Confused by my APR? Anyone else had this?

All about Discover & Diners Club - talk about their credit card deals such as the More, Miles, Escape, and others.
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hjordan836
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Confused by my APR? Anyone else had this?

Postby hjordan836 » Thu Nov 13, 2014 2:08 am

Hi all.

First time post here. Long story short is this: My wife and I had some challenges years back and have been rebuilding our credit. We have a plan and so far its working great. We have staged out our credit apps and be careful about unwanted inquiries.

I recently applied for Discover It and was approved for a CL of $6500. I was feeling good. However the interest rate is a questionable 22.99% after the 14 month 0% intro period. I was expecting in the 13-15% range.

To put this in some persceptive, here are some of the approvals prior to Discover:
American Express TrueEarning @ 15.24% with a 7k CL
Platinum Visa with our Credit Union @ 8.99% with a 10k CL
Refi'd our car @ 2.24%

Our total credit card debt is less then 1k.

So things were / are moving in a good direction. When we last had credit pulled my score was roughly 780. The Discover app shows my Equifax as 769.

I am just a little confused by the APR of 22.99%. Anyone else had a similar issue with Discover? I called and asked about the rate. They said that they can not look into adjusting the APR until the 14 month 0% is over, because "you can't go lower than a 0% rate".

Any thoughts? Also another question, do credit cards report APR's to the bureaus or is it mostly CL and current balance/late etc? With no plans to carry a balance, am I getting worked up for no reason?

Thanks all.

Hal


notcool
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Postby notcool » Thu Nov 13, 2014 12:00 pm

The APR is higher than your other cards. However, if you use the card and then in month 15 call and ask for an APR reduction, you may well get it.

My discover started with an APR in the 20s. It took about two years, but I eventually got it down to 10.24% by calling every 6 or 7 months.

Alternately, if the APR is just too high for your taste and you don't want the hassle of calling and asking for a lower one: you can apply for another issuers card and cancel discover.

Luckily, you aren't carrying a balance. So at some level, the APR really doesn't matter (at least in terms of financial cost).

One way around the high APR problem is: if there ever is a month you think you might carry a balance, be sure to do it on your credit union card.

Discover won't report the APR to credit bureaus, so no need to worry that this will hurt your credit.

hjordan836
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Postby hjordan836 » Thu Nov 13, 2014 12:08 pm

notcool wrote:Discover won't report the APR to credit bureaus, so no need to worry that this will hurt your credit.


This is good news. I suppose since I am not going to be carrying a balance then no big deal. I do not mind calling to ask for an APR reduction. Thanks!

takeshi
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Postby takeshi » Thu Nov 13, 2014 1:27 pm

Mentioned this on myFICO but other creditors giving you lower APR's doesn't mean that another creditor will give you the same APR. It's also not just about scores and your credit has certainly changed from when you applied to those creditors versus when you applied to Discover. The credit union data point really doesn't offer much perspective either as credit unions can have more lax critiera, offer better limits and offer lower APR's. To give you another data point my PenFed card is 9.99% and my Discover card is 17.99% IIRC.

hjordan836 wrote:Also another question, do credit cards report APR's to the bureaus

No. Definitely pull your reports on a routine basis. You can see for yourself on your reports.

hjordan836 wrote:With no plans to carry a balance, am I getting worked up for no reason?

Yup. That said, if you want a lower APR you can request it later on.

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Xorand
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Postby Xorand » Thu Nov 13, 2014 2:50 pm

Out of curiousity, I looked up the APRs on all my cards (except the Amex Platinum, which is a charge card). The APRs generally get lower as the cards get newer (and my credit score increased), except for the latest card, the Chase Sapphire Preferred:

Cap One QS (2003) 22.90
Cap One Plat (2011) 19.80
Amex BCP (3/13) 17.99
Amex Delta (2/14) 15.24
Chase Freedom (3/14) (Not sure, still in 0% introductory APR)
Chase Disney (4/14) 14.24
Chase Amazon (9/14) 14.24
Chase CSP (11/14) 15.99

Like the OP, I don't every carry balances so I've never paid much attention to the APRs.

Also, Credit Unions typically offer lower APRs on their cards, though typically little to no rewards.
AmEx - Platinum (NPSL) , Blue Cash Preferred ($19,000), Gold Delta Skymiles ($8,500)
Chase - Sapphire Preferred ($14,000), Disney ($11,500), Amazon.com ($9,000), Freedom ($8,000)
CapOne - QuickSilver ($7,250) / Platinum Rewards ($7,250)

popamode72
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Postby popamode72 » Thu Nov 13, 2014 3:12 pm

My lowest APR to date has been with my Amex ED at 12.99% after the promo period. Besides the 24.99% on my Barclay card that I got around two months ago, the aprs on my newer bank cards have been lower than what I started out with on my first card. Chase gave me 15-16% APR, Boa around 16.99% after the promo period ends. Amex Gold delta is around 19.24%, citi is now around the same rate too, Capone is at 19.99 and Discover is like 18.99 though in going from the top of my head.
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)

whit
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Postby whit » Thu Nov 13, 2014 8:51 pm

It's not just dependent on your score but the issuer as well

Chase sapphire preferred apr is a fixed apr + the prime so everyone that gets approved for this card, gets the same apr, regardless

With discover IT, maybe you opened one that has a higher range of apr, and they placed you at that based on credit reports pulled at the time you open it

And the Amex, the particular card you applied for, again, has a range of apr that maybe the highest it charges, is still lower than the one discover placed you in their range!

I hope this makes sense

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CarefulBuilder14
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Postby CarefulBuilder14 » Thu Nov 13, 2014 9:43 pm

Discover has a reputation for having unusual - though not necessarily financially irrational - criteria for credit card limits and APRs. Most issuers give limits and APRs according to a customer's income and a good credit history.

The best understanding I have is that Discover likes to show special treatment not to their customers with spectacular credit, but to their most profitable customers - people who use the card regularly and/or carry a balance. They may think you are just going to use the card to earn 5% cash back and pay the bill in full and on time each month. That makes you an unprofitable customer for them. If you don't pay your bill on time, they figure it's probably a rare event and they will charge you what interest they can. So why give you special treatment?

Compare your situation to someone in an earlier stage of rebuilding, who needs to transfer a balance, and doesn't have a good card for everyday use. That customer will give them a lot of business from spending outside of the 5% categories, and also they can earn some interest or fee income from the balance transferred in. That's where they make their profit, so if they think someone is a good credit risk, then that person may get a low APR and big limit so he or she will be encouraged to spend a lot, transfer in a balance, or carry a balance - making Discover a lot more money.

They wouldn't stay in business very long if they were only making ~2.5% of transaction volumes in revenues and paying out 5% in rewards. Making 2.5% of each transaction, paying out 1.5% in rewards, and making 15% interest on a moderate balance is a lot more profitable.

Discover makes much more money from interest than they do from swipes. They are the opposite of Amex.

I'm happy doing business with both companies.
Very useful: SchwabPlat, CSP, IHG, Costco (was AA Plat), Freedom, SPG, Prestige (retention)
Somewhat useful: Discover, ED (was EDP), BCE, Hyatt
SD with activity alerts, might close: Arrival

Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech, BofA Travel PH, Aviator Red

hjordan836
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Postby hjordan836 » Fri Nov 14, 2014 2:06 am

CarefulBuilder14 wrote:Discover has a reputation for having unusual - though not necessarily financially irrational - criteria for credit card limits and APRs. Most issuers give limits and APRs according to a customer's income and a good credit history.


This was great. I had not thought about it from Discovers POV. Thanks again for a different perspective.

VictorSuede
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Postby VictorSuede » Sun Nov 23, 2014 7:12 pm

I wanted to pass along a bit of advice re: asking for rate reduction. I've had my card for much more than 14 months, and decided to go for it after reading this thread.

I called up Discover Customer Service and got a really nice rep on the phone who was happy to help me out, and within less than a minute I had a 1.75 percent rate reduction. So, awesome!

But, not so fast. You'll want to wait a few days to make sure it sticks. About 18 hours later (my original request was on a Thursday), I got a message through the Discover website's secure messaging center that due to certain factors (utilization, AoA), they were unable to let me keep the rate reduction, and they set me back where I started. This was after I'd already gotten a "congratulations on your rate reduction" message.

Annoying, but understandable, I suppose. I'm especially not going to complain given how generous they've been with auto CLIs. Though, I do wish they had just denied me flat out instead of giving me the reduction and taking it away. Tiny, sad violins were playing when I read the message. :P

So you'll want to give it a little while to make sure it sticks. Also keep in mind that if you do get a lower rate, it'll only apply towards purchases made after the rate reduction.
Victor Suede

My Cards
  • Discover IT (1% Everything; 5% Rotating): $15.7k (Credit Limit Increase: 3/15)
  • American Express Premier Rewards Gold (1 Point per Dollar Everything; 3 Points per Dollar Travel; 2 Points per Dollar Gas and Groceries): NPSL (7/13; Credit Limit Adjustment 8/14)
  • Chase Slate: $500 (4/14)
  • Barclaycard MasterCard (1 Point per Dollar Everything; 2 Points per Dollar Gas, Groceries, Utilities): $2.9k (8/14; Credit Limit Increase 4/15)
  • Citi Simplicity MasterCard: $1.5k (4/15)

Total CL: $20.6k



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