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A question: Credit cards are generally profitable for banks, interest rates set accordingly to account for high default risk for these types of unsecured loans.
by ineedasername 3y ago
A question: Credit cards are generally profitable for banks, interest rates set accordingly to account for high default risk for these types of unsecured loans.
So what is it about these particular cards (really the audience using them) that makes them disproportionately more risky/prone to default?
- themoonisachees 3y agoApparently the default rate for pay later loans was astronomically low during the pandemic, and it kicked back up again afterwards, probably compounded by rampant inflation. Additionally, the way to get such a loan is "own an iphone" which is way more accessible than having to sit at a bank and talk to a guy, or even do it on your bank's app. If this trend continue I could see lawsuits (with or without merit) about how vetted loanees actually were.
- ineedasername 3y agoGetting a credit card usually is pretty easy though unless you have a recent bankruptcy, in which case you need a secured card to work your way back up the credit ladder. An 18 year old with no credit history can generally get a very low limit card (my first as such, in the 90’s, was $500 limit) Makes me think their screening process for Apple cards was awful from the start. Either that or all the banks are seeing higher defaults right now (inflation etc) but GS doesn’t have a deep enough consumer base for profitable customers to cover things. Or GS got into an area of finance they didn’t understand well enough to do it right.