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lollersauce914 t1_j46sq1p wrote

I mean, card interest rates should loosely track balances. If more people are holding a balance that means the issuer needs higher rates to maintain the same revenue. Obviously the latest increase has much more to do with interest rate increases, but the fact that these two are tightly intertwined is very unsurprising.

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pkgary t1_j46uijc wrote

Im confused, why is this the case? I would assume that the card balances being higher means they can charge less interest for the same revenue. Is it not the card balances that are being charged interest?

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lollersauce914 t1_j46un9u wrote

Card balances means that the issuer is paying merchants but not getting paid back by the card holder. It also implies a higher risk of default. You don't make money on interest until you start getting paid back.

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pkgary t1_j46voxg wrote

Ah, that makes sense, thanks!

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