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Overdrafts were the second thing that came to mind, a decade into clawing my way out of poverty and just plain being broke. The first was the scam of debit car
by eyelidlessness 5y ago
Overdrafts were the second thing that came to mind, a decade into clawing my way out of poverty and just plain being broke.
The first was the scam of debit cards and secured credit cards being treated fundamentally differently. They both operate basically the same way for customers (you’re only spending your own money, it’s not credit in the lending sense), but debit cards are a profit center with no credit reporting for the customer and secured credit cards can be recommended or not in any discriminatory way anyone wants (which they are).
- rp1 5y agoWhat do you mean by secured credit cards can be recommended is any discriminatory way? I definitely think the nation should prioritize financial literacy in the education system, but I'm not sure you should be trusting any information you get from a bank regarding what to do with your money.
- rjzzleep 5y agoWell they work like debit cards in a way, you can't overdraft and you build credit with it. It's what's recommended for newcomers to the US. But I'm not sure they're really the same given that your credit limit will be as high as the spare amount of money you can keep as security in your bank.
- eyelidlessness 5y agoWhat I mean is that for customers, secured credit cards and debit cards have roughly the same risk, but banks have obligations to offer checking accounts fairly but offering the equivalent credit-building account is up to their own discretion. It’s considered lending even though they’re lending the customer their own money.
- rp1 5y agoDo you feel that the "discretion" violates the equal credit opportunity act? Technically, credit discrimination is illegal, but I could see a bank taking liberties with people who don't have the means to protect themselves.
- eyelidlessness 5y agoGiven that the risks to “creditors” (banks lending money back to people who own that money) are equal for debit and secured credit cards, and that the risks to “debtors” (people who would be using their checking account to build a neutral-at-worst credit history)… Having the means to protect yourself is the baseline definition of a secured credit card. That’s why it’s secured. You’re starting with some positive balance and spending your own money. That’s what debit cards are too. The liberty banks take is choosing who gets to benefit from their normal spending of their own money being considered as credit at all.
- xdennis 5y agoDebit cards are a fraud? Living on borrowed money is a fraud.
- passerby1 5y agoHow about the printed money?
- eyelidlessness 5y agoIt’s a scam that: 0. for many aspects of life you need positive credit history to live at all 1. debit cards don’t help you build credit 2. secured credit cards (your own money! not borrowed!) do 3. both function almost the same way, but the latter is much less equally available And if you think “living on borrowed money is a fraud”, I suppose that means you think only independently wealthy people should own homes? Nearly no one could afford to buy a home anywhere without a mortgage.
- rhengles 5y agoThat's a kinda chicken and egg problem. I could argue that the more financing you give to people, the more they're gonna be willing to pay, so this actually drive prices up.
- deleted 5y ago[deleted]