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Credit card debt collection

bitsaboutmoney.com

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Re: Credit card debt collection

#121

Post by sebazzz »

habosa wrote: post #111
adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

You're mostly correct but I should point out one thing that credit cards do that debit cards don't really do in America: fraud protection. Credit card companies spend a lot of money protecting their customers from card number theft (which is rampant in all parts of the world)

Debit cards in the Netherlands at least don't have a number that can solely be used for payments. You need the physical card (with a pin code which isn't written on the card but memorised), or a virtual card like Apple Pay coupled to that card.

It seems that fraud protection is rather something that is necessary because fraud is so easy.

Re: Credit card debt collection

#122

Post by seanmcdirmid »

habosa wrote: post #111
adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

You're mostly correct but I should point out one thing that credit cards do that debit cards don't really do in America: fraud protection. Credit card companies spend a lot of money protecting their customers from card number theft (which is rampant in all parts of the world)

Not all countries apply this protection to their credit cards, even if they are issued from visa/master card/Amex. For example, we knew if a Chinese restaurant in Bellevue WA would target Chinese visitors using ICBC AmEx cards because ICBC (a big bank in China) puts the onus on the consumer to prove they didn’t make the charge rather than in the business making the charge. American credit card issuers would never do that and just let you make the charge back.

Re: Credit card debt collection

#123

Post by tourmalinetaco »

eru wrote: post #103
c1sc0 wrote: post #100

Earlier quoted context omitted.

Because it stimulates the economy by making it easier to consume. Without consumption the whole house of card falls down.

It doesn't really make consumption easier. In any case, you can just print more money, if people in the economy aren't spending enough. (In more formal terms: the central bank can control nominal gross domestic products.)

The Federal Reserve already overprints, that’s one reasonwhy the USD and almost every other major currency is currently struggling. Printing more money during high inflation only worsens the problems.

Re: Credit card debt collection

#124

Post by logN_2 »

adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

Why have the money taken out of my bank account for a purchase made today when I can pay it without penalty 60 days later and let the money grow in my brokerage account.

Along with the usual answers like cash bank/points/consumer protection, it also decouples spending from "pay day".

Re: Credit card debt collection

#125

Post by unmole »

adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

> It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ?

TIL: Credit cards are banned in Europe. /s

Re: Credit card debt collection

#126

Post by chipsa »

adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

Someone mentioned fraud protection, to be more explicit: With credit cards, you haven't truly paid until the credit card bill gets paid. So, if you have a dispute, you don't have to pay the disputed amount until the dispute is resolved. With a debit card, you've already paid, and so you're out the money until the dispute is resolved. Now, if the dispute is not resolved in your favor, you may have to pay interest on the credit card.

Related to the above, you don't need to make sure you have the money in your debit card account before buying things. You can just charge it and then make sure you're good to pay later. Example: you don't have the cash handy right now for an emergency car repair. You can still pay the mechanic, and then be able to pay off the car repair over the next two months.

Credit is a tool. Sometimes the tool is good and useful. Sometimes you blow your foot off with it.

Re: Credit card debt collection

#127

Post by relyks »

eru wrote: post #105
relyks wrote: post #99

Earlier quoted context omitted.

A lot of credit card companies offer cash back or redeemable points towards other purchases like for travel. If credit cards are used effectively (you pay back every statement balance) and the merchant isn't significantly raising the price of goods or services for transaction costs, you can make a serious amount of money back, easily in the amount of thousands of dollars per year from normal everyday use. Edit: When…

That money still comes from your spending with the merchant, so ultimately out of your own pocket. But you are right, that the system is not very transparent, and merchants probably seldom give people the full discount of the costs saved when they use non-credit card payments.

Most sadly don't give a discount for not using a credit card. I've only seen my local bagel place do that. Other places say they will charge a credit card transaction fee even if you use a debit card (which still has costs for the merchant but not as much as credit cards)

Re: Credit card debt collection

#128

Post by eru »

adev_ wrote: post #106
relyks wrote: post #99

Earlier quoted context omitted.

A lot of credit card companies offer cash back or redeemable points towards other purchases like for travel. If credit cards are used effectively (you pay back every statement balance) and the merchant isn't significantly raising the price of goods or services for transaction costs, you can make a serious amount of money back, easily in the amount of thousands of dollars per year from normal everyday use. Edit: When…

Money does not grow on trees. From my understanding this cashback systems come from two sources: (1) Money taken on processing fees on Merchants themselves. (2) Money taken from the interests of debt from the people screwed by this entire system. The first one is just an hidden tax and garbage profits made possible only due to the monopolistic behaviour of credit card companies. The second one is just plain simply im…

I agree on your analysis of the sources.

> The first one is just an hidden tax and garbage profits made possible only due to the monopolistic behaviour of credit card companies.

I'm not sure any supposed monopoly is necessary here to explain anything. In fact, there's no monopoly and different competing issuers have different levels of fees and 'rewards'. Eg American Express explicitly has high fees and high rewards, and competes against Visa and Mastercard (and against domestic systems in eg Germany or Japan).

A monopoly (or oligopoly or cartel) argument could perhaps explain why the smallest fees you can find are still 'high' by some arbitrary standard, but it couldn't explain why American Express is a viable competitor.

See https://upgradedpoints.com/credit-cards/us-credit-card-marke... for market shares of the different payment networks in the US.

Re: Credit card debt collection

#129

Post by scatters »

adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

An economy needs money to be created to ensure full employment. If that money is created as loans to businesses it will result in investment; to the government, in lower taxes; to homeowners, in house price bubbles, but if it is created as consumer credit it will result directly in consumption, which has the greatest social benefit since it is the purpose of an economy to enable consumption.

Re: Credit card debt collection

#130

Post by metacritic12 »

benjaminwootton wrote: post #116
adev_ wrote: post #91

It might be a very European view to the problem but: Why does the American government does even tolerate this credit card garbage business in the first place ? We are in the 21th century. Most payment can be validated electronically and processed under 200ms. I can pay something with my phone and get money taken directly from my bank account within seconds. There is absolutely no need of Credit Cards where Debit Card…

Because the vast majority of people use credit cards without messing up their lives? I suspect most people don’t even need them but use them for cash back and consumer protection. For people who do need them, there’s nothing inherently wrong with buying something and spreading the cost or paying for it later in return for paying some interest. Most people who do that won’t get into any trouble. There are a hundred le…

Funny enough, Europe has indeed banned various degrees of the top items on your list.

Generally Europe more paternalistic and Europeans like it that way. Americans are less so, and like it that way.

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