Credit and Debit

• In 2012, the average credit card interest rate is 17%—some folks have lower rates, others have higher.

• People with really good credit scores, a nice long solid history of paying their bills on time, and who aren’t overloaded with debt (money you’ve borrowed that you’re going to have to pay back) can get the lowest rates—perhaps 12-14%.

• 20-25% is the rate given for high-risk borrowers. High risk means the bank doesn’t really trust your promise to pay so they charge a lot to borrow the money in case you default (don’t make your payments on a loan, break the terms of a loan). And thinking about things from the bank’s perspective, if you’ve had a bankruptcy in your life and then subsequently somehow you got a car dealer to loan you money to lease a Beemer and now you owe dough in arrears (behind on payments), you’re a screaming red light of financial danger. If YOU were the bank, would YOU loan YOU yet MORE money? Probably not. So the 25% figure accounts for the very high likelihood that money they loan you won’t fully be paid back and that they’ll have to spend thousands on lawyers and Repo Men trying to track you down and take the money out of your hide…

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