7 ms·

The whole credit card system in US is made to rip off "stupid" people, extremely so. Nobody writes about that, probably because everyone from US thinks it's no

The whole credit card system in US is made to rip off "stupid" people, extremely so. Nobody writes about that, probably because everyone from US thinks it's normal, and nobody from the rest of the world knows about it. But that system is made to screw all the people who are not good at personal finances.

slackingoff2017 9y ago
It's built to screw poor people. If the choice is between getting another credit card or losing your apartment you end up in a lot of debt.
losteric 9y ago
The root cause of most American problems is poor public education. We're still over-emphasizing passing grades over effectively growing new American citizens... Personal finance is rarely offered and never mandatory, yet we collectively bare the burden of financial ignorance. The same applies to other subjects like statistics or civics.
- maxxxxx 9y ago
  I didn't learn finance in Germany in school but we all knew that taking on massive debt is stupid. It's the advertising and easy access to consumer credit. Wage increases have been replaced by easier access to credit.
  - ringaroundthetx 9y ago
    German culture has a mass distortion on the perils of consumer credit. The "debt is evil" crowd is just an extreme as the people that irresponsibly use debt. Maybe you should learn finance.
  - the_mitsuhiko 9y ago
    Germany is the other extreme though. Not sure if that is healthier.
    - kuschku 9y ago
      The German model definitely has lower risks. If something goes wrong, there will still be something left with which you can rebuild. The American high-risk model on the other hand is definitely one that isn't long-term sustainable, but it wins out in short term, until another crash happens.
      - maxxxxx 9y ago
        I think especially in the last 30 years the risk has been shifted to lower incomes. To me that's the real evil.
- cvsh 9y ago
  >We're still over-emphasizing passing grades over effectively growing new American citizens... 2/3rds of state legislatures are actively hostile to basic tenets of science, let alone the government teaching "effective American citizenship". We just recently legalized malpractice for financial advisors. The rules preventing them from screwing their clients out of their retirement savings were spun as hurting consumer choice. Imagine how it'd be spun if there was a movement for public schools to teach "effective citizenship".
  - jacobush 9y ago
    Teaching terrorism, no doubt.
  - gwenzek 9y ago
    > We just recently legalized malpractice for financial advisors. Do you have reference?
    - derivagral 9y ago
      Link[1] is from forbes, but you get the idea. Matt Levine mentioned it once or twice in his column a week or 3 ago. [1] https://www.forbes.com/sites/jamiehopkins/2017/02/03/trump-signs-executive-order-shelving-fiduciary-standard-for-financial-advisors https://www.forbes.com/sites/jamiehopkins/2017/02/03/trump-s...
  - pizza 9y ago
    It would be nice if schools allocated more time for the young kids to get to share with teachers which topics that they wanted to know more about, just a block of unstructured time like the agoras of Ancient Greece. Just some form of rubric-free authentic curiosity-driven discourse, to break out of the teacher-student hierarchical relation a bit and to widen their understanding of learning, I suppose.
- koonsolo 9y ago
  I think you totally mis the point. It's not about education, it's about a system where you can't opt out of in US. What is your credit score? If you are from US, you probably know. If you are from somewhere else, you are probably staring at your screen saying "what???". Shops giving out their own credit cards... crazy.
  - bmelton 9y ago
    You can always choose to pay cash for everything you want, and eschew credit altogether, it's just so much harder to muster up the cash for big-ticket purchases like homes and automobiles that it's easier to game the system for credit building than it is to save for decades for a home to own. It's not that you can't do it, but that trading potential future earnings for money now is so damned practical that it's hard to ignore.
    - richardknop 9y ago
      I'm planning to do that. I am 2 thirds on my way to buy house with cash. No need to borrow any money. That will be my dream!
- XorNot 9y ago
  No it isn't. The root cause of America's problems is a deep-seated, societal belief that you can always blame the victim and attendant governmental malfeasance and neglect in actually fixing the numerous traps which ensure that when something goes wrong, everyone piles on until that person is destitute. American society is setup to find someone, anyone to pin a problem on, even if it would ruin that person, just to ensure that "everyone" doesn't have to think or worry about it existing. It is writ large a tragedy of the commons, where everyone thinks the specific wrong they experience is unAmerican but everything else is a failure of rugged individualism and bootstraps.
osteele 9y ago
Maybe. Or maybe (many) poor people are acting rationally given their economic circumstances. See ["Reframing the Debate about Payday Lending"](http://libertystreeteconomics.newyorkfed.org/2015/10/reframing-the-debate-about-payday-lending.html http://libertystreeteconomics.newyorkfed.org/2015/10/reframi...) (a pop summary of ["Interest rate caps and implicit collusion: the case of payday lending"](http://www.inderscience.com/info/inarticle.php?artid=58089 http://www.inderscience.com/info/inarticle.php?artid=58089), DeYoung & Phillips), or other articles linked [this episode of Freakonomics](http://freakonomics.com/podcast/payday-loans/ http://freakonomics.com/podcast/payday-loans/). These articles are about payday loans, not credit card debt, but (1) some (but not all!) of the same concerns apply; and (2) I suspect much discussion of “poor people” and “credit cards” lumps together these forms of debt anyway. I've seen other comparisons of payday loans to banking services for low-wealth individuals. (I don't have these at hand. I think Bannerjee & Duflo's _Poor Economics_ may cover some of this.) The banking services and fees that middle-class individuals see aren't available to the poor, so it's easy to draw false conclusions if you're generalizing from your own circumstances instead of studying theirs. I agree that “the system” is screwing poor people. It's less obvious to me that this is because the poor aren't good at personal finances (let alone that they're “stupid”), and therefore that education would largely address this – although, according to some studies summarizes in the DeYoung & Phillips work, it might make some difference.
- Domenic_S 9y ago
  Yep. This whole thread is full of cringe. TFA was about how silicon valley & Washington are The Elites -- out of touch with the working class and what are everyday problems for a huge swath of America. And the top 3 comments from the elite are: - Poor people are stupid - Poor people are bad at personal finance - More/better education (government) will help Did everyone suddenly forget all the un/underemployed college graduates we've got? Are they stupid, too? Just a shocking lack of empathy here.
  - closeparen 9y ago
    >Did everyone suddenly forget all the un/underemployed college graduates we've got? Are they stupid, too? I think you'll find the HN consensus is that they're stupid (or were tragically misled) for going to college in a major other than computer science or engineering.
valuearb 9y ago
If you want to gamble on starting your own business it's amazing how much money you can easily borrow on credit cards.
- avremel 9y ago
  Sounds on target. Anyone in the US can start a business based solely upon churning credit cards. For illustration purposes: Let's say you swipe at the start of the billing cycle, you now have about 60 days to repay. We will also assume that you have 10 acquaintances willing to swipe for you, each with a credit line of 80k, you suddenly got 800k credit to start. The more being spent, the higher the credit line offered by the banks. Add the incentive of credit card points/cash-back, and it's no wonder people are blinded by the risks of swiping. The end result? Small business owners will take heavy risks with an outsized amount of capital.
xyz451 9y ago
I bet a lot of the credit card debt eventually gets written off. I heard a statistic a few years back 05/2014. Essentially 1/4 credit card debtors had more on credit then they had in the bank. Those levels of debt are unsustainable on a macro level. Some bank somewhere won't get paid. Then we'll have 2008 all over again.
xyz451 9y ago
I bet a lot of the credit card debt eventually gets written off. I heard a statistic a few years back 05/2014. Essentially 1/4 credit card debtors had more on credit then they had in the bank. Those levels of debt are unsustainable on a macro level. Some bank somewhere won't get paid. Then we'll have 2008 all over again.
xyz451 9y ago
I bet a lot of the credit card debt eventually gets written off. I heard a statistic a few years back 05/2014. Essentially 1/4 credit card debtors had more on credit then they had in the bank. Those levels of debt are unsustainable on a macro level. Some bank somewhere won't get paid. Then we'll have 2008 all over again.

slackingoff2017 9y ago

It's built to screw poor people. If the choice is between getting another credit card or losing your apartment you end up in a lot of debt.

losteric 9y ago

The root cause of most American problems is poor public education. We're still over-emphasizing passing grades over effectively growing new American citizens... Personal finance is rarely offered and never mandatory, yet we collectively bare the burden of financial ignorance. The same applies to other subjects like statistics or civics.

maxxxxx 9y ago
I didn't learn finance in Germany in school but we all knew that taking on massive debt is stupid. It's the advertising and easy access to consumer credit. Wage increases have been replaced by easier access to credit.
- ringaroundthetx 9y ago
  German culture has a mass distortion on the perils of consumer credit. The "debt is evil" crowd is just an extreme as the people that irresponsibly use debt. Maybe you should learn finance.
- the_mitsuhiko 9y ago
  Germany is the other extreme though. Not sure if that is healthier.
  - kuschku 9y ago
    The German model definitely has lower risks. If something goes wrong, there will still be something left with which you can rebuild. The American high-risk model on the other hand is definitely one that isn't long-term sustainable, but it wins out in short term, until another crash happens.
    - maxxxxx 9y ago
      I think especially in the last 30 years the risk has been shifted to lower incomes. To me that's the real evil.
cvsh 9y ago
>We're still over-emphasizing passing grades over effectively growing new American citizens... 2/3rds of state legislatures are actively hostile to basic tenets of science, let alone the government teaching "effective American citizenship". We just recently legalized malpractice for financial advisors. The rules preventing them from screwing their clients out of their retirement savings were spun as hurting consumer choice. Imagine how it'd be spun if there was a movement for public schools to teach "effective citizenship".
- jacobush 9y ago
  Teaching terrorism, no doubt.
- gwenzek 9y ago
  > We just recently legalized malpractice for financial advisors. Do you have reference?
  - derivagral 9y ago
    Link[1] is from forbes, but you get the idea. Matt Levine mentioned it once or twice in his column a week or 3 ago. [1] https://www.forbes.com/sites/jamiehopkins/2017/02/03/trump-signs-executive-order-shelving-fiduciary-standard-for-financial-advisors https://www.forbes.com/sites/jamiehopkins/2017/02/03/trump-s...
- pizza 9y ago
  It would be nice if schools allocated more time for the young kids to get to share with teachers which topics that they wanted to know more about, just a block of unstructured time like the agoras of Ancient Greece. Just some form of rubric-free authentic curiosity-driven discourse, to break out of the teacher-student hierarchical relation a bit and to widen their understanding of learning, I suppose.
koonsolo 9y ago
I think you totally mis the point. It's not about education, it's about a system where you can't opt out of in US. What is your credit score? If you are from US, you probably know. If you are from somewhere else, you are probably staring at your screen saying "what???". Shops giving out their own credit cards... crazy.
- bmelton 9y ago
  You can always choose to pay cash for everything you want, and eschew credit altogether, it's just so much harder to muster up the cash for big-ticket purchases like homes and automobiles that it's easier to game the system for credit building than it is to save for decades for a home to own. It's not that you can't do it, but that trading potential future earnings for money now is so damned practical that it's hard to ignore.
  - richardknop 9y ago
    I'm planning to do that. I am 2 thirds on my way to buy house with cash. No need to borrow any money. That will be my dream!
XorNot 9y ago
No it isn't. The root cause of America's problems is a deep-seated, societal belief that you can always blame the victim and attendant governmental malfeasance and neglect in actually fixing the numerous traps which ensure that when something goes wrong, everyone piles on until that person is destitute. American society is setup to find someone, anyone to pin a problem on, even if it would ruin that person, just to ensure that "everyone" doesn't have to think or worry about it existing. It is writ large a tragedy of the commons, where everyone thinks the specific wrong they experience is unAmerican but everything else is a failure of rugged individualism and bootstraps.

osteele 9y ago

Maybe. Or maybe (many) poor people are acting rationally given their economic circumstances. See ["Reframing the Debate about Payday Lending"](http://libertystreeteconomics.newyorkfed.org/2015/10/reframing-the-debate-about-payday-lending.html http://libertystreeteconomics.newyorkfed.org/2015/10/reframi...) (a pop summary of ["Interest rate caps and implicit collusion: the case of payday lending"](http://www.inderscience.com/info/inarticle.php?artid=58089 http://www.inderscience.com/info/inarticle.php?artid=58089), DeYoung & Phillips), or other articles linked [this episode of Freakonomics](http://freakonomics.com/podcast/payday-loans/ http://freakonomics.com/podcast/payday-loans/). These articles are about payday loans, not credit card debt, but (1) some (but not all!) of the same concerns apply; and (2) I suspect much discussion of “poor people” and “credit cards” lumps together these forms of debt anyway. I've seen other comparisons of payday loans to banking services for low-wealth individuals. (I don't have these at hand. I think Bannerjee & Duflo's _Poor Economics_ may cover some of this.) The banking services and fees that middle-class individuals see aren't available to the poor, so it's easy to draw false conclusions if you're generalizing from your own circumstances instead of studying theirs. I agree that “the system” is screwing poor people. It's less obvious to me that this is because the poor aren't good at personal finances (let alone that they're “stupid”), and therefore that education would largely address this – although, according to some studies summarizes in the DeYoung & Phillips work, it might make some difference.

Domenic_S 9y ago
Yep. This whole thread is full of cringe. TFA was about how silicon valley & Washington are The Elites -- out of touch with the working class and what are everyday problems for a huge swath of America. And the top 3 comments from the elite are: - Poor people are stupid - Poor people are bad at personal finance - More/better education (government) will help Did everyone suddenly forget all the un/underemployed college graduates we've got? Are they stupid, too? Just a shocking lack of empathy here.
- closeparen 9y ago
  >Did everyone suddenly forget all the un/underemployed college graduates we've got? Are they stupid, too? I think you'll find the HN consensus is that they're stupid (or were tragically misled) for going to college in a major other than computer science or engineering.

valuearb 9y ago

If you want to gamble on starting your own business it's amazing how much money you can easily borrow on credit cards.

avremel 9y ago
Sounds on target. Anyone in the US can start a business based solely upon churning credit cards. For illustration purposes: Let's say you swipe at the start of the billing cycle, you now have about 60 days to repay. We will also assume that you have 10 acquaintances willing to swipe for you, each with a credit line of 80k, you suddenly got 800k credit to start. The more being spent, the higher the credit line offered by the banks. Add the incentive of credit card points/cash-back, and it's no wonder people are blinded by the risks of swiping. The end result? Small business owners will take heavy risks with an outsized amount of capital.

xyz451 9y ago

I bet a lot of the credit card debt eventually gets written off. I heard a statistic a few years back 05/2014. Essentially 1/4 credit card debtors had more on credit then they had in the bank. Those levels of debt are unsustainable on a macro level. Some bank somewhere won't get paid. Then we'll have 2008 all over again.

xyz451 9y ago