4 ms·

How is being late on a minimum payment a junk fee?

endisneigh 3y ago
It's unnecessary since you are already paying interest. Why are you paying interest? Because you are late on paying your entire balance. If they want to collect late fees they should stop accumulating the interest. Of course they won't since that's the entire point.
- Alupis 3y ago
  The outcome of this proposed policy would be interest charges immediately, instead of being assessed monthly. It's not actually free to loan someone money... which is what happens when you swipe your credit card instead of your debit card and float the charges until the end of the billing period.
  - endisneigh 3y ago
    There's no point of speculating - is what you're suggesting happening? You seem to be under an illusion that you cannot make money without late fees, which is false.
    - Alupis 3y ago
      Wrong, I'm saying late fees are not an issue for anyone who makes on-time payments. They're literally called "late fees". Heck, the late fees on my credit cards might as well be $1,000 per day or something - it doesn't matter because I make payments on time as a responsible adult. Late fees discourage irresponsibility. That is why movie rentals had late fees, libraries have late fees, utility bills have late fees, rent, mortgage, and credit cards all have late fees. It encourages you to be responsible. Therefore, reducing late fees increases irresponsibility.
      - endisneigh 3y ago
        Where is the empirical evidence? You keep saying the same nonsense. Let's see it. Of course you won't produce anything since it's not true to begin with.
        Alupis 3y ago
        Let's see... who pays late fees currently? Is it people making on-time payments? No? Oh, so by definition the people paying late fees are being financially irresponsible? So, by lowering the consequences of being financially irresponsible, we'll get less people being irresponsible? This logic does not seem sound.
        endisneigh 3y ago
        So you don't have any evidence for your outrageous claims, got it.
        Alupis 3y ago
        When someone is out of reasonable arguments they often resort to demanding "sources/evidence" without producing any of their own.
        gruez 3y ago
        It's an "outrageous claim" that monetary incentives change behavior?
        gotoeleven 3y ago
        [flagged]
        JumpCrisscross 3y ago
        > Where is the empirical evidence? You’re asking for evidence that late fees are fees that are charged when one is late? It’s in every cardholder agreement. You don’t get charged a late fee if you aren’t late.
- _heimdall 3y ago
  Debts generally aren't bases on the expectation that every payment will zero out your balance. Interest is charged for the outstanding debt, banks would make very little money on credit cards if everyone actually paid them off every month.
  - BenjiWiebe 3y ago
    There are merchant fees too.
    - _heimdall 3y ago
      Sure, banks have multiple revenue streams. They charge merchant fees per transaction, interest on outstanding debt, administration fees for some open accounts, interest on outstanding debt, etc. I'm not saying I agree with all these fees or like the banking industry, but we can't just ignore some revenue streams because others exist. They all add up to a banks quarterly financial statements, and if one goes down they will do everything they can to make up for it in other areas.
    - bombcar 3y ago
      If you work out the merchant fees on $1k rotated each month vs the interest on $1k held for the entire year, the merchant fees come out greater.
- Ferret7446 3y ago
  > Because you are late on paying your entire balance No, it is normal to carry a balance on a credit card. The normal ("normal") way to use a credit card, before ubiquitous financing that seems to be everywhere today, is to allow you to buy something that costs a couple of pay periods, but instead of saving up and buying it later, you buy it now and pay it off gradually. It's the same way all debt is supposed to work (mortgages, business loans, etc). You are still supposed to pay on time though, hence the late fee when you miss a payment.
  - Detrytus 3y ago
    Your comment sounds very strange to me, because it never occurred to me that credit card can be used to "buy something that costs a couple of pay periods". I thought they are mostly for convenience, like when you can carry them instead of cash, or use them to pay in the Internet. But I always pay off the whole balance at the first occasion (irregularly, whenever I login to my bank website and notice the outstanding balance). If you want to pay something off gradually, you usually have better options (car dealerships or shops selling electronics, and many others, they typically have their own credit offers, much better than your average credit card). I think never in my life have I ever paid any interests on my credit card.
    - hammock 3y ago
      The history of card payments is pretty rich. Individual shops like electronics, but before that department stores, etc offered charge cards (or charge coins) since the 1870's. Charge cards/accounts are distinct from credit cards because you settle the balance at the end of the period (month) and it's not revolving debt with an interest rate. Its more like Net 30 terms. Diners Club card was introduced in 1950 as a multipurpose charge card, usable at a large selection of merchants. Eventually banks got in the game in the 50's and 60's and that enabled true credit cards, which were like a charge card but you could carry revolving debt on them
      - hammock 3y ago
        The finance side of it is equally rich. Merchants did/do offer their own financing, with mixed results. Car dealerships did well, and eventually made so much money they spun off entities like GMAC (the GM financing arm), which now operates as a bank - Ally - because of regulatory requirements on deposits etc
_heimdall 3y ago
Unpopular opinion, it isn't. "Junk fee" is based on opinion, one is just saying the cost is exorbitant. I'd assume that no one here actually knows what the real cost of enforcing minimum payments is. Without knowing the real cost we couldn't begin to define what fee is too high (or how "too high" is even defined).

It's unnecessary since you are already paying interest. Why are you paying interest? Because you are late on paying your entire balance. If they want to collect late fees they should stop accumulating the interest. Of course they won't since that's the entire point.

Alupis 3y ago
The outcome of this proposed policy would be interest charges immediately, instead of being assessed monthly. It's not actually free to loan someone money... which is what happens when you swipe your credit card instead of your debit card and float the charges until the end of the billing period.
- endisneigh 3y ago
  There's no point of speculating - is what you're suggesting happening? You seem to be under an illusion that you cannot make money without late fees, which is false.
  - Alupis 3y ago
    Wrong, I'm saying late fees are not an issue for anyone who makes on-time payments. They're literally called "late fees". Heck, the late fees on my credit cards might as well be $1,000 per day or something - it doesn't matter because I make payments on time as a responsible adult. Late fees discourage irresponsibility. That is why movie rentals had late fees, libraries have late fees, utility bills have late fees, rent, mortgage, and credit cards all have late fees. It encourages you to be responsible. Therefore, reducing late fees increases irresponsibility.
    - endisneigh 3y ago
      Where is the empirical evidence? You keep saying the same nonsense. Let's see it. Of course you won't produce anything since it's not true to begin with.
      - Alupis 3y ago
        Let's see... who pays late fees currently? Is it people making on-time payments? No? Oh, so by definition the people paying late fees are being financially irresponsible? So, by lowering the consequences of being financially irresponsible, we'll get less people being irresponsible? This logic does not seem sound.
        endisneigh 3y ago
        So you don't have any evidence for your outrageous claims, got it.
        Alupis 3y ago
        When someone is out of reasonable arguments they often resort to demanding "sources/evidence" without producing any of their own.
        gruez 3y ago
        It's an "outrageous claim" that monetary incentives change behavior?
      - gotoeleven 3y ago
        [flagged]
      - JumpCrisscross 3y ago
        > Where is the empirical evidence? You’re asking for evidence that late fees are fees that are charged when one is late? It’s in every cardholder agreement. You don’t get charged a late fee if you aren’t late.
_heimdall 3y ago
Debts generally aren't bases on the expectation that every payment will zero out your balance. Interest is charged for the outstanding debt, banks would make very little money on credit cards if everyone actually paid them off every month.
- BenjiWiebe 3y ago
  There are merchant fees too.
  - _heimdall 3y ago
    Sure, banks have multiple revenue streams. They charge merchant fees per transaction, interest on outstanding debt, administration fees for some open accounts, interest on outstanding debt, etc. I'm not saying I agree with all these fees or like the banking industry, but we can't just ignore some revenue streams because others exist. They all add up to a banks quarterly financial statements, and if one goes down they will do everything they can to make up for it in other areas.
  - bombcar 3y ago
    If you work out the merchant fees on $1k rotated each month vs the interest on $1k held for the entire year, the merchant fees come out greater.
Ferret7446 3y ago
> Because you are late on paying your entire balance No, it is normal to carry a balance on a credit card. The normal ("normal") way to use a credit card, before ubiquitous financing that seems to be everywhere today, is to allow you to buy something that costs a couple of pay periods, but instead of saving up and buying it later, you buy it now and pay it off gradually. It's the same way all debt is supposed to work (mortgages, business loans, etc). You are still supposed to pay on time though, hence the late fee when you miss a payment.
- Detrytus 3y ago
  Your comment sounds very strange to me, because it never occurred to me that credit card can be used to "buy something that costs a couple of pay periods". I thought they are mostly for convenience, like when you can carry them instead of cash, or use them to pay in the Internet. But I always pay off the whole balance at the first occasion (irregularly, whenever I login to my bank website and notice the outstanding balance). If you want to pay something off gradually, you usually have better options (car dealerships or shops selling electronics, and many others, they typically have their own credit offers, much better than your average credit card). I think never in my life have I ever paid any interests on my credit card.
  - hammock 3y ago
    The history of card payments is pretty rich. Individual shops like electronics, but before that department stores, etc offered charge cards (or charge coins) since the 1870's. Charge cards/accounts are distinct from credit cards because you settle the balance at the end of the period (month) and it's not revolving debt with an interest rate. Its more like Net 30 terms. Diners Club card was introduced in 1950 as a multipurpose charge card, usable at a large selection of merchants. Eventually banks got in the game in the 50's and 60's and that enabled true credit cards, which were like a charge card but you could carry revolving debt on them
    - hammock 3y ago
      The finance side of it is equally rich. Merchants did/do offer their own financing, with mixed results. Car dealerships did well, and eventually made so much money they spun off entities like GMAC (the GM financing arm), which now operates as a bank - Ally - because of regulatory requirements on deposits etc

_heimdall 3y ago

Unpopular opinion, it isn't. "Junk fee" is based on opinion, one is just saying the cost is exorbitant. I'd assume that no one here actually knows what the real cost of enforcing minimum payments is. Without knowing the real cost we couldn't begin to define what fee is too high (or how "too high" is even defined).