<figure><img src="https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iIAnp5oKCzgw/v7/-1x-1.png"><figcaption><div></div><div>Bloomberg.</div></figcaption></figure><p>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 &#x2014; way higher than what would be expected simply based on a user&#x2019;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 &#x2018;Why Are Credit Card Rates so High?&#x2019; Drechsler walks us through the costs of running a credit card operation and explains what borrowers are really paying for.</p>

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 Dreschsler, 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.

Odd Lots: This Is Why Credit Card Interest Rates Are so High

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