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Debit cards are hidden financial infrastructure

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Re: Debit cards are hidden financial infrastructure

#121

Post by pc86 »

toomuchtodo wrote: post #106
dustintrex wrote: post #64

Earlier quoted context omitted.

It's also another illustration of how backwards US payments infra is. In the EU, SEPA instant payments are just that: by law it can take a maximum of 10 seconds for the recipient to get paid, including across countries. And, of course, they're free. https://en.wikipedia.org/wiki/Single_Euro_Payments_Area

The US Federal Reserve is building an instant payment system (FedNow) that goes live in 2023 [1] [2]. Payment providers are moving upmarket and to features that stave off churn (my analysis here) due to expected revenue destruction caused by a free alternative being available (a US version of SEPA). This is alluded to in the second half of this blog post. If payment revenue (interchange and the like) declines, and ne…

What do you think is most likely to "give" in this scenario?

Re: Debit cards are hidden financial infrastructure

#122

Post by rp1 »

eyelidlessness wrote: post #101
rp1 wrote: post #78

Earlier quoted context omitted.

What do you mean by secured credit cards can be recommended is any discriminatory way? I definitely think the nation should prioritize financial literacy in the education system, but I'm not sure you should be trusting any information you get from a bank regarding what to do with your money.

What I mean is that for customers, secured credit cards and debit cards have roughly the same risk, but banks have obligations to offer checking accounts fairly but offering the equivalent credit-building account is up to their own discretion. It’s considered lending even though they’re lending the customer their own money.

Do you feel that the "discretion" violates the equal credit opportunity act? Technically, credit discrimination is illegal, but I could see a bank taking liberties with people who don't have the means to protect themselves.

Re: Debit cards are hidden financial infrastructure

#123

Post by [deleted] »

raegis wrote: post #75
Spooky23 wrote: post #57

Earlier quoted context omitted.

No, that’s not how it works.

It's a little complicated. My credit score has been consistently higher than my wife's score, and but she has never carried a credit card balance in her life. You get high credit score marks for making banks money, but not borrowing so much that they get nervous.

[deleted]

Re: Debit cards are hidden financial infrastructure

#124

Post by EdwardDiego »

mherdeg wrote: post #56
numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

It's not just overdraft fees right? It's overdraft fees plus transaction reordering which makes the magic happen. I'm still kind of mesmerized on this one, it felt like regulatory action almost happened, the most lucrative of the overdraft practices got limited circa 2009/2010, and then banks voluntarily toned it down and the regulators mostly looked the other way on things like reordering?

Sounds like one of those "Look! We came up with a voluntary code of conduct, so your regulatory body can stop investigating necessary regulations, we've changed honest, so please feel free to have a triumphant press conference and congratulate yourselves without actually holding us to account."

Re: Debit cards are hidden financial infrastructure

#125

Post by starwind »

smabie wrote: post #80
p2t2p wrote: post #48

Earlier quoted context omitted.

Australian here. Don’t use credit card, setup a separate account for bills, direct debit everything from there, don’t keep anything big on your debit card and use it with Apple Pay everywhere. No fraud, no fees, no complex things and rules to remember.

Why would you ever not want to put something on a cc? It's quite literally free money (rewards/points + you can delay payments for a month and pay no interest)

I can't speak for Australia specifically, but most EU countries sharply cap the interchange fees that credit card companies can charge so they don't really have rewards to speak of

Re: Debit cards are hidden financial infrastructure

#126

Post by starwind »

mb7733 wrote: post #51
reaperducer wrote: post #38

Earlier quoted context omitted.

Are there American banks that don't cover debit transactions with the same guarantees as credit card transactions? I've had two debit cards from two different large banks skimmed in the last five years, and both times the banks took care of it instantly. I think the whole "no coverage if you use debit" notion is many years out of date.

Even if things are taken care of in the end, with debit fraud the money leaves your bank account immediately and then it is up to you to make sure you get it back. With credit card fraud it won't get to the point -- you dispute the charges before paying them back.

Exactly. $10k skimmed out of my bank account is a huge problem for me while it gets resolved. $10k skimmed off a credit card, eh, I'm never that close to my limits anyway

Re: Debit cards are hidden financial infrastructure

#127

Post by starwind »

raegis wrote: post #95
tasogare wrote: post #23

Earlier quoted context omitted.

What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.

> Credit is useful for the single use case of buying a house. If you can exercise self-control with spending, you can use a credit card for almost everything. I think Dave Ramsey advises you're less likely to spend money if you use real cash, but for some people, this is not an issue at all.

I've always noticed that cash has a way of disappearing from my wallet with me wondering "what did I spend it on?" With a credit card I have to think: will I punch myself in the face when I see that on my statement?

Re: Debit cards are hidden financial infrastructure

#129

Post by alphabettsy »

recursive wrote: post #12
vmception wrote: post #3

> An interesting wrinkle about net interest is that most customers don’t contribute much. In much of the U.S., median checking account balances at account creation are only around $3,000 Thats a lot of money not in crypto or stocks. Surprising.

I don't think most Americans understand stocks. I definitely don't. Even more so for crypto-currency.

True, even most people who believe they understand stocks don’t understand the complexities of the market.

Re: Debit cards are hidden financial infrastructure

#130

Post by tcgv »

hahajk wrote: post #96
p2t2p wrote: post #48

Earlier quoted context omitted.

Australian here. Don’t use credit card, setup a separate account for bills, direct debit everything from there, don’t keep anything big on your debit card and use it with Apple Pay everywhere. No fraud, no fees, no complex things and rules to remember.

Amex pays me over a thousand dollars a year to use my credit card (which it takes from the merchants as fees.) I kinda feel bad about that, but I know those fees are built into the price and if I used cash or debit I’d still be paying the same price, just not get the reward. But if they accepted lightning payments, I would pay them in BTC.

I used to ask "can you give me a discount if I pay in cash?" and most of the times the merchant would say no. Then I stopped asking and started using only credit cards for at least earning some "rewards" back.

("rewards" purposely in quotes since it's not really a reward, but amex/visa/mastercard want us to think it is - there's no free lunch)

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