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In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mec

by Khaine 5y ago

In Australia millennials, are allergic to credit cards. Credit card usage in that demographic is really low. Instead they prefer BNPL services as a credit mechanism. Banks have also responded and offer credit cards that don’t act like normal credit cards[1] [1] https://www.commbank.com.au/credit-cards/commbank-neo.html https://www.commbank.com.au/credit-cards/commbank-neo.html

ZephyrBlu 5y ago
I'm an early 20s Kiwi zoomer, so somewhat similar demographic. I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.
- xenihn 5y ago
  I've received roughly $3000 in rewards from my credit card usage over the past six years. Not a life-changing amount, but not completely insignificant, either. I think the biggest thing that I've lost is data privacy, but I would think that debit cards incur the same cost. I've never used any of the benefits like extra insurance/warranty, but it's nice to know they exist. Chargebacks on debit cards are also much more painful than on credit.
  - distances 5y ago
    Assuming NZ is like Europe, the are no rewards thanks to fees being low due to regulation. Chargebacks exist but are not as strongly defaulting on consumer side; to succeed, you need real proof of merchant not holding up their side.
  - jlangenauer 5y ago
    You do realise that you have paid that $3000 in higher prices, right? The credit card companies and banks are not giving you free money.
    - etempleton 5y ago
      Interested to hear you elaborate. It might be different in different countries, but in the US you do not pay additional to use a credit card. As long as you pay on time each month many credit cards have zero fees or interest. Rewards can range from 1-5 percent cash back, which does add up. Now if you are making a larger point about credit cards increasing the general cost of goods across the board as merchants incur the cost and pass along to the consumer to maintain margin, sure, but that ship sailed a long time ago. The only reasonable reaction from the consumer is to leverage the convenience, protections, and float afforded by credit cards, while maximizing any rewards afforded by said cards.
- J253 5y ago
  > I don’t have a credit card and see no point in it. If you use a credit card like a debit card (pay it off in full every month) it can be rewarding depending on the card. I make $75-$100 cash back every month on my credit card.
  - cranekam 5y ago
    I assume you’re in the US given $ amounts. Outside the US credit cards are far less developed. A few offer some kind of points or perhaps promotional cash back for some period of time but there’s nothing like the level of competition between cards in the US.
  - rwmj 5y ago
    Where does the $75-$100 come from? Is it that prices are generally more expensive, or is it a transfer from people who get into terrible debt?
    - acchow 5y ago
      It's a 1-3% tax on the merchants. This effectively makes doing business more expensive. You would think that prices in the US would be 1-3% higher than elsewhere in the world, but the "buy first decide later" carefree spending attitude makes for quite a different consumption landscape. Credit cards in the US offer all kinds of perks. My card covers my purchase for damages or theft/loss for 120 days. This reduces the friction in consumption.
    - scatters 5y ago
      It's mostly from merchant fees. This means that it's being paid by consumers who use other payment methods - but then, those come with their own costs.
    - adventured 5y ago
      US card transaction processing fees are higher than in most peer nations. That creates a nice profit stream in the credit card industry in the US, which largely doesn't exist eg in Europe. It funds the points & benefits systems that cards offer here. It's how Visa ($540 billion market cap) can be worth more than the world's most valuable banks (eg JPMorgan $453 billion), and has an almost unbelievable 64% operating income margin ($14.6b operating income on $22.6b sales). Visa has one of the greatest businesses ever conceived, it's almost nothing more than an intangible floating brand toll bridge (they do operate an enormous global processing network, their primary cost center). And then there's Mastercard, worth $380 billion. And American Express, worth $135 billion. It's how Capital One - a credit card issuing company in the US - can be worth more than Barclays and Deutsche Bank combined. HSBC is a giant for example, the second largest bank by assets in Europe, and is worth $113 billion. And although some might jump to the conclusion that Americans must be drowning in credit card debt, that's not the case. US household finances are in decent shape and have been for most of the past decade. The ratios of household debt and debt service payments vs disposable income remains at historic lows (lower than 50 years ago). US household debt as a total sum hasn't increased in the past 20 years inflation adjusted. It's the processing fees that keep the card industry thriving. The switch from cash to cards for everything here was a bonanza for the industry.
- paxys 5y ago
  This is obviously country specific and I don't know anything about the banking/payment environment in NZ, but here in the US credit cards offer a ton of benefit to consumers, so much so that it's almost always stupid to not use one.
  - ZephyrBlu 5y ago
    None of the cards my bank offers seem that enticing: https://www.kiwibank.co.nz/personal-banking/credit-cards/rates-and-fees/ https://www.kiwibank.co.nz/personal-banking/credit-cards/rat...
    - yardstick 5y ago
      It’s a shame the NZ market hates credit cards so much. In the UK they are widely accepted - as in I struggle to think of a shop that didn’t accept them. Including dairies and food trucks (thanks Square!). Btw I find it weird that EFTPOS cards have no annual fee, but debit cards do, but some credit cards don’t (eg ASB Visa Light has no ongoing fees). I sometimes have to pay £1 via card when in a shop activating a service like a monthly phone plan. The £1 is just to validate the card details I gave. They then give me a £1 coin back. I always pay with the credit card, even for such a small amount- because it’s the banks money, not mine, and the bank will always take care of their money more carefully than your own.
      - kiwijamo 5y ago
        In New Zealand, the local EFTPOS network is basically a home-grown network that the major NZ banks established in the 1980s's and have continued operating on a shoe-string budget ever since. For the most part merchants only have to pay a low fixed cost to access the network, whereas customers usually don't pay a fee (as most banks either bundle free EFTPOS transactions in a fixed monthly fee package or even offer it for free entirely for certain account products). Visa/Mastercard on the other hand has Merchants paying 1-3% of all transactions as well as customers paying an annual fee (usually around $25 or so for standard non-reward cards but can go up to hundreds of dollars for higher end cards) for many card products (so a tidy profit from the merchants as well as some annual top-up from the customers). From a typical New Zealand merchant's perspective it doesn't always make sense to offer Visa/Mastercard if they can decide to only accept EFTPOS cards (which almost everyone in New Zealand has) and keep the 1-3% that they would otherwise lose to Visa/Mastercard. Visa/Mastercard offer more modern benefits (e.g. Paywave) which is not offered by EFTPOS which I suspect is partly due to the fact New Zealand's EFTPOS network does not generate much of its own income (just the small fees merchants pay to access the network I believe) so they just continue with the minimum amount of investment. Personally I have an zero-fee American Express card that earns Air New Zealand Airpoints. As a fallback at merchants that don't accept Amex, I have a Wise (ex TransferWise) Mastercard on my phone (for NFC payments) as well as a physical Kiwibank Visa card. When none of these are accepted I fall back on to my EFTPOS card which is more or less on par with cash in New Zealand. I estimate around 50% of my expenses are on Amex, 10% on Visa/Mastercard and the balance through EFTPOS with the occasional cash for markets and the like.
- hnick 5y ago
  Insurance, points, cashback, chargebacks. It's also a one month interest free float of your funds if you pay in full each month, meaning you earn some interest. I know some debit cards are getting closer to credit cards in these areas but at least when I first got one, they were just plastic cash. You spend it you lose it, the bank won't support you with clawing it back.
  - ZephyrBlu 5y ago
    > Insurance, points, cashback, chargebacks The first 3 don't really seem to exist in relation to CCs in NZ, and wanting/needing to do a chargeback seems unlikely. There are probably mild benefits to me having a CC over a debit card in NZ, but it doesn't seem to be anything like the US.
    - InvertedRhodium 5y ago
      They do, although it's not a common feature for a basic credit card - for example, the BNZ Platinum Visa card comes with travel insurance, and you can either earn points or get a 1% cashback, depending on which reward scheme you choose.
      - ZephyrBlu 5y ago
        Your comment inspired me to check out a bunch of other banks to see what the deal is. It seems like a few of them have some perks like travel insurance, cashback or airpoints/reward points, but most of them have no or very tiny perks on their cards. A lot of the airpoints are also locked behind a minimum spend in the first 3 months. For me personally even the "good" cards aren't that great because I just don't spend that much money. Though travel insurance would be nice once the world opens back up.
        hnick 5y ago
        The better ones do have an annual fee, so also take that into account. But for us while we were travelling more frequently, the flyer points and insurance made it very worthwhile. Chargebacks are useful depending on consumer protection laws. I'd guess in NZ they're less useful like here in Aus, but if you buy from foreign companies it can be a useful stick to wield as otherwise you'd have little legal recourse.
- shell0x 5y ago
  When I lived in Singapore, I got an American Express cashback card with 3% cashback on the first $5000 and 1.5% unlimited cashback for everything > $5000. They waived the annual fee and there was no minimum spend. Another card(the annual fee got waived too) gave me free access to the airport lounge in Dubai, which was great, because I could get a free meal, free drinks, and take a shower during my layover.
- Accacin 5y ago
  I'm in the UK, and use one (IMO) sensibly. If there's a larger purchase I'll often find a 0% credit card and use that, then pay back. I only do this for stuff I could afford to pay back immediately if required. Secondly, I'm not sure outside the UK, but we have something called Section 75, if I buy something and spend just £1 on a credit card, they are jointly liable for compensating me if something happens. If I'm buying a car, or large purchase I'll often pay £100 on a credit card just for the extra protection.
- sleepyhead 5y ago
  Using a debit card online is not wise. If there is an issue you could end up with an empty bank account temporarily. Much better to be able to deal with such issues when you get an invoice at the end of the month.
gonzo41 5y ago
Interesting product from CBA. Doesn't afterpay act more like a loan? From looking at this it looks like CBA is trying to get people to splash their money and manage the payback themselves. Those management fee's are also based on the idea you can get the card paid off in the month (CBA also use a rolling bill day. so they have a 30 day month and a 25 day payment period for that month. And those details are pretty opaque to newbies with cards. ). You're effectively paying a somewhat high interest rate. From the looks of it CBA's low interest card would be comparable or cheaper if you were young and held a bit of rolling debt. And right now they have 15 months interest free on their 'low' rate card. I think the difference that's better for afterpay customers is being able to have your purchase chunked into installments, effectively making it more like lay by. Also, cba should have made it black so it didn't look you were holding a learners plate credit card. Our Australian banks are lazy.
- Khaine 5y ago
  Black is reserved for their premium card. NAB have a similar product https://www.nab.com.au/personal/credit-cards/nab-straightup-card https://www.nab.com.au/personal/credit-cards/nab-straightup-... Yes the chunking into 4 payments, is the primary benefit of BNPL. It allows you to buy something significant (i.e. a laptop) and spread the payments over time. The downside is its very easy to overspend and get stuck in a debt spiral
  - omniscient_oce 5y ago
    If someones cashflow is pushed to the edge with BNPL purchases it's so easy to get toppled over by an unexpected emergency. It really is quite scary thinking about it. Is it financial irresponsibility causing people to overextend themselves and their cashflow on frivolous purchases, or is it out of necessity and a wider issue such as poor economy / job market / wealth distribution causing people to turn to these services? - Either way, they feel rather predatory to me...
- danpalmer 5y ago
  > Doesn't afterpay act more like a loan? Yep. Buy-now-pay-later services are just short term loan providers. Part of what they're selling to merchants is the fact they are regulated as lenders. We use Klarna in the UK to offer BNPL for exactly this reason, even though we could likely offer it ourselves.
pjerem 5y ago
Maybe I’m wrong but I have the feeling that credit cards as a norm is really just an American thing. In Europe where I live, I know nobody who buys anything with a credit card or barely if there is a 0% rate promotion. Credit cards do exists here but they are the card some shop gave you for whatever reason that you’d better never use. What is interesting is that we use the term « credit card » to speak about our debit cards so I needed a long time to acknowledge that in America, Credit cards really meant that you paid your coffee with a real credit and not with your money.
- sleepyhead 5y ago
  > In Europe where I live, I know nobody who buys anything with a credit card or barely if there is a 0% rate promotion. Do you live in Germany? Here in Norway credit cards are quite common for various reasons (safer to use online, pay later, bonus points).
  - deleted 5y ago
    [deleted]
- Semaphor 5y ago
  I use one in Germany, but only for the cashback and other promotions, I pay 100% off every month (automatically).
- aeyes 5y ago
  > In Europe where I live, I know nobody who buys anything with a credit card Renting a car or making a hotel reservation without a credit card can be quite painful, even in Europe. With a credit card the deposit is held on your card but the money never moves, with debit the money is gone from your account.
  - dagw 5y ago
    Renting a car or making a hotel reservation without a credit card can be quite painful, even in Europe. I have lived in Europe basically my entire adult life and have never had a problem doing either of these with a debit card.
omniscient_oce 5y ago
Myself and most people I know (early twenties) use what the banks give by default which is a "Debit Mastercard/Visa" which lets you shop online like a credit card, perform chargebacks, or pay in-store, but the money just comes out of your savings account like a debit card - not on credit (they get declined if your account is empty too AFAIK but haven't tested it ;P). Are these common overseas? I rarely see reference to it on here or Reddit which is presumably predominantly people from the US or Europe.
- sprkwd 5y ago
  This is very common in the UK.
- Semaphor 5y ago
  Those are what the vast majority of people in Germany use (mainly our own girocard network, but MC/Visa debit are big as well)
  - touisteur 5y ago
    Well yeah, most cards in Europe aren't 'credit' who would want that. If you want a credit, take a loan... Or use the store-financed 'free payment plan' for a fridge or a dishwasher... One thing we have is deferred payment (usually 1 month). And looooooads of credit companies... Some payment cards here (usually with 'store points') are with 'revolving loans' which is considered quite predatory... Wouldn't want to touch this with a space-elevator-sized pole.
- lumost 5y ago
  Uncommon in the US as most major credit cards give you "rewards" for using them which amount to 1-5% off every purchase. Debit cards are used almost exclusively when credit cards are unavailable.
- bruce_one 5y ago
  > they get declined if your account is empty too AFAIK but haven't tested it ;P Not always, at least some banks will allow you to go into overdraft and then charge a fee (e.g. $15 for Commbank) - so it's worth being cautious about running out. I remember miscalculating and going into overdraft by a very small amount (e.g. a dollar or two) and then being slugged the overdraft fee - I would've much preferred the transaction to be declined, but that isn't/wasn't the default behaviour. For example: https://www.commbank.com.au/support.banking.explain-account-overdraw.html https://www.commbank.com.au/support.banking.explain-account-... -> `CommBank may allow you to overdraw transaction accounts for the following payment types... Spend using your linked CommBank card` (It used to be enabled by default with Commbank, not sure if that's still the case; but I'd kinda guess "yes"...)

by Khaine 5y ago

ZephyrBlu 5y ago

I'm an early 20s Kiwi zoomer, so somewhat similar demographic. I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.

xenihn 5y ago
I've received roughly $3000 in rewards from my credit card usage over the past six years. Not a life-changing amount, but not completely insignificant, either. I think the biggest thing that I've lost is data privacy, but I would think that debit cards incur the same cost. I've never used any of the benefits like extra insurance/warranty, but it's nice to know they exist. Chargebacks on debit cards are also much more painful than on credit.
- distances 5y ago
  Assuming NZ is like Europe, the are no rewards thanks to fees being low due to regulation. Chargebacks exist but are not as strongly defaulting on consumer side; to succeed, you need real proof of merchant not holding up their side.
- jlangenauer 5y ago
  You do realise that you have paid that $3000 in higher prices, right? The credit card companies and banks are not giving you free money.
  - etempleton 5y ago
    Interested to hear you elaborate. It might be different in different countries, but in the US you do not pay additional to use a credit card. As long as you pay on time each month many credit cards have zero fees or interest. Rewards can range from 1-5 percent cash back, which does add up. Now if you are making a larger point about credit cards increasing the general cost of goods across the board as merchants incur the cost and pass along to the consumer to maintain margin, sure, but that ship sailed a long time ago. The only reasonable reaction from the consumer is to leverage the convenience, protections, and float afforded by credit cards, while maximizing any rewards afforded by said cards.
J253 5y ago
> I don’t have a credit card and see no point in it. If you use a credit card like a debit card (pay it off in full every month) it can be rewarding depending on the card. I make $75-$100 cash back every month on my credit card.
- cranekam 5y ago
  I assume you’re in the US given $ amounts. Outside the US credit cards are far less developed. A few offer some kind of points or perhaps promotional cash back for some period of time but there’s nothing like the level of competition between cards in the US.
- rwmj 5y ago
  Where does the $75-$100 come from? Is it that prices are generally more expensive, or is it a transfer from people who get into terrible debt?
  - acchow 5y ago
    It's a 1-3% tax on the merchants. This effectively makes doing business more expensive. You would think that prices in the US would be 1-3% higher than elsewhere in the world, but the "buy first decide later" carefree spending attitude makes for quite a different consumption landscape. Credit cards in the US offer all kinds of perks. My card covers my purchase for damages or theft/loss for 120 days. This reduces the friction in consumption.
  - scatters 5y ago
    It's mostly from merchant fees. This means that it's being paid by consumers who use other payment methods - but then, those come with their own costs.
  - adventured 5y ago
    US card transaction processing fees are higher than in most peer nations. That creates a nice profit stream in the credit card industry in the US, which largely doesn't exist eg in Europe. It funds the points & benefits systems that cards offer here. It's how Visa ($540 billion market cap) can be worth more than the world's most valuable banks (eg JPMorgan $453 billion), and has an almost unbelievable 64% operating income margin ($14.6b operating income on $22.6b sales). Visa has one of the greatest businesses ever conceived, it's almost nothing more than an intangible floating brand toll bridge (they do operate an enormous global processing network, their primary cost center). And then there's Mastercard, worth $380 billion. And American Express, worth $135 billion. It's how Capital One - a credit card issuing company in the US - can be worth more than Barclays and Deutsche Bank combined. HSBC is a giant for example, the second largest bank by assets in Europe, and is worth $113 billion. And although some might jump to the conclusion that Americans must be drowning in credit card debt, that's not the case. US household finances are in decent shape and have been for most of the past decade. The ratios of household debt and debt service payments vs disposable income remains at historic lows (lower than 50 years ago). US household debt as a total sum hasn't increased in the past 20 years inflation adjusted. It's the processing fees that keep the card industry thriving. The switch from cash to cards for everything here was a bonanza for the industry.
paxys 5y ago
This is obviously country specific and I don't know anything about the banking/payment environment in NZ, but here in the US credit cards offer a ton of benefit to consumers, so much so that it's almost always stupid to not use one.
- ZephyrBlu 5y ago
  None of the cards my bank offers seem that enticing: https://www.kiwibank.co.nz/personal-banking/credit-cards/rates-and-fees/ https://www.kiwibank.co.nz/personal-banking/credit-cards/rat...
  - yardstick 5y ago
    It’s a shame the NZ market hates credit cards so much. In the UK they are widely accepted - as in I struggle to think of a shop that didn’t accept them. Including dairies and food trucks (thanks Square!). Btw I find it weird that EFTPOS cards have no annual fee, but debit cards do, but some credit cards don’t (eg ASB Visa Light has no ongoing fees). I sometimes have to pay £1 via card when in a shop activating a service like a monthly phone plan. The £1 is just to validate the card details I gave. They then give me a £1 coin back. I always pay with the credit card, even for such a small amount- because it’s the banks money, not mine, and the bank will always take care of their money more carefully than your own.
    - kiwijamo 5y ago
      In New Zealand, the local EFTPOS network is basically a home-grown network that the major NZ banks established in the 1980s's and have continued operating on a shoe-string budget ever since. For the most part merchants only have to pay a low fixed cost to access the network, whereas customers usually don't pay a fee (as most banks either bundle free EFTPOS transactions in a fixed monthly fee package or even offer it for free entirely for certain account products). Visa/Mastercard on the other hand has Merchants paying 1-3% of all transactions as well as customers paying an annual fee (usually around $25 or so for standard non-reward cards but can go up to hundreds of dollars for higher end cards) for many card products (so a tidy profit from the merchants as well as some annual top-up from the customers). From a typical New Zealand merchant's perspective it doesn't always make sense to offer Visa/Mastercard if they can decide to only accept EFTPOS cards (which almost everyone in New Zealand has) and keep the 1-3% that they would otherwise lose to Visa/Mastercard. Visa/Mastercard offer more modern benefits (e.g. Paywave) which is not offered by EFTPOS which I suspect is partly due to the fact New Zealand's EFTPOS network does not generate much of its own income (just the small fees merchants pay to access the network I believe) so they just continue with the minimum amount of investment. Personally I have an zero-fee American Express card that earns Air New Zealand Airpoints. As a fallback at merchants that don't accept Amex, I have a Wise (ex TransferWise) Mastercard on my phone (for NFC payments) as well as a physical Kiwibank Visa card. When none of these are accepted I fall back on to my EFTPOS card which is more or less on par with cash in New Zealand. I estimate around 50% of my expenses are on Amex, 10% on Visa/Mastercard and the balance through EFTPOS with the occasional cash for markets and the like.
hnick 5y ago
Insurance, points, cashback, chargebacks. It's also a one month interest free float of your funds if you pay in full each month, meaning you earn some interest. I know some debit cards are getting closer to credit cards in these areas but at least when I first got one, they were just plastic cash. You spend it you lose it, the bank won't support you with clawing it back.
- ZephyrBlu 5y ago
  > Insurance, points, cashback, chargebacks The first 3 don't really seem to exist in relation to CCs in NZ, and wanting/needing to do a chargeback seems unlikely. There are probably mild benefits to me having a CC over a debit card in NZ, but it doesn't seem to be anything like the US.
  - InvertedRhodium 5y ago
    They do, although it's not a common feature for a basic credit card - for example, the BNZ Platinum Visa card comes with travel insurance, and you can either earn points or get a 1% cashback, depending on which reward scheme you choose.
    - ZephyrBlu 5y ago
      Your comment inspired me to check out a bunch of other banks to see what the deal is. It seems like a few of them have some perks like travel insurance, cashback or airpoints/reward points, but most of them have no or very tiny perks on their cards. A lot of the airpoints are also locked behind a minimum spend in the first 3 months. For me personally even the "good" cards aren't that great because I just don't spend that much money. Though travel insurance would be nice once the world opens back up.
      - hnick 5y ago
        The better ones do have an annual fee, so also take that into account. But for us while we were travelling more frequently, the flyer points and insurance made it very worthwhile. Chargebacks are useful depending on consumer protection laws. I'd guess in NZ they're less useful like here in Aus, but if you buy from foreign companies it can be a useful stick to wield as otherwise you'd have little legal recourse.
shell0x 5y ago
When I lived in Singapore, I got an American Express cashback card with 3% cashback on the first $5000 and 1.5% unlimited cashback for everything > $5000. They waived the annual fee and there was no minimum spend. Another card(the annual fee got waived too) gave me free access to the airport lounge in Dubai, which was great, because I could get a free meal, free drinks, and take a shower during my layover.
Accacin 5y ago
I'm in the UK, and use one (IMO) sensibly. If there's a larger purchase I'll often find a 0% credit card and use that, then pay back. I only do this for stuff I could afford to pay back immediately if required. Secondly, I'm not sure outside the UK, but we have something called Section 75, if I buy something and spend just £1 on a credit card, they are jointly liable for compensating me if something happens. If I'm buying a car, or large purchase I'll often pay £100 on a credit card just for the extra protection.
sleepyhead 5y ago
Using a debit card online is not wise. If there is an issue you could end up with an empty bank account temporarily. Much better to be able to deal with such issues when you get an invoice at the end of the month.

gonzo41 5y ago

Interesting product from CBA. Doesn't afterpay act more like a loan? From looking at this it looks like CBA is trying to get people to splash their money and manage the payback themselves. Those management fee's are also based on the idea you can get the card paid off in the month (CBA also use a rolling bill day. so they have a 30 day month and a 25 day payment period for that month. And those details are pretty opaque to newbies with cards. ). You're effectively paying a somewhat high interest rate. From the looks of it CBA's low interest card would be comparable or cheaper if you were young and held a bit of rolling debt. And right now they have 15 months interest free on their 'low' rate card. I think the difference that's better for afterpay customers is being able to have your purchase chunked into installments, effectively making it more like lay by. Also, cba should have made it black so it didn't look you were holding a learners plate credit card. Our Australian banks are lazy.

Khaine 5y ago
Black is reserved for their premium card. NAB have a similar product https://www.nab.com.au/personal/credit-cards/nab-straightup-card https://www.nab.com.au/personal/credit-cards/nab-straightup-... Yes the chunking into 4 payments, is the primary benefit of BNPL. It allows you to buy something significant (i.e. a laptop) and spread the payments over time. The downside is its very easy to overspend and get stuck in a debt spiral
- omniscient_oce 5y ago
  If someones cashflow is pushed to the edge with BNPL purchases it's so easy to get toppled over by an unexpected emergency. It really is quite scary thinking about it. Is it financial irresponsibility causing people to overextend themselves and their cashflow on frivolous purchases, or is it out of necessity and a wider issue such as poor economy / job market / wealth distribution causing people to turn to these services? - Either way, they feel rather predatory to me...
danpalmer 5y ago
> Doesn't afterpay act more like a loan? Yep. Buy-now-pay-later services are just short term loan providers. Part of what they're selling to merchants is the fact they are regulated as lenders. We use Klarna in the UK to offer BNPL for exactly this reason, even though we could likely offer it ourselves.

pjerem 5y ago

Maybe I’m wrong but I have the feeling that credit cards as a norm is really just an American thing. In Europe where I live, I know nobody who buys anything with a credit card or barely if there is a 0% rate promotion. Credit cards do exists here but they are the card some shop gave you for whatever reason that you’d better never use. What is interesting is that we use the term « credit card » to speak about our debit cards so I needed a long time to acknowledge that in America, Credit cards really meant that you paid your coffee with a real credit and not with your money.

sleepyhead 5y ago
> In Europe where I live, I know nobody who buys anything with a credit card or barely if there is a 0% rate promotion. Do you live in Germany? Here in Norway credit cards are quite common for various reasons (safer to use online, pay later, bonus points).
- deleted 5y ago
  [deleted]
Semaphor 5y ago
I use one in Germany, but only for the cashback and other promotions, I pay 100% off every month (automatically).
aeyes 5y ago
> In Europe where I live, I know nobody who buys anything with a credit card Renting a car or making a hotel reservation without a credit card can be quite painful, even in Europe. With a credit card the deposit is held on your card but the money never moves, with debit the money is gone from your account.
- dagw 5y ago
  Renting a car or making a hotel reservation without a credit card can be quite painful, even in Europe. I have lived in Europe basically my entire adult life and have never had a problem doing either of these with a debit card.

omniscient_oce 5y ago

Myself and most people I know (early twenties) use what the banks give by default which is a "Debit Mastercard/Visa" which lets you shop online like a credit card, perform chargebacks, or pay in-store, but the money just comes out of your savings account like a debit card - not on credit (they get declined if your account is empty too AFAIK but haven't tested it ;P). Are these common overseas? I rarely see reference to it on here or Reddit which is presumably predominantly people from the US or Europe.

sprkwd 5y ago
This is very common in the UK.
Semaphor 5y ago
Those are what the vast majority of people in Germany use (mainly our own girocard network, but MC/Visa debit are big as well)
- touisteur 5y ago
  Well yeah, most cards in Europe aren't 'credit' who would want that. If you want a credit, take a loan... Or use the store-financed 'free payment plan' for a fridge or a dishwasher... One thing we have is deferred payment (usually 1 month). And looooooads of credit companies... Some payment cards here (usually with 'store points') are with 'revolving loans' which is considered quite predatory... Wouldn't want to touch this with a space-elevator-sized pole.
lumost 5y ago
Uncommon in the US as most major credit cards give you "rewards" for using them which amount to 1-5% off every purchase. Debit cards are used almost exclusively when credit cards are unavailable.
bruce_one 5y ago
> they get declined if your account is empty too AFAIK but haven't tested it ;P Not always, at least some banks will allow you to go into overdraft and then charge a fee (e.g. $15 for Commbank) - so it's worth being cautious about running out. I remember miscalculating and going into overdraft by a very small amount (e.g. a dollar or two) and then being slugged the overdraft fee - I would've much preferred the transaction to be declined, but that isn't/wasn't the default behaviour. For example: https://www.commbank.com.au/support.banking.explain-account-overdraw.html https://www.commbank.com.au/support.banking.explain-account-... -> `CommBank may allow you to overdraw transaction accounts for the following payment types... Spend using your linked CommBank card` (It used to be enabled by default with Commbank, not sure if that's still the case; but I'd kinda guess "yes"...)