Itamar Drexler

In this conversation with Itamar Drexler, a finance professor at the Wharton School, listeners dive into the surprising world of high credit card interest rates. Drexler explains how banks profit through swipe fees and marketing costs, revealing the stark differences between transactors and revolvers. He debunks the myth that default rates justify these high APRs and discusses the impact of rewards on consumer behavior. The discussion also touches upon the challenges faced by fintech and the implications of macroeconomic factors on credit card pricing.

Itamar Drexler, a Wharton finance professor and expert in consumer credit, dives into the complexities of credit card lending. He reveals how high interest rates stem from a mix of defaults, soaring marketing costs, and the market power of issuers. Interestingly, he points out that consumer rewards are largely paid for by retailers, not interest rates. Itamar also offers practical tips for securing lower rates, like exploring credit unions or personal loans to manage debt more effectively.