Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

Post by patio11 » Fri, May 20, 2016, 8:29 PM UTC

chinathrow wrote: post #122

karcass wrote: post #41

Earlier quoted context omitted.

Many credit cards have cash-back or other rewards. It's easy to see the dual appeal of the reward, plus a month's worth of float on the payment.

The rewards system is the wrong incentive here in my eye. It corrupts everyone and everything down to each penny, on every transaction. Everyone along the line where the money flows is incentivised to get you a) hooked on credit cards and b) on paying by credit cards. The issuer, the merchant, the card institute, the processors in between and even the buyer get's a cut from the exorbitant high fees.

Post by bigjimmyk3 » Fri, May 20, 2016, 8:57 PM UTC

patio11 wrote: post #171

chinathrow wrote: post #122

Earlier quoted context omitted.

The rewards system is the wrong incentive here in my eye. It corrupts everyone and everything down to each penny, on every transaction. Everyone along the line where the money flows is incentivised to get you a) hooked on credit cards and b) on paying by credit cards. The issuer, the merchant, the card institute, the processors in between and even the buyer get's a cut from the exorbitant high fees.

Merchant here. We don't get a cut from "the exorbitant high fees"; we pay 2~3% for the (substantial utility of) being able to reliably take money from you in seconds.

Post by madelinecameron » Fri, May 20, 2016, 8:59 PM UTC

uuoc wrote: post #161

distances wrote: post #73

Earlier quoted context omitted.

I don't know how general this is, but I'd say it's common for banks to cover also fraud costs for the customers in Europe. Be it fraudulent debit card payments or Internet banking transactions, I've seen news of banks covering the customer's ass on both. Not sure how often they can reclaim the money, and how often they just take the loss for better publicity.

US banks make the same promises too. But which would you trust more when something goes wrong and your "card number" racks up thousands of stolen purchases: 1) credit card dispute/chargeback process that is mandated by law 2) the promise from your bank that, on their good will, they will fix things Not only that, but thousands of dollars on your credit card is "loaned" to you by the bank, the money's not out of pocke…

Post by maxerickson » Fri, May 20, 2016, 9:04 PM UTC

maxxxxx wrote: post #176

rm_-rf_slash wrote: post #25

Earlier quoted context omitted.

There was an eerily prescient 2006 documentary about consumer credit called "Maxed Out," which featured a scene where someone recalled going to a conference of bank and credit card executives, and one of the CC CEOs plainly stated: "The bulk of our profits come from people making minimum payments for the rest of their lives." As for "pay-in-full" folks like you and me, credit card companies could care less. Whenever…

When I came to the US I couldn't figure what "minimum payment" means. It took a while to realize that it's a totally arbitrary amount and really has no meaning for any kind of financial planning. I bet a lot of people think they are paying off their debt by making minimum payments.

Post by dionidium » Fri, May 20, 2016, 9:06 PM UTC

morgante wrote: post #178

dionidium wrote: post #158

Earlier quoted context omitted.

On unsecured credit cards? I doubt it.

Wealthier people are the ones who have unsecured credit cards. Banks apparently have no problem giving me a limit of $50k without any sort of collateral, but my dad can't get a credit card without depositing his entire limit.