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Daily Traders Edge

The First Rule of Personal Finance

December 29
15:47 2017

Interest rates on almost everything have fallen since the onset of the financial crisis — long-term bonds, short-term bonds, fed funds, mortgages, car loans — pretty much anything with an interest rate attached to it.

Well, everything except credit cards. The average credit card APR rose to it’s highest average ever in 2017 at around 16%.

In some ways this makes sense. It’s an unsecured line of credit given out to borrowers with very little due diligence performed on their creditworthiness. But it’s also kind of crazy that as interest rates in nearly everything else have fallen, credit card rates haven’t budged at all.

There are obvious risks involved for the companies giving these types of credit lines to people but there are also huge rewards. Visa has made nearly $14 billion over the past year. Mastercard has seen sales of almost $10 billion.

And what’s good for these companies is bad for the personal finances of anyone carrying a credit card balance. According to a recent study from Nerd Wallet, that’s a lot of people.

Continue Reading at A Wealth of Common Sense

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