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.

Read more:
US Consumer Confidence Falls by Most Since April on Economy
Gambling, Prediction Markets Create New Credit Risks, BofA Warns

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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 &mdash; 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 <a href="https://libertystreeteconomics.newyorkfed.org/2025/03/why-are-credit-card-rates-so-high/" data-prosemirror-content-type="mark" data-prosemirror-mark-name="link">Why Are Credit Card Rates so High?</a> Drechsler walks us through the costs of running a credit card operation and explains what borrowers are really paying for.
Read more: <a href="https://www.bloomberg.com/news/articles/2025-11-25/us-consumer-confidence-falls-by-most-since-april-on-outlook?utm_medium=referral&amp;utm_source=podcast&amp;utm_campaign=odd_lots&amp;utm_content=article" data-prosemirror-content-type="mark" data-prosemirror-mark-name="link">US Consumer Confidence Falls by Most Since April on Economy</a> <a href="https://www.bloomberg.com/news/articles/2025-11-25/bank-of-america-warns-of-mounting-credit-risks-as-gambling-booms?utm_medium=referral&amp;utm_source=podcast&amp;utm_campaign=odd_lots&amp;utm_content=article" data-prosemirror-content-type="mark" data-prosemirror-mark-name="link">Gambling, Prediction Markets Create New Credit Risks, BofA Warns</a>
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Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets and economics. Join the conversation every Monday and Thursday.

Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets and economics. Join the conversation every Monday and Thursday.

Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Tuesday and Thursday for interviews with the most interesting minds in finance, economics and markets.

Odd Lots

On Bloomberg’s Odd Lots podcast Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday. 

On Bloomberg’s Odd Lots podcast Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday.

This Is Why Credit Card Interest Rates Are So High

https://api.omny.fm/orgs/e73c998e-6e60-432f-8610-ae210140c5b1/clips/cfb8b790-251c-4ad3-98d9-b3a101317e0e/transcript

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