Tina Fey has been in a bunch of American Express commercials recently. Not that I’m a big fan of hers, but it makes her look slimy. Anyway, I usually try to avoid looking at commercials of any kind, but I noticed some text flash across the screen, and I wondered what it was. I couldn’t pause the commercial, so instead I looked up a different one on YouTube.
It’s interesting that the text is required to flash briefly during the commercial but isn’t in the description. It’s like this fake, symbolic disclosure. The text reads
APR on Purchases variable 13.24-23.24% Cash advance APR variable 25.49%. Penalty APR variable 29.49% Call 1-800-843-2273 for details about credit costs and terms.
I’m a little tempted to call them to ask them about complex credit scenarios… somehow I’ll stop myself. Well, off the bat, I think it’s interesting they use the word “variable” in there, but it’s not really clear what it means. I mean, the first sentence seems to indicate a range, so the purchase APR will vary on a range. But then later they mention a penalty APR, so it’s clear that it’s possible for a purchase to exceed the original range. But the second two times ‘variable’ is mentioned, they don’t give any limits. So then what’s the point of mentioning any numbers in the first place? What is being disclosed, exactly?
Setting aside the actual terms of the card, what do the stated number mean? Only about half of credit card users pay off their bill every month and avoid interest. The other half are the “revolvers.”
This commercial equates borrowing money at a high interest rate to being a billionaire. lol
Ok, back to the terms. 23.24% interest, eh? I wonder if they use so many digits in order to increase the cognitive load on the person trying to analyze the deal.
Let’s say you max out a $5k card and then make minimum monthly payments. Cost of credit is then $18k. But that’s assuming you cut up the card and don’t just keep charging more things. Most people charge more thins, so the real cost of credit is even higher once you get a high balance. The annual cost on $5000 would be $1174. So you’re just bleeding that out every year that you hold the high balance on the card.
Another way of looking at it is that you’re paying at least 23.49 too much for shrimp. Be a billionaire! Pay too much for shrimp! Tina Fey!