Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Autopay is making us worse at managing credit-card bills

wsj.com

Post reply on HN
Print view View original

121–130 of 145 posts

Re: Autopay is making us worse at managing credit-card bills

#121

Post by m463 »

charlie0 wrote: post #110
crazygringo wrote: post #11

The headline is not supported by the article. The actual truth of the article comes in the middle: > Borrowers who use autopay pay off between 8% and 17% less of their monthly credit-card balances compared with customers who make manual payments, according to the study... When credit-card customers sign up for autopay, they typically have three options for monthly payments: the required minimum, the statement balance…

In other words, water is wet and people who are financially illiterate/irreponsible will continue making bad financial choices, no matter what tools are available to help aid them.

Isn't that a like like saying people are irresponsible when they fall for dark patterns?

This involves money and profit. Privacy policies involve money and profit.

In both cases, there are clear financial incentives to make things confusing to the benefit of the financial institution.

Because credit cards got so bad, they added "nutrition labels" by law. These are the required disclosures that take about APRs, penalties, grace periods, fees and minimum finance charges, etc

Re: Autopay is making us worse at managing credit-card bills

#122

Post by landemva »

crazygringo wrote: post #11

The headline is not supported by the article. The actual truth of the article comes in the middle: > Borrowers who use autopay pay off between 8% and 17% less of their monthly credit-card balances compared with customers who make manual payments, according to the study... When credit-card customers sign up for autopay, they typically have three options for monthly payments: the required minimum, the statement balance…

A broader look at credit card industry, for those who can pay off monthly balance, is those people use it to get more points than they would with the debit card attached to the checking account where the funds sit for the autopay.

Rewards and benefits on debit cards are low or nonexistent due to regulatory pressure in USA to have lower network processing fees than credit cards.

Europe has lower card network fees than USA, so there are fewer rewards cards available.

Re: Autopay is making us worse at managing credit-card bills

#123

Post by landemva »

clockwork-dev wrote: post #89
Rapzid wrote: post #19

Earlier quoted context omitted.

I auto-pay with minimal and log in at the beginning of every month and pay the full balances.

With higher interest rates, I stopped paying the full balance and instead try squeezing a little extra interest out of the money (I buy USFR, which is giving around 5.3% right now). I still pay the statement balance of course.

Does USFR have principal risk? The price of USFR appears to fluctuate.

Re: Autopay is making us worse at managing credit-card bills

#124

Post by landemva »

redblacktree wrote: post #120
kccqzy wrote: post #107

Earlier quoted context omitted.

You are incredibly confused about terminology here. You have a balance. And then you let Autopay pay it off in full by the due date, which is after the balance appears on your statement and after the balance is reported to credit bureaus. You still don't carry a balance. What you are describing (having zero balance reported) is called cycling the credit limit. This is indeed a dangerous behavior that can not only aff…

I wasn't aware that this was a bad thing. I have a couple of "business" credit cards that I use to segregate purchases for some sole proprietorships that I run. (as well as for the rewards, of course) There are occasionally months where I need to spend beyond the credit limit, and I pay the card early in order to do so. I had no inkling that this could be considered a problem.

It's about the bank knowing their customer and appropriate limits for the customer income. If you cycle $50k in a month on a $10k credit line, and your credit application had your income at $80k/year, the bank may look into it.

Re: Autopay is making us worse at managing credit-card bills

#125

Post by landemva »

andrelaszlo wrote: post #62

I set up my (Swedish) CC bill to autopay the full amount each month. I only use it for emergencies though. It seems like it's really common elsewhere (the US) to use it for larger purchases. Isn't it very uneconomical? I recognize that I might be speaking from a position of relative financial privilege, but it doesn't seem limited to people in acute financial distress? Maybe it works differently too. I've read stuff…

In USA it's about collecting rewards points and travel benefits. Airlines and hotels are addicted to the cards.

https://creditcards.chase.com/travel-credit-cards

The interchange fees in Europe are too low to support these kickback games at scale.

Re: Autopay is making us worse at managing credit-card bills

#126

Post by redblacktree »

landemva wrote: post #124
redblacktree wrote: post #120

Earlier quoted context omitted.

I wasn't aware that this was a bad thing. I have a couple of "business" credit cards that I use to segregate purchases for some sole proprietorships that I run. (as well as for the rewards, of course) There are occasionally months where I need to spend beyond the credit limit, and I pay the card early in order to do so. I had no inkling that this could be considered a problem.

It's about the bank knowing their customer and appropriate limits for the customer income. If you cycle $50k in a month on a $10k credit line, and your credit application had your income at $80k/year, the bank may look into it.

Ah, ok. The numbers are nowhere near that close. If anyone looked more closely, I think they'd see the spending as legitimate. I did some research after you mentioned the term, and "credit cycling" is different from my scenario, I think. There is an element of intentionality to it, ala /r/churning.

Re: Autopay is making us worse at managing credit-card bills

#127

Post by [deleted] »

landemva wrote: post #119
inetknght wrote: post #102

Earlier quoted context omitted.

As I understand it, your credit score isn't dinged per-se , but it doesn't increase as much as it would if you carried a balance. Remember that credit scores try to score your credit worthiness: are you capable of paying off a balance. How can that be measured if you never have a balance? Instead it simply appears that you have a lot of available credit without ever using it.

> you have a lot of available credit without ever using it. I find it funny that the example person with big credit lines, which are unused, should care about a slightly better credit score. The financialization of everything coaxes people to care about numbers that don't greatly matter to their situation - they already have the credit line.

[deleted]

Re: Autopay is making us worse at managing credit-card bills

#128

Post by soupfordummies »

WirelessGigabit wrote: post #100
Analemma_ wrote: post #7

One thing that has really helped me is that you can set up the Apple Card so that it sends a notification to your phone for _every single purchase_, whether one-off or recurring. Of course you can turn this off if it annoys you, but I have found it's good to leave it on: it makes CC purchases "hurt" like spending cash does, and occasionally reminds me of recurring costs I would otherwise have forgotten. Probably othe…

I went back to requesting paper statements. When you get an email with your statement you have to click on the button (or navigate to the website), put in username and password, wait for the text to arrive (because half of the banks I use don't support YubiKeys), navigate to the PDF, wait for that to load. And then it's on my computer, a tool that is supposed to be there to make me more productive, but instead, Micro…

And another bonus is, you're costing the credit-card-issuing mega bank just a littttle more money to send you that paper statement and supporting the postal service on top.

A negligible amount to be sure, but an amount all the same.

Re: Autopay is making us worse at managing credit-card bills

#129

Post by soupfordummies »

sokoloff wrote: post #70
ricardou wrote: post #6

I don't know what it is, but autopay causes me so much mental load. Instead I go over my bills every two weeks, following the tune of my paycheck. Every two weeks I check all credit cards, pay my mortgage, utilities, etc.

This is wild to see other perspectives. I'm a reasonably upstanding citizen and I have basically two categories of bills: Bills that are auto-paid. Bills that are late. The auto-paid ones are completely on auto-pilot. If I have a particularly heavy spending month (maybe we took a trip somewhere), I might open my bank app to make sure there's enough cash in the account to cover the auto-payment. (Or I might not and ei…

>>I'm a reasonably upstanding citizen and I have basically two categories of bills: >>Bills that are auto-paid. >>Bills that are late.

I just mentally went down the list and it hurts me to admit it but that's the exact same for me.

Re: Autopay is making us worse at managing credit-card bills

#130

Post by [deleted] »

icedchai wrote: post #16
ricardou wrote: post #6

I don't know what it is, but autopay causes me so much mental load. Instead I go over my bills every two weeks, following the tune of my paycheck. Every two weeks I check all credit cards, pay my mortgage, utilities, etc.

I haven't paid bills "manually" in almost 15+ years. You waste so much time opening mail, writing checks, buying stamps, etc. I put everything on auto-pay, with the exception of property taxes (only because the city won't allow it.)

[deleted]
Post reply on HN