Max Levchin

Like the rate itself, if you revolve on a 36% APR card for three months, it's going to cost you pennies.

No, no, it's actually, it's not going to be very much at all.

That's the exact, see, this is the intuition.

You got to work on the intuition.

So if you take $1,000, borrow it, pay it off in a month and a half.

36% APR, giant APR.

What do you think it's going to be?

You're not paying $360 of interest.

You're going to pay like a few dollars of interest because the period is so short.

If you take a $1,000 loan for 10% APR and then revolve for the next 10 years, you're going to pay an enormous amount of interest because of this exponential compounding.

And so this is the thing that people have a fairly hard time estimating.

Intuitively, like high APR, more expensive.

It is only more expensive if you compare it on the same timelines.

The antidote to Americans abusing credit cards or being abused by credit cards more like it is just telling people, here's exactly how long you need to take to pay this back.

We institutionalize it by saying, we're not going to give you a choice.

You're not going to go six months, but maybe I want to take longer.

No, no, it's six months.

We're going to agree it's six months or 12 months or whatever, and then it won't change.

And the quid pro quo is we will never raise a penny.

If you're late by a little bit, if you need a break because you lost your job, had some sort of an emergency, we won't change the price at all.