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Comment by ocdtrekkie | Hacker News Reader

Most interesting claim is that there are no late fees. If you don't pay it on time, I presume they're going to stop letting you continue making charges to the card until you do? But that it never gets you locked into the debt cycle of so many other cards?

If true, this is the true real innovation.

Or is there interest, but just no fee for not making your payment on time?

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There is interest, so you'd still be locked in the cycle. Just a little better off because they don't charge you $30-50 for paying late.

But it appears they are much more forward on telling you how much interest you will be paying if you don't pay off the card.

Not sure how this fits in, but she did mention there's no higher interest penalty for late payments.

AT least in the video, they do charge you late fee. If you pay balance in full, there's no fee. But if you don't, then the minimum interest they charge is around $20.

From their website: Variable APRs range from 13.24% to 24.24% based on creditworthiness. Rates as of March 2019

So a doubling time of about 5 to 3 years, for those who don't understand compound interest (which is most humans, hence credit cards being insanely profitable).

wow, is 13.24% considered good?

For a credit card, yes. That's lower than any of the cards listed on NerdWallet's "Low Interest Credit Cards" page.

They showed interest calculation while deciding how much to pay, so there's definitely interest. But not penalty rates or late fees.

There is definitely penalty fee for not paying balance in full. In the video, the fee appeared to be around $20.

I guess this means there's no minimum monthly payment?

E.g. generally a credit card will have a minimum of, say, $29/mo., if you have a balance of maybe $500... if you have a balance of $10K the minimum might go up to $129 or something. And if you don't pay the minimum, you're hit with the late fee.

I never really understood the purpose of minimum monthly payment, except maybe it's useful in proving you're not a complete deadbeat, and also probably not dead? Getting rid of it does seem like a consumer-friendly innovation maybe?

In the US at least, banks are strongly encouraged (by law) to have a minimum fee that prevents the borrower from increasing the principal owed through cumulative interest (negative amortization). If the minimum payment might do this, the bank is required to disclose it to the borrower.

Basically it means that borrowers should at least be paying off the interest incurred on the principal owed at the beginning of the billing period.

Charges interest but no late fees.

FWIW late fees are a big revenue source for existing card issuers.

I wonder if they ran the numbers and found out that a) late fees really wouldn't be a big deal and b) it's a disruptive move against standard issuers?

How is that an innovation? You're describing Charge Cards

Charge cards are not what's being described here. If you have an Amex "charge card" (not one of their credit cards) you do have to pay late fees if you miss a payment.

Charge cards generally force you to pay them off each month (again, an Amex charge card expects you to clear out the balance for each cycle). This is a credit card, which means you can carry a balance.

I've... actually never heard of these. Why isn't this more popular?

Once debit cards came out charge cards lost a lot of their appeal. Charge cards also tend to have a higher yearly fee (an Amex Platinum is $550 a year) because they aren't making money off of interest (although it should be noted they are making money off of the merchants who accept them).

Not allowing you to carry a balance makes the card less flexible, since it takes away the ability to use the card to finance items you can't afford to pay in full right now.

At least in the US, charge cards also (historically) charged higher fees to retailers, so a lot of stores wouldn't accept them.

> [...] ability to use the card to finance items you can't afford to pay in full right now.

Given the rates charged by many cards, I'm not sure you'd want to do that. The US has an average of 15%:

* https://www.creditkarma.com/credit-cards/i/average-apr-on-cr... * https://www.valuepenguin.com/average-credit-card-interest-ra...

So much this. I've never carried a balance on a card that charges interest. but I would be more open to the idea if they charged interest more inline with market loan rates. 15-35% is insane.

35% seems pretty high, but I think you'd find that, far from being insane, the bottom portion of that range is right in line with what's typical for unsecured debt.

You can't really compare it to mortgages or car loans, because those are both secured by a collateral. You can't really compare it to student loans because it's impossible to get out from under a student loan. Either way, the debt is less risky for the lender, so they're willing to offer it for a lower rate.

I've done it before.

Never for truly big ticket items, but sometimes the $5 or whatever in interest to carry a small balance for a month isn't worth the extra effort it would take to free up the cash I'd need to pay it off in full without dipping below the minimum balance I like to keep in my checking account, and it's also not worth $5 to me to wait another month before replacing that busted transmission.

> I've done it before.

It depends on the matter of scale. Some folks either don't understand how things work, or are just bad at math. That's where the problems start for people.

American Express offers both credit cards and charge cards. The "black card" might be the most well known of all cards and its only real limit is AMEX's judgement of your ability to repay the charges.

The same applies to the Platinum Card- it defaults to being a charge card but they offer people a built in credit card as well. The interest rate on it is insane though, so even though I have it as an option I've literally never used it as a credit card.

Marketing? I suspect that charge cards are more likely to charge an annual fee, since there's not interest income from carrying a balance.

Your iMessages stop working and your iPhone shuts off randomly a few times a day

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