Comment by weird-eye-issue
13 hours ago
What do credit cards have to do with debt? I've used them for over a decade and never a carried balance
13 hours ago
What do credit cards have to do with debt? I've used them for over a decade and never a carried balance
That's like asking "what does rent have to do with property prices?". Just because you've managed to be on the top of this perverse social summation of usury doesn't mean it isn't predatory and a net negative for society.
Credit cards are one of the most insidious ways that banks extract money from those living closest to the margins of poverty. The benefits you gain are a fraction of the profits gained from raking the most vulnerable over the coals of bankruptcy. They're a financial instrument of torture and I refuse to have anything to do with them. I'm not by any means rich, but I'm 48 years old, have zero debt, and will spend the rest of my life avoiding debt.
Finance is not a zero sum game.
No it's actually like asking what cars have to do with debt. You can have a car without going into debt just like how you can have a credit card without debt.
Since you have such high moral standards I hope you don't invest in any index funds because lots of companies in those would probably not live up to your standards
It has been legal for sellers to ask buyers to pay more if they use a credit card for 15 years now.
There is no "moral" quandary. Sellers that have the same price for credit and non credit payment methods are simply betting that people using credit will be more willing to pay higher prices overall and still buy from them compared to their competitors' with lower prices who charge more for credit cards.
Every year, fewer and fewer of my expenses are paid with a credit card because more and more sellers are not betting on this. My kids' gymnastics class/tutoring/daycare charges 3% or more for credit cards. My home wired ISP and mobile network provider charges 5% more for credit cards. My property tax, insurance, water/sewer utility, all charge 3% or more. Even Target charges 5% for credit cards. Basically all tradespeople that come to fix things on my house charge extra and ask for Zelle/Venmo electronic cash payments instead.
So in all these cases, I do not use a credit card to pay. But the point is, it is up to the seller to decide what price they want to charge for credit and non credit, so there is no "moral" quandary for buyers. No one's hand is being forced.
Edit: to respond to comment below due to hitting posting limit, the extra charge does not go to the card issuer, the seller collects the higher price. If I choose to pay with a non credit card payment as a result of the extra charge for credit cards, then the credit card issuer gets nothing.
Whether or not credit card interest rates and terms are usurious or otherwise morally problematic is not a credit card user's moral responsibility. When I use a credit card, I do not ask or enable or incentivize someone else to be taken advantage of.
>It has been legal for sellers to ask buyers to pay more if they use a credit card for 15 years now.
Not in the jurisdiction I live in. You should not generalize your local laws to the rest of the world.
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The extra charges you are describing are a "cherry on the top" for the card issuers. They could easily survive without those charges (in many countries they do). They also act as a convenient diversion. If you think that's the way they make money you will avoid looking into the other ways they make money. Namely, exhorbitant interest rates on defaulted loans by those who were "sold" credit cards with no practical means of ever servicing the debt.
Morally, they're also quite problematic, imo. Even if you aren't paying interest because you pay off the balance every month, CC companies can only offer points and cash back and all of that other stuff on the backs of the customers who aren't able to pay it off every month. It's a subsidy of the financially illiterate to those who are. If the predatory 20%+ interest rates were banned, the points and rewards programs would disappear overnight.
I know this isn't popular in the USA, but when compared to the rest of the western world, consumer debt is off the charts insane in America and it doesn't have to be that way. I've lived on both sides of the pond and I much prefer a society where people buy things that they can afford instead of financing everything on the back of a hope and dream that they will for sure pay off the balance this month.
As for the "but muh security!!" argument that I can hear someone typing, having a credit card for security is a terrible argument. You should be lobbying your politicians to regulate financial institutions to build better systems that are not susceptible to such obvious exploits and fraud. Again, much of the world has solved this problem to the point where I can post my bank account number on my business website and nothing bad ever happens. Customers can wire me money directly without approval and I have to manually approve all outgoing transactions at least once (scheduled transfers are still possible); it's not rocket science!
In your moral dilemma your assertion is that the credit card companies are only making money off of people who aren't paying off their cards each month which must mean that people like me are costing them money by paying off each month. Since I'm costing these evil companies money then don't I have a moral obligation to continue using my credit card?
As for saying that the argument that using credit cards because they have more fraud and security measures is not a good argument because the world should be different is also quite silly and naive since arguments should be made based on how the world currently operates not how you wish it might operate in the future. Life is much easier when you live in reality
Credit card companies make money from interest on debt. That is undisputed. To pay out your rewards, they need to make a profit above and beyond what it takes to run the business such that they can afford to give you 2% back. This leads to higher interest rates for everyone that are approaching usurious (imo). Your circular argument about costing the evil company money therefore makes your purchases justified, doesn't make sense.
I agree that the US financial system does not currently operate in a manner that is secure for consumers. I am not naive to that reality (I'm also American and have had various amounts of credit card debt throughout my life, and also times when I paid off balances for years). However, that does not diminish the societal responsibility to advocate for a financial system that is more secure by default. The fact that I need to expose myself to more financial risk in one area to circumvent a shortcoming in another area of the market is a bad thing, in my opinion.
Again, I think if we capped interest rates at something reasonable (12% maybe?), it would force credit card companies to more seriously evaluate if their customers can afford the debt they are incurring and this entire problem would disappear overnight. Sure, there would be less rewards programs as revenue would be decreased, but we would make society better as whole by not incentivising a financial instrument that ruins millions of lives annually. We tried doing it this way for almost 50 years and it doesn't seem to be working out for society if you believe the debt/income ratios as a percentage of GDP in the United States.
As to your last point, I'm much happier living in a reality where I own the things I purchase. Nobody is ever going to repo my car if I lose my job. A sheriff/the state is never going to come to my home and take things to pay off a creditor because I hit the unlucky lottery and was injured in a freak accident or Act of God. Please try to engage my arguments in good faith and not make personal attacks about my separation from reality. The rest of the western world is proof that you do not need debt to participate fully in society.
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> It's a subsidy of the financially illiterate to those who are.
Counterpoint, the financially literate are subsidizing the existence of the financially illiterate via taxes and social programs.