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Posted by Concepts (66.36.249.149) on January 16, 2004 at 15:22:49:

In Reply to: Embarassed posted by birdland on January 15, 2004 at 22:48:52:

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“Interest rates quoted by lenders usually include much more than "pure" interest. To persuade a lender to surrender current control of resources, the borrower will have to pay, in addition to interest, an amount that compensates the lender for any costs incurred in arranging the transaction, usually including some kind of insurance premium against the risk of default by the borrower. Someone without an established credit rating who applies for an unsecured loan will typically be required to pay "interest" at an annual rate that is several times the prevailing rate of pure interest. “
http://www.econlib.org/library/Enc/Interest.html
Current Prime Rate 4%
Current Average CC Interest Rate 14.71% http://www.cardweb.com/cardlearn/faqs/2002/sep/25.xcml
There’s quite a bit of “default premium” there. I don’t think anyone should feel bad for using insurance they’ve already paid for.

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