John McCain's Credit Card Problems

Is John McCain paying 26% interest on his credit card? Dan Ray seems to think so:

McCain reported he [and his wife were] paying 25.99 percent on their joint credit card, on which they owed somewhere between $10,001 and $15,000. That's at least 10 percentage points above the average credit card rates at the end of 2007.

I got crack Portfolio.com investigator Christine Lenzo on the case; she called up the McCain campaign to find out the truth of the matter. And in fact it's not only possible but probable that McCain is paying no interest on his credit cards at all.

So long as McCain pays off the balance in full every month - something he can certainly afford to do - no interest is charged. The 25.99% rate is merely what he would be charged if he were running a balance; the $10,000-$15,000 range is the largest amount of money owed on the credit card during the time period covered by the disclosure form. In other words, so long as he racked up that bill in the course of one month, and then paid it all off the following month, no interest would be charged.

This explains why the much larger balances on McCain's American Express cards carry a 0% interest rate: it's because they're charge cards, which have to be paid off in full each month. It's not because Amex is being particularly nice to the McCains.

So what do we learn from the disclosure form? For one thing, that the McCains seem to be spending hundreds of thousands of dollars on their credit cards every month, and then paying that sum off in full. And we also learn that McCain might not have been entirely on top of things at all times.

As Ray notes, of the 25.99% rate:

That's not the kind of interest rate that someone with good credit gets; it's usually the rate of someone who has defaulted on credit card payments.

I'm sure the default was one of forgetfulness or error rather than one of inability to pay. And probably the total amount of interest charged by Chase was small enough that McCain didn't feel it worthwhile calling to get the rate reduced. Besides, how does a Senator make such a call while avoiding getting special treatment? Better just to never make the call at all.

Still, it's probably comforting to know that even VIP millionaires have credit-card problems.

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