Forum Post: Interesting Interest Rates
Posted 12 years ago on Oct. 30, 2011, 4:47 p.m. EST by TAXBILL
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The PRIME Rate = 0.25% The Mortgage Rate = 4% The Auto Loan Rate = 12% The Credit Card Rate = 29% WHY
Credit Card rates are based on your credit rating. If you have negative marks on your credit rating, you become a risk to extend credit to, so credit card rates are higher. Auto loans work the same way. The others I'd have to ask someone who knows more about that.
Possible Answer: Think of it like a pyramid scheme. The top creates the money and gives it to a select few at a low rate. They are then able to do the same to their audience, and so on. The distribution model of the money ends up looking like a pyramid.