This Is Why Credit Card Interest Rates Are So High
Odd Lots
Bloomberg
4.4 • 1.6K Ratings
🗓️ 28 November 2025
⏱️ 49 minutes
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Summary
Some people pay off their credit cards at the end of each month. They use the cards as a payment method and collect points and rewards, and never have to pay any interest. For other users, interest can be sky high — way higher than what would be expected simply based on a user's credit or default risk. Why is this? And how do credit card companies get away with charging interest at these levels? On this episode, we speak with Itamar Drechsler, a finance professor at Wharton, who recently co-authored a piece titled Why Are Credit Card Rates so High? Drechsler walks us through the costs of running a credit card operation and explains what borrowers are really paying for.
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| 1:09.6 | Podcasts Radio News |
| 1:12.5 | Hello and welcome to another episode of the Odd Lots podcast. |
| 1:27.3 | I'm Jill Wisenthal. And I'm Tracy |
| 1:29.1 | Al-Away. Tracy, are you good about like frequent flyer miles and hotel rewards and cash back |
| 1:35.7 | and using your credit card to get like good seats at the U.S. Open, like all the, or dining? Are you good |
| 1:41.2 | about maximizing that stuff? Nope. I am not. I'm trying to be better. |
| 1:46.2 | You know, I'm finally signing up to a bunch of frequent flyer programs and things like that. |
| 1:50.6 | But in general, I am not a point strategy. Some people get really into it. I know. I do not. I have a |
| 1:57.3 | very busy life. I do not have mental energy towards, you know, maximizing points |
| 2:03.7 | or learning about the newest cards. Like, oh, is this card worth a $400 fee because I can get |
... |
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