Why are credit card rates so high?

Personal responsibility vs. structural drivers of credit use

• Some argue credit cards would be unnecessary if people had financial discipline, emergency savings, and delayed gratification.
• Others counter that people often need essentials (e.g., healthcare) they can’t afford, so credit fills a survival gap, especially with stagnant wages and high costs.
• Several note that even in countries with little credit-card culture, people still take out small, often unnecessary loans, so debt isn’t only about discipline.

Why credit dominates over debit/cash

• Many users never carry a balance and treat cards as a payments tool: convenience, recurring billing, itemized statements, no need to carry cash.
• Rewards and cashback are a major draw; some optimize card choice per purchase and treat it as “free money” if they always pay in full.
• Building a credit score is another strong motive, especially in the US.
• Some highlight the time value of money: an interest‑free float of 30–45 days that can sit in interest‑bearing accounts or investments.

Fraud and consumer protection

• Widespread belief: credit cards have much better fraud and chargeback protection than debit.
• Others note that US law and network “zero liability” policies give debit similar formal protections, but:
  • With debit, stolen funds leave your account until the dispute is resolved.
  • With credit, it’s the bank’s money at risk; your cash balance isn’t disrupted.
• In Europe, some say debit protections and usage are more robust, reducing reliance on credit.

Rewards, cross-subsidies, and ethics

• Strong consensus that merchants bake interchange fees into prices, so all consumers fund rewards.
• Debate over who ultimately subsidizes whom:
  • One view: high‑interest revolvers cross‑subsidize transactors and marketing.
  • Another, aligning with the article: interchange alone covers rewards; high interest is driven more by operating costs and undiversifiable default risk.
• Some users feel uneasy benefiting from rewards that are ultimately funded by higher prices and others’ misfortune.

Merchant economics and system critique

• Merchants often add ~3%+ to prices to cover card fees; cash is not free either (theft, handling, counterfeit).
• US interchange is seen as unusually high versus EU caps; credit networks are described as entrenched “scammy middlemen.”
• Pay‑by‑bank and instant payments (FedNow, etc.) are cited as emerging lower‑cost alternatives, but adoption is slow.

Why rates are so high (per article and comments)

• Commenters highlight the article’s finding:
  • High card APRs are not mostly about charge‑offs or rewards.
  • Major drivers are high operating/marketing expenses and the fact that card lenders can’t easily diversify away from systemic downturn risk.
• Others add a simpler explanation: issuers charge what the market will bear because borrowers have few alternatives.