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How credit cards make money

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Re: How credit cards make money

#431

Post by njwi332 »

patio11 wrote: post #62
TorKlingberg wrote: post #38

Earlier quoted context omitted.

Thank you. It matches my impression that lenders in other countries do share information, but mainly negative factors such as defaults. Than means "credit building" does not exist in the same way. > nearly zero in Japan, historically That surprises me actually. I know Japan has a very, let's say, high conscientiousness culture but do they never get into economic problems and are simply unable to pay card bills?

"Never" is a strong word, but you're welcome to read the English-language reports of Japanese lenders which break this out for their consumer businesses. Factors which generally tend to depress it include low revolving credit use, relatively high underwriting standards for credit (not solely a positive thing—ask your favorite Japan-resident foreigner for stories sometime), formal or informal risk transfer, outsourcin…

Yeah, I'm currently going through the process of getting a mortgage for a property in Tokyo. I'm also interviewing about a potential job - nothing unusual there, moving around every 2-4 years is common in the software industry.

I was told in no uncertain terms by my real estate agent "Do not move company until your loan is approved. You're already impacted by the fact you work for a foreign company, and you will probably get declined if you start somewhere new."

The fact that I'd likely be looking at a substantial raise and therefore be in a better position to pay off any mortgage is irrelevant, the bank just cares about stability.

(I'm sure you already understand this, this story is for the benefit of other curious thread-readers)

Re: How credit cards make money

#432

Post by Dylan16807 »

perl4ever wrote: post #418
Dylan16807 wrote: post #316

Earlier quoted context omitted.

Just as a nice round example number, let's say someone is effectively paying a 1% fee at time of purchase. How do you turn that into an interest rate? Stuff at the start of the month and stuff at the end of the month are going to pay interest for different lengths of time. What if they change the timing of purchases? Let's say you pick an average you're satisfied with. Okay, now you've calculated a rate you need to c…

>that's not really an "interest rate" anymore, is it? If a grace period is ok now, why would it not be ok? But if there has to be one rate per customer, sure, fine, why can't it be adjusted based on their minimum balance over time? >Tell me what interest rate could replace "2% fee, 1 billing cycle grace period, 16% interest afterwards" Option 1 would be to add (for the sake of an example) 24%, keep a sort of grace pe…

> If a grace period is ok now, why would it not be ok?

Grace periods are fine! But you said get rid of them, and I was pointing out that you can't simplify the math that much. It ends up being a mess with a hidden grace period inside a bunch of confusing math, rather than an understandable and relatively stable interest rate.

If you're happy to keep grace periods, great, let's do that. And I'll skip the rest of the post because it's not worth fussing over in that case.

Re: How credit cards make money

#433

Post by conductr »

saint_angels wrote: post #363
conductr wrote: post #124

Earlier quoted context omitted.

My great grandfather owned a grocery store in our town somewhere around 1940s-1970s (the only one at the time). Town was much smaller then but about 200,000 people now (edit: I looked it up, it went from about 10K people to 200K since 1940). My last name is somewhat unique in spelling and it was called "$LASTNAME Grocery" so I still occasionally* get a random old timer that asks me if I'm related to him. When I say y…

do you know if the grocery store was relatively successful? I imagine that doing business with whole town, instead of just 75%, is economically preferable

I think it did ok. I never met my great grandfather. I heard a lot of family stories about the store. A lot of family time across 3 generations was spent there. I’m the first that never saw it first hand.

I knew the great grandmother. I remember her fondly, but she didn’t talk much other than in duty of running the house. Food, cleaning, gardening, laundry, etc. They were depression era mentality. Saved all the butter container. I think they themselves were raised by Czech/Pol immigrants to Texas.

Anyways, I knew they did well financially because of seeing my grandfather squander a ton of assets. They were super modest folks but as the town grew, they built apartment complex. They had several 100s units. Also the grocery store was on a gold mine of a street intersection. Supermarket competition and sufficient rental income are my guess at what caused my great grandfather to close the store and sell the land.

Re: How credit cards make money

#434

Post by [deleted] »

Jensson wrote: post #319
perl4ever wrote: post #301

Earlier quoted context omitted.

I interpret your tone as suggesting the justification is circular and arbitrary, that finance doesn't serve a human need.

People can take loans all over the world, USA is the only country I'm aware of where you need to do stuff like use a credit card to take a loan. Don't you think it is suspicious that the finance market decided that the only way to get a loan is to first buy a lot of expensive finance products? It is kind of like how politicians are mostly lawyers, and they decided that the only way to ensure your rights is to pay a t…

[deleted]

Re: How credit cards make money

#435

Post by cercatrova »

rsj_hn wrote: post #339
TulliusCicero wrote: post #338

Earlier quoted context omitted.

You can have federalism without anti-democratic institutions like the Senate. If the Senate was abolished or starting apportioning senators by population, the US would remain federalist, because there'd still be plenty of powers devolved to the states. That's what makes it federalist.

No, you can't. The only way you can truly prevent states from having their interests overriden by a majority of the nation is to give them a direct role in the legislative process. Democracy is three wolves and two sheep voting on what to have for dinner. It's last thing we want. So when the three wolves invite the two sheep to join them in a democracy, the sheep wisely say "Not a democracy, but a federal union, with…

How do you deal with the problem of the US population becoming more urbanized such that eventually we might have 70% Republican states to 30% Democratic ones? The Senate then becomes a purely Republican controlled one.

Re: How credit cards make money

#436

Post by rsj_hn »

cercatrova wrote: post #435
rsj_hn wrote: post #339

Earlier quoted context omitted.

No, you can't. The only way you can truly prevent states from having their interests overriden by a majority of the nation is to give them a direct role in the legislative process. Democracy is three wolves and two sheep voting on what to have for dinner. It's last thing we want. So when the three wolves invite the two sheep to join them in a democracy, the sheep wisely say "Not a democracy, but a federal union, with…

How do you deal with the problem of the US population becoming more urbanized such that eventually we might have 70% Republican states to 30% Democratic ones? The Senate then becomes a purely Republican controlled one.

That's extremely unlikely, but let's hypothesize a situation in which 70% of the states are rural Republican and 30% are urban Democrat. So the GOP always controls the senate and Dems always control the House. Then you either form something like a coalitional government where both sides have a veto, which in your scenario would be just the status quo, or you negotiate some kind of split.

This would be like the scenario where Lebanon assigns fixed seats for christian/muslim votes.

The issue with geographic states as minorities - as opposed to other minority categories -- say bald men -- is the geographic group is a functioning community and it can secede, so you have to decide whether you want to keep them in the country or not.

This goes back to the original debates in the constitution, where the smaller population states weren't willing to be a part of the country unless they were given a veto.

Nothing about that has changed.

It's just like when you have a team -- 10 developers with 6 feeling strongly to do A and 4 feeling strongly to do not A. Well, you find some compromise where both sides agree, because you if force A, and you do that over and over where the same group of 4 keep having their ideas overriden, then you lose 4 developers from your team. They secede as there is no reason for them to be a part of a team that keeps overriding them, and they can walk.

So if the 70% of your states are constantly having policies shoved down their throats that are extremely hated, then you are going to lose those states.

Now you can say, "no if they try to secede we will crush them militarily" and now the mask comes off that this is about domination and the imposition of the will, which suddenly undermines the whole concern for fairness and democracy.

So you are back to requiring a compromise. If you have 51% of the population, you should get 51% of what you want. Not 100%. And this power discontinuity is a well understood defect of the democratic decison making process -- e.g. it's not representative, whereas a consensus decision making process is more representative. In the consensus process, you give a veto to the minority. Now which minority gets the veto? Well, the founders selected the small state to be the minority because they can actually walk. Not bald men. So due to the underlying dynamics to keep the nation together, we give the rural states disproportinately a bit more power.

Re: How credit cards make money

#437

Post by 101keyboard »

bosie wrote: post #429
101keyboard wrote: post #407

Earlier quoted context omitted.

IBAN EU Transfers have to be free by law AFAIK Instant transfers may cost fees Europe is bigger than EU.

Are there countries where wire transfers cost money within a country? > Europe is bigger than eu Condescending much? Especially since this doesn’t mean anything for the question asked

>"why are wire transfers free in Europe but not in the US")

>> this applies only to a subset of Europe or european banks.

>>> Do you want to expand where it isn't the case?

Question asked, where are European IBAN Transfers not free? I clarified that they are free by law in the EU but instant transfers (exception 1) may cost money.

At the same time, a wire money transfer in Europe, as long as there is a least one non-EU party involved (UK, Serbia, Moldavia, Ukraine, Switzerland, whatever) may cost money.

I think this does indeed answer the question. Doesn't it?

Re: How credit cards make money

#438

Post by figassis »

prepend wrote: post #159
figassis wrote: post #140

Earlier quoted context omitted.

My solution to this is having a debit card connected to an account that has no funds and allows no overdrafts. And I only load the account when I specifically want to pay for something. I do this for everything, incl. Spotify, Netflix, etc. I pay a subscription when I want to pay for it, so usually at the end of the month I load the total of my subscriptions and they all go away. This also helps me keep track of my s…

How is this better than using a credit card?

Some people can't have credit cards bc they're not us citizens or permanent residents.

Re: How credit cards make money

#439

Post by rconti »

sydthrowaway wrote: post #224
rconti wrote: post #187

Earlier quoted context omitted.

I went with a girlfriend to her small-town-CA home, about 15 years ago. Went to get groceries and she just gave their name and a 3-digit number and the groceries went on the family account. I'm 40, but I had never before seen that in my life.

Eureka CA?

Nope, other side of the state.

Re: How credit cards make money

#440

Post by kortilla »

TulliusCicero wrote: post #408
shapefrog wrote: post #352

Earlier quoted context omitted.

> anti-democratic institutions like the Senate Representitive democracy is anti-democratic, not allowing babies to vote is anti-deomcratic. Based on the role purpose of the Senate, its more democratic that those examples. Its purpose is 2 votes per state, with representitives elected by the people of those states. You may not like that that is its role, and that is fine, but you can not say it would be more democrati…

Democracy is rule by the people, so yes, the current setup is anti-democratic, precisely because it gives greater representation and voting power to some people than others. Each person's vote for a senator in Wyoming is worth 50x or more what it is in California. That's wrong, and it's anti-democratic. People ought to be on an even playing field.

> Wyoming is worth 50x or more what it is in California.

No it’s not, they are different elections. The people in Wyoming are voting for who they want to represent their state’s power.

What you’re arguing is that the state should not have power on its own. There would be literally no purpose to the senate if it were proportional to the people.

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