Posted on 04/08/2025 2:02:24 AM PDT by Libloather
“No, in a perfect world I’d get 3% real interest from parking my idle ca$h at the Bank.”
Absolutely, that is how it once was. Back when we were actually a prosperous nation.
The whole interest structure standards. Interest compounded daily is a huge blow to our national welfare and prosperity. No one should have to pay interest on interest and end up paying two or three times what the initial loan was for. It should be like buying land from the seller. The principle loan plus a flat interest total.
For me, that’s what I experienced as a 3rd grader in the later 50s.
We had a monthly?/biweekly? banking exercise with our kid accounts at the Erie County Savings Bank in the classroom.
[https://en.wikipedia.org/wiki/Erie_County_Savings_Bank]
The 50s had issues, but in general, as a kid, it was GREAT!
tHERE IS NOTHING WRONG WITH DAILY COMPOUNDING.
Sorry for cap reversal.
That is pretty cool history... :)
Oh yes there is... Do the math. It is a scam. We are paying interest on interest. A lot of folks have no clue this is what they are actually paying so the banks are getting away with it.
Yep, don’t pay the interest and the interest owed is added to the principle [rather than being thrown in debtors’ prison].
Quite simple. It’s just math. Many ways to calculate Interest.
Daze v. Months v. Years is all in the Fine Print.
YMMV
Take a course in Finance.
Compound interest usually applies just to loans that are open-ended or short-term, like credit cards or lines of credit, where the lender doesn’t know when you’ll pay it off. If you carry a balance, the unpaid interest gets added to your total, and then interest is charged on that new, higher amount—that’s compounding.
But here’s the thing: lenders compete with each other, just like grocery stores. If one charges too much, borrowers go somewhere else. That competition keeps rates in check. No one’s forcing anyone to borrow—if you don’t like the rate or how interest works, you can shop around or just not borrow at all.
In the end, borrowing is a choice, and the terms reflect the risk and flexibility that come with it.
The world has been a bunch of free loaders dumping their goods in our market. It’s time to make American companies competitive. I can wait out the bear market. Tariffs are an essential ingredient of MAGA. Go Trump!
Banking is a highly competitive industry. If a bank charges too much, customers will go elsewhere. Other banks will undercut them to win the business. Interest rates aren’t arbitrary—they reflect competition, risk, and market forces. If banks were truly gouging people, new lenders would step in with better deals.
That said, credit cards are the biggest source of compounding debt. Their rates are high because the risk of default is high—and compounding interest can stack up fast. The key with credit cards is to use them sparingly and pay them off quickly.
Most people like having a credit card for emergencies. But if you don’t like the rates or how interest is charged, don’t use it—that’s your choice as a borrower.
BTW, I used my credit card a few years ago to buy a high-end bicycle I found while traveling. It was on sale for about half price, so I jumped on it. I didn’t want to drain my checking account all at once, so I paid it off over two months.
I think I paid around $50 in interest, but I saved about $1,000 on the bike. In that case, the interest was a small price to pay for the opportunity—it was worth it.
I still have the bike.;-)
Cash back options, some as much as 4%, can reduce your overall expenses. I use an airline rewards card because I enjoy the travel points.
Credit cards are also convenient, so I don't have to keep a large balance in my checking account. Each month, I move money out of a savings account to pay my balance in full. I pay no interest, earn rewards points, and might earn a little extra interest in my savings account.
Agree
Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!
President Trump
“I still have the bike.;-)”
NEVER buy “durable” stuff you won’t want to keep for its usable life.
Saves no shortage of buck$ to invest for your future.
” Each month, I move money out of a savings account to pay my balance in full. I pay no interest, earn rewards points, and might earn a little extra interest in my savings account.”
Are you trying to bankrupt the Banks?
Example: My daily driver is a 1997 Nissan pick-up. It's in perfect shape.
As for the credit card companies, they receive about 3-5% from the vendor on each purchase, so they're doing pretty good without the interest charges.
There, fixed it.
That's odd. My driver is a TaylorMade Stealth 2, but whatever allows you to get home in two is fine by me.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.