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Interest rates will go up so that they will end up making the same amount of money, just from slightly different people. Another possibility is penalty interes

by ars 3y ago

Interest rates will go up so that they will end up making the same amount of money, just from slightly different people. Another possibility is penalty interest rates that kick in if you are late.

odyssey7 3y ago
Imagine the horror if credit card companies stop being able to offer premium airport lounge experiences and free travel to their wealthiest customers by means of the late fees they charge to their most marginalized.
- ars 3y ago
  That's not a thing. You are horrified at something that doesn't exist. If a credit card company offers this kind of perk it's because that customer gives them enough profit to make it worth it. It's simply not a thing to lose money on a wealthy customer and make it up on a poor one. That's would be a pretty poor business. (In general those kinds of cards have annual fees in the thousands of dollars.) And what makes you say it's "their most marginalized" anyway? Is there something about being poor that makes people forget to pay a bill? Like I understand carrying a balance if you are poor, but forgetting to pay is just a human thing. If anything these lower fees will be worse for them. Instead of a late fee that anyone might experience, the interest rates will go up, and those are paid mainly by the ones least able to afford it.
  - odyssey7 3y ago
    I take it that you’ve never been paid late while living paycheck to paycheck? No, it’s not just about forgetting to pay the bill on time, and in many cases the interest rate is already the highest one that’s legally possible. When high-status people conspicuously consume through Birkin bags and exclusive club memberships, a lot of other people are led to desire those things. In the case of credit cards, not only is demand drummed up by enlisting wealthy people as card-carrying brand ambassadors who flash their membership card every time they approach a cashier, it also distorts the perception of incurring debt for everyday purchases into something that financially savvy people are doing. Your analysis is kind of correct if you entirely ignore marketing and psychology.

by ars 3y ago

Interest rates will go up so that they will end up making the same amount of money, just from slightly different people. Another possibility is penalty interest rates that kick in if you are late.

odyssey7 3y ago

Imagine the horror if credit card companies stop being able to offer premium airport lounge experiences and free travel to their wealthiest customers by means of the late fees they charge to their most marginalized.

ars 3y ago
That's not a thing. You are horrified at something that doesn't exist. If a credit card company offers this kind of perk it's because that customer gives them enough profit to make it worth it. It's simply not a thing to lose money on a wealthy customer and make it up on a poor one. That's would be a pretty poor business. (In general those kinds of cards have annual fees in the thousands of dollars.) And what makes you say it's "their most marginalized" anyway? Is there something about being poor that makes people forget to pay a bill? Like I understand carrying a balance if you are poor, but forgetting to pay is just a human thing. If anything these lower fees will be worse for them. Instead of a late fee that anyone might experience, the interest rates will go up, and those are paid mainly by the ones least able to afford it.
- odyssey7 3y ago
  I take it that you’ve never been paid late while living paycheck to paycheck? No, it’s not just about forgetting to pay the bill on time, and in many cases the interest rate is already the highest one that’s legally possible. When high-status people conspicuously consume through Birkin bags and exclusive club memberships, a lot of other people are led to desire those things. In the case of credit cards, not only is demand drummed up by enlisting wealthy people as card-carrying brand ambassadors who flash their membership card every time they approach a cashier, it also distorts the perception of incurring debt for everyday purchases into something that financially savvy people are doing. Your analysis is kind of correct if you entirely ignore marketing and psychology.