Final – A credit card built for the 21st century • Hacker News Board

Re: Final – A credit card built for the 21st century

#351

Post by alkonaut » Thu, Oct 09, 2014, 2:05 PM UTC

mwexler wrote: post #350

alkonaut wrote: post #329

Earlier quoted context omitted.

How does that add up? If I send money via my internet bank too person or company the bank has to do zero work (other than maintain their servers). Anything that requires manual work has to be a lot more expensive for the bank!? Here, transfers are free and any "paper" business such as check cashing/bill payment has steep fees. How can your banks provide you with the labor intensive service for free and charge for wha…

Well, it's kind of interesting. The billpay system leverages the fact that most payments for most folks go to companies, and those are all electronic links; the checks are somewhat rarer in the big picture and only to small businesses or people. The checks in this case are not "certified" in that they are not a guaranteed transfer; like any other check, they can bounce. But yes, they are printed and mailed, and there…

Bottom line is still that any manual work (cashing a check, mailing one, cash-paying a bill at a bank...) must be one or two orders of magnitude more expensive than wiring.

I'm not sure what the costs are for wiring as it is usually packaged. I pay $30-40/year for Internet bank w unlimited wiring including p2p through phone number (yes guaranteed/negotiated transfer to the babysitter!). Meanwhile cash-paying a bill or cashing a check is probably $10 a pop, simply because banks are trying very very hard to get rid of two things: cash and staff. that makes a lot of sense from a business perspective.

Re: Final – A credit card built for the 21st century

#352

Post by jack-r-abbit » Thu, Oct 09, 2014, 2:13 PM UTC

runeks wrote: post #334

scarmig wrote: post #280

Earlier quoted context omitted.

There's some ambiguity in the scriptures. See Deuteromy 15:1-11: "At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for canceling debts has been proclaimed." ( http://www.biblestudytools.com/deuteronomy/passage.aspx?q=de…

> It's interesting to imagine a world where there was no legal recourse to someone not paying back debt [...] I think it sounds scary. If I enter into a contract that says I have to do something in exchange for something else, I'd like a court to honor that contract, and not -- somewhat arbitrarily I'd say -- declare debts in the contract invalid after seven years. Imagine no one being able to issue debt with a matur…

I think it would be even scarier than that. I imagine very few people would even issue debt. I know I would not. People default on debt all the time now and there is some legal recourse. I can only imagine how many people would default if there was no consequence. So now even people with every intention to repay their debt won't even get it. I believe that this would lead to an even bigger class gap because people who don't have the money to start businesses, buy houses or cars, etc no longer can get a loan to do it. I think it really would create a bigger divide between the Haves and the Have-Nots.

I'm not saying that having a bunch of debt is good. But imagine where you'd be right now if you couldn't get a student loan for an education. Or finance a car or a house. I'm pretty sure I would not be where I am now if I hadn't gone to school... which I would not have been able to do without a student loan. And I never would have been able to get a house without a loan.

Re: Final – A credit card built for the 21st century

#353

Post by GrinningFool » Thu, Oct 09, 2014, 2:14 PM UTC

toomuchtodo wrote: post #108

troupe wrote: post #104

Earlier quoted context omitted.

I believe most people would say that when they agree to take money with a promise to repay it, they are under a moral obligation to do so.

So when an individual borrows and fails to repay, there is a moral hazard, but when a business declares bankruptcy and restructure, that's smart business? Debt is a contractual issue, not a moral one. As HackerNews entrepreneurs should keep in mind, its the ability to easily shed debt (and not be shackled to those debts for decades) in the US that creates the environment for startups to take the risks they do.

"Debt is a contractual issue, not a moral one."

Keeping one's word is always a moral issue. The bad practices of others (businesses or individuals) do not change the value of my word.

Re: Final – A credit card built for the 21st century

#354

Post by cantankerous » Thu, Oct 09, 2014, 2:16 PM UTC

tripzilch wrote: post #341

gnaritas wrote: post #288

Earlier quoted context omitted.

Except that's not what happens, you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. There's nothing at all immoral about choosing to suffer the hit on your credit rather than repay as both options are expected possible outcomes in the original deal.

> you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money. I never considered that risk would also be a factor in interest rates. It makes sense, but I really doubt it's a ve…

This analogy doesn't relate to OP's comment. He's talking about secured debt with institutional lenders, not interpersonal loans. Risk is an integral component to determining your interest rate in the US. This is why there is an industry around protecting, understanding, and improving one's FICO score here. Try getting a good loan with a crappy (or substandard) credit score.

Spoiler Alert:

You can't.

Re: Final – A credit card built for the 21st century

#355

Post by izolate » Thu, Oct 09, 2014, 2:32 PM UTC

nayefc wrote: post #186

Someone1234 wrote: post #43

Earlier quoted context omitted.

Do you actually know, for a fact, that you can generate arbitrary card numbers? Meaning have you got an agreement with visa, mastercard, or similar where they allow you to do that. Is there a limit on how many customers/unique card numbers you can have, and is there an inherent cost in gaining a new number (e.g. will accounts be capped at X disposable numbers per Y period). Once you delete a card number how quickly i…

They need a relationship with the issuing bank on top of Visa/MC. That is rather impossible. However, Visa/MC new TSP that was announced with Apple Pay really solves this problem. In essence, we all get this new feature for free just next year :)

What does TSP stand for?

Re: Final – A credit card built for the 21st century

#356

Post by encoderer » Thu, Oct 09, 2014, 3:11 PM UTC

toomuchtodo wrote: post #19

Someone1234 wrote: post #13

> Final lets you give a unique credit card number to every merchant, or a disposable one-time use number for one-off purchases. This is something I have been asking for since forever! People on here claimed it was "impossible" because of how credit cards work, I guess not... > Tired of your monthly yoga pants subscription? Or a two-week "free" trial that lasted four months? Just deactivate that card number. It's that…

Counterpoint. If you get taken to collections over a trivial amount ( Have to go to court for collections? The first words out of your mouth need to be, "Verify the debt." Ask them to produce the document you signed and agreed to. In the vast majority of cases, without this, your case will be dropped with prejudice. This is based on research I did while dealing with a personal mortgage "issue". http://www.thisamerica…

Did you know there are actually a dozen+ different Fico scoring products, several versions for each of the big 3 credit agencies and several product-specific models for Houses, Cars, etc?

Lenders do not update to the latest Fico version the way we all buy new iPhones. Many lenders integrate Fico scoring into proprietary models.

Having ANY collection will hurt you, period. Even under $100. Even if it doesn't drop your fico, American Express for example won't open you an account with an open collection. Any mortgage lender would make you settle the collection before closing. So in summary, i think your advice here is very bad. Yes, if you have a collection, you MAY be able to have it removed from your reports without waiting 7 years. But it's not black and white.

Re: Final – A credit card built for the 21st century

#357

Post by encoderer » Thu, Oct 09, 2014, 3:15 PM UTC

tripzilch wrote: post #341

gnaritas wrote: post #288

Earlier quoted context omitted.

Except that's not what happens, you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. There's nothing at all immoral about choosing to suffer the hit on your credit rather than repay as both options are expected possible outcomes in the original deal.

> you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money. I never considered that risk would also be a factor in interest rates. It makes sense, but I really doubt it's a ve…

Risk is THE biggest factor in interest rates. If it was all timevalue we'd be paying interest closer to inflation rates.

Put yourself in the shoes of a lender. On one hand is a doctor, $300k salary, looking to borrow $30k for a new boat. 780 fico. On the other is Trevor, a bartender who makes $25k a year, has a 680 fico with some late payments and a cable bill collection from 2 years ago and wants $30k for a new car.

Would you lend to them both at the same rate? Both will have the same time value effects....

Re: Final – A credit card built for the 21st century

#358

Post by scarmig » Thu, Oct 09, 2014, 3:17 PM UTC

jack-r-abbit wrote: post #352

runeks wrote: post #334

Earlier quoted context omitted.

> It's interesting to imagine a world where there was no legal recourse to someone not paying back debt [...] I think it sounds scary. If I enter into a contract that says I have to do something in exchange for something else, I'd like a court to honor that contract, and not -- somewhat arbitrarily I'd say -- declare debts in the contract invalid after seven years. Imagine no one being able to issue debt with a matur…

I think it would be even scarier than that. I imagine very few people would even issue debt. I know I would not. People default on debt all the time now and there is some legal recourse. I can only imagine how many people would default if there was no consequence. So now even people with every intention to repay their debt won't even get it. I believe that this would lead to an even bigger class gap because people wh…

My perspective is that a whole lot of our economic problems (in the USA) stem from personal debt. It wouldn't be the end of the world if people typically had to earn enough money to own a house before buying a house--in fact, it would decrease home prices, since the ability to get mortgages and the promise of government violence if you don't pay them back inflates the cost of housing stock. And student loans are literally slavery--they similarly inflate educational expenses, and even worse can't be discharged in bankruptcy. An end result is otherwise educated people face a large marginal tax rate that cuts into productivity, and far too many choosing education that is mostly a waste of money since they don't have to pay for it, until some unforeseen point in the future.

I think it's also easy to overstate how much loaning would decrease. The widespread use of credit scores when issuing loans belies the idea that it's only state violence that ensures people pay back debts.

Re: Final – A credit card built for the 21st century

#359

Post by scarmig » Thu, Oct 09, 2014, 3:25 PM UTC

runeks wrote: post #334

scarmig wrote: post #280

Earlier quoted context omitted.

There's some ambiguity in the scriptures. See Deuteromy 15:1-11: "At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for canceling debts has been proclaimed." ( http://www.biblestudytools.com/deuteronomy/passage.aspx?q=de…

> It's interesting to imagine a world where there was no legal recourse to someone not paying back debt [...] I think it sounds scary. If I enter into a contract that says I have to do something in exchange for something else, I'd like a court to honor that contract, and not -- somewhat arbitrarily I'd say -- declare debts in the contract invalid after seven years. Imagine no one being able to issue debt with a matur…

Why do you want the court to honor the contract? (Which is a bit euphemistic, to my mind: it means to use organized violence or the threat of it to extract value from someone.)

Maybe it'd make sense in a totally anonymous world, but why not just do business with people or entities you can trust? Think web of trust. That's what consumers and businesses de facto do nowadays anyway.

You could still issue debt; it's just you can't expect to have violence to back it up. Past decisions and alignment of lender and borrower self-interest determine the likelihood of it being paid back.

Re: Final – A credit card built for the 21st century

#360

Post by gnaritas » Thu, Oct 09, 2014, 3:59 PM UTC

tripzilch wrote: post #341

gnaritas wrote: post #288

Earlier quoted context omitted.

Except that's not what happens, you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. There's nothing at all immoral about choosing to suffer the hit on your credit rather than repay as both options are expected possible outcomes in the original deal.

> you borrow money with the explicit notion that you might not repay it; that's what sets the interest rate, both sides know that going in. The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money. I never considered that risk would also be a factor in interest rates. It makes sense, but I really doubt it's a ve…

> The interest rate is set by the fact that money-NOW is worth more than money-in-a-few-months-or-years. This is also the case if it's certain you will get the money.

No, interest rates are a measure of risk; the bigger the risk of default the higher the interest rate. Bad credit score equals very high interest rate.

Secondly, stop pretending you're the lender, we're talking about banks here, not personal loans from friends.

When you take out a loan with a bank, it's a business deal with explicit exit strategies baked in: pay off loan, or default loan. Both options are valid exits according to the contract. Morality simply isn't a factor in this equation.