yourself if it puts you in a financially bad position, people.

I love 30-day budgeting. It’s brought me such peace of mind, especially around our credit cards. We use Apple Pay wherever possible, and an American Airlines miles card everywhere else. But our budgeting process means we always know we have enough to cover the full balance.

If anyone is interested, the app/service You Need a Budget can be a help.

 

[thefourthpope]

I wouldn't consider it a con. If you pay your balance off every month (don't also pay interest), the cash back is 100% yours assuming the credit card doesn't have an annual fee. Yes, you have to buy something first but that is how discounts, coupons, rebates, cash back offers, etc. work. What is the "con job" here?

And it’s not like we wouldn’t be buying things if rewards cards didn’t exist. So why not use a service that can — when managed properly — offer benefits relative to cash?