4 ms·

You're looking at it the wrong way. It's just a shell game to get around truth-in-lending laws. Using a credit card is borrowing money. Interest rates have to

You're looking at it the wrong way. It's just a shell game to get around truth-in-lending laws. Using a credit card is borrowing money. Interest rates have to be disclosed. So the fees plus the grace period are a way of making it look like typical card users are not paying a lot of interest. People getting cash back are actually paying low interest rates, because the market dictates it. If the fees were prohibited, then not much of substance would change, except the numbers would all be higher.

Jensson 5y ago
Well, I live in Europe, use debit and the transaction costs are 0.15% with no hidden fees anywhere in the system. And that is the norm, I don't know of anyone who uses credit cards here. (Although we call debit cards issued by Visa or Mastercard credit cards since Americans call those brands of cards credit cards, but people who use them don't have any credit, your account gets deducted instantly and you can't buy if there is no money left). I'm not sure why Americans say that credit cards with 3% fees would be better than this system, and make fun of Europeans for not wanting to use credit cards. To me it just feels like US finance industry tricked everyone into choosing the more expensive product since they hid the costs of it from the person making the choice. But when people has to pay the real costs of credit cards then basically nobody wants one.
- ilammy 5y ago
  > But when people has to pay the real costs of credit cards then basically nobody wants one. I believe there is an opportunity cost for not using a credit card in US: you don't build your credit history. This might leave you disadvantaged in the future because... the finance industry (as an extension, the society) is structured in a way that you must have a good credit history.
  - perl4ever 5y ago
    I interpret your tone as suggesting the justification is circular and arbitrary, that finance doesn't serve a human need.
    - Jensson 5y ago
      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 ton of money to a lawyer, is that just a coincidence? I don't think so, to me both of those seems very corrupt.
      - deleted 5y ago
        [deleted]
    - ilammy 5y ago
      I didn't mean it in a negative way. I've never lived is US so what do I know. Just suggesting a reason for why people might want credit cards. But you have a point with circularity and arbitrarity. Credit is basically about trust, and the thing with trust is that you already need trust to build more trust. When do you start trusting people to take loans is just as arbitrary as when a person attains the age of majority.
- perl4ever 5y ago
  >I'm not sure why Americans say that credit cards with 3% fees would be better than this system I don't know if you're trying to characterize my remarks above, but if so, this is inapposite. I claimed the fees were a shell game, which implies having them isn't significantly better or worse. If they weren't hidden, it would be clearer how much interest was being paid, but people who pay a low rate would probably still want to borrow. I do feel like there is more fraud protection with credit cards as they currently exist, which is not to say that is specifically tied to a detail like fees not being regulated. It seems all around logical and reasonable to me to want to pay a few basis points more in fees in exchange for fraud being someone else's problem. It's not just a fee for service, but also aligning incentives. If your bank can take the position that fraud is (virtually) impossible, that's not just inconvenient when you happen to be an unlucky victim, but it minimizes their motivation to prevent anything that contributes to it.
- emodendroket 5y ago
  People will go toward the option the system points them to, and in the US you don't pay extra fees for credit cards and have the best fraud protection with them. So why wouldn't you use it? Sure, I guess I might think twice if I had to pay a surcharge with every card purchase. But I don't, so why should I behave as though I did?

Jensson 5y ago

Well, I live in Europe, use debit and the transaction costs are 0.15% with no hidden fees anywhere in the system. And that is the norm, I don't know of anyone who uses credit cards here. (Although we call debit cards issued by Visa or Mastercard credit cards since Americans call those brands of cards credit cards, but people who use them don't have any credit, your account gets deducted instantly and you can't buy if there is no money left). I'm not sure why Americans say that credit cards with 3% fees would be better than this system, and make fun of Europeans for not wanting to use credit cards. To me it just feels like US finance industry tricked everyone into choosing the more expensive product since they hid the costs of it from the person making the choice. But when people has to pay the real costs of credit cards then basically nobody wants one.

ilammy 5y ago
> But when people has to pay the real costs of credit cards then basically nobody wants one. I believe there is an opportunity cost for not using a credit card in US: you don't build your credit history. This might leave you disadvantaged in the future because... the finance industry (as an extension, the society) is structured in a way that you must have a good credit history.
- perl4ever 5y ago
  I interpret your tone as suggesting the justification is circular and arbitrary, that finance doesn't serve a human need.
  - Jensson 5y ago
    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 ton of money to a lawyer, is that just a coincidence? I don't think so, to me both of those seems very corrupt.
    - deleted 5y ago
      [deleted]
  - ilammy 5y ago
    I didn't mean it in a negative way. I've never lived is US so what do I know. Just suggesting a reason for why people might want credit cards. But you have a point with circularity and arbitrarity. Credit is basically about trust, and the thing with trust is that you already need trust to build more trust. When do you start trusting people to take loans is just as arbitrary as when a person attains the age of majority.
perl4ever 5y ago
>I'm not sure why Americans say that credit cards with 3% fees would be better than this system I don't know if you're trying to characterize my remarks above, but if so, this is inapposite. I claimed the fees were a shell game, which implies having them isn't significantly better or worse. If they weren't hidden, it would be clearer how much interest was being paid, but people who pay a low rate would probably still want to borrow. I do feel like there is more fraud protection with credit cards as they currently exist, which is not to say that is specifically tied to a detail like fees not being regulated. It seems all around logical and reasonable to me to want to pay a few basis points more in fees in exchange for fraud being someone else's problem. It's not just a fee for service, but also aligning incentives. If your bank can take the position that fraud is (virtually) impossible, that's not just inconvenient when you happen to be an unlucky victim, but it minimizes their motivation to prevent anything that contributes to it.
emodendroket 5y ago
People will go toward the option the system points them to, and in the US you don't pay extra fees for credit cards and have the best fraud protection with them. So why wouldn't you use it? Sure, I guess I might think twice if I had to pay a surcharge with every card purchase. But I don't, so why should I behave as though I did?