Brief version: Its sounds like the benefits of "simple interest" are being inflated and being used as a marketing tool. The monetary difference between simple and compound interest are minuscule if the interest is paid off every month - which this service insists on. If you pay off 100% of your compound interest every month, you can only save a few cents per month by signing up with this simple interest. If you can't pay off 100% of your interest every month (the only scenario where simple is substantially better than compound), this service is not available to you.

This looks like marketing a very marginally better product (if at all), with excessive pomp. This is no revolution... its much more like well disguised misleading stuff from financial institutions that we are so much used to.

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[ edited to clarify some points ]

Karthik,

Since you insist on the complete interest being paid at the end of each month, the grand idea of "simple interest" has very little meaning. Hear me out here...

The whole idea of compound interest is to charge interest on the unpaid interest. You are "solving" the compound interest problem by not compounding interest for a month and forcing people to not have unpaid interest at the end of the month. However, the benefits amount to very little. If people are capable of paying off their interest at the end of each month, there is little difference between simple and compound interest.

I find your explanation on simple interest (https://www.simplycreditinc.com/simpleinterest) a bit misleading and self serving.

The difference between simple and compound interest (as stated in your essay) arises only in the long run, and your service does not allow long runs of unpaid interest... which means there can only be very little difference. Its misleading to compare long runs (> 30 days) if you don't allow them. The large savings from simple interest only apply to people who cannot pay the interest for 4 years. But you will kick them out after 2 months of non-payment.

Also, if a person is capable of paying the interest every month, they don't gain anything by signing up with your service... maybe a few cents on 5000$ every month, but that's it. Nothing more.

The positives I really see...

  1. Convenience of not worrying about paying different credit cards.
  2. Possibly lower interest rate... but I have seen no solid numbers on that on the website.
  3. By forcing people to pay off the interest every month, you might make them more financially responsible.
  4. I would like to see banking evolve, and this might be a ray of some hope... but I need to see more.

Also, it will be useful to give us some ballpark figures on the APR... I would like to see a table of some figures before I take the pains of giving out further details.