38 ms·

Theoretically, credit should be used for one thing: to make more money. (not less) However, instead of using it to buy or construct a machine to triple what yo

Theoretically, credit should be used for one thing: to make more money. (not less) However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. At some point, you run out of hours available and the house of cards collapses. i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit. or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.

Neywiny 1y ago
I think that's a bit disingenuous. It's not always delaying work. There's only so much time and there are some people who cannot afford to live with the time in the day, the skillset they have, and the market conditions (both income and expenses). Your tone and word choice shows you don't understand the problem at all. If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.
- PostOnce 1y ago
  Obviously there are edge cases. Debt can be a form of insurance for the individual. However, I stood in line behind someone who financed a bowl of noodles with afterpay, and it got me thinking. Those are the folks I'm talking about.
  - Neywiny 1y ago
    Sure, but could that not be an edge case? I'd imagine most people aren't sharing the sadder parts of their life. Or, is it possible they spent the rest of their money on everything more important? Could be argued they should cook at home but still.
  - etchalon 1y ago
    So you're using a single person you stood behind in a line for a massive generalization but calling one of the largest sources of consumer debt in the US an edge-case? Neat.
  - janalsncm 1y ago
    It’s not an edge case. The vast majority of debt is mortgages and student loans. Things that people pretty much need, unless you happen to have the upfront cash.
UltraSane 1y ago
I'm currently living off of investment gains from high interest consumer loans.
bufferoverflow 1y ago
[dead]
candiddevmike 1y ago
For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary until your business gets up and running).
- gottorf 1y ago
  > credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time In my experience, the average American has no concept of saving money, and those below average even less. It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it. What do you see in practice? You see people dashing over to the nearest rent-to-own rims shop. (If you don't know poor people, you may not know such businesses exist.) > Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US I doubt that greater availability of credit, perhaps facilitated through government subsidy, is what precludes the majority of such people from transforming their lives.
  - Arainach 1y ago
    When everything around suggests that the system is rigged against you and care against you, it's no surprise that many people live for the moment and try to find some small bit of pleasure or joy in the moment without planning for a future that may not come. It's easy to say "why don't they save more?" from an upper or middle class stability, but when the price of everything keeps going up, the police are out to get you, and healthcare is just a fast track to debt that will take away any savings or assets you managed to have, what's the point?
    - bluecalm 1y ago
crazygringo 1y ago
> Theoretically, credit should be used for one thing: to make more money. I disagree. You use credit to buy a car or buy a house when you don't have the cash to buy them up-front. It's not so you can use them to make money, it's so you can use them to enjoy life. > At some point, you run out of hours available and the house of cards collapses. Only if you go too far. The point is to buy things knowing what they'll cost monthly and for how long, and to budget those as part of your monthly expenses. As long as you can always handle those, you will never run out of hours available and it's not a house of cards. Nothing collapses. You pay off your car; you pay off your mortgage. You seem to be treating this as something black-and-white when it's not. It's an incredibly useful tool when used with budgeting. Not "to make more money" but to have a better life for you and your family for when it matters the most. Nobody wants to wait until the kids have graduated from college to be able to buy their first house. And even with credit cards -- yes you generally want to be paying them off in full monthly. But if you want to take a vacation a couple months before you could otherwise fully pay for it, it's really nice to have that convenience too. Not to mention covering some expenses for a few months if you lose your job. They're a tool to be used responsibly.
- deleted 1y ago
  [deleted]
- gottorf 1y ago
  > They're a tool to be used responsibly. I used to hate to take the position that government should save people from themselves, but I've moderated a lot on it. Some people clearly cannot use credit responsibly.
  - bonoboTP 1y ago
    Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing. It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Having opportunity means you may squander it. Too many guardrails on life paths and behavior blocks meritocratic social mobility as well as opportunities and motivation. Since conditions are changing too fast there is no appropriate crystallized wisdom about it. There is no wealth of myths that would define how to live. The best we are able to say is the non-instruction to "be free" and to tap into your authentic self and author your life path with freedom and agency. In biology one can distinguish evolved traits and behaviors (instincts) from learned ones. The latter can adapt much faster to the situation. Even better than learning from environmental feedback over one's lifetime is planning and simulating possible futures and deciding based on that. Somewhere between the individual lifetime and the genetic evolution levels, there is also the level of culture that used to reshape much slower than a single lifetime, taking lessons and condensing them over generations into templates. But more amd more as we diverge from the ancestral environmental conditions of the savannah and hunting-gathering in tight knit tribes and clans, we can less and less rely on biological instinct, cultural bedrock, wisdom from the parents' generation, what you learned a decade ago, and so on. We are forced to adapt and outmaneuver the shifting landscape faster than ever. More and more things pulling in entirely opposite directions. A vortex of stimuli to cut through with a machete-like mental strength. But most people are not built for this, and even those who are, constantly have to gamble and guess and rely on luck and hindsight.
ocdtrekkie 1y ago
I think my understanding has come to the fact that loans and interest can smooth out your financial situation: When I was single especially I had a lot of savings building, I was making interest and making money. Then when I had a kid, I end up paying that interest back, because expenses for a kid are way above what I can healthily operate in this economy, and I needed more financial products to cover that. But that's also not forever: As soon as a kid's in school and you aren't sending an entire paycheck a month to the daycare, you can establish a upward financial pattern again. It'd be nice if kids were an affordable choice for anyone expect Elon Musk, but you know, here we are. \o/
ajsnigrutin 1y ago
This is all true if you have enough for the basics and are looking above the minimum survival costs. Just to make the money you are making now, you need some stuff, be it a phone or a car, home AC, oven or even a washing machine at home (you can't go to work hungry in dirty clothes). If you don't have the money to pay with cash, you'll be buying that oven/stove with whatever delayed/monthly payment option is available. Yes, if you're buying franchises you can do the "make more money" calculations, but if your kids are going to be hungry soon, you often have no choice.
- Jcampuzano2 1y ago
  You are literally describing using credit as a tool to make more money, just some in a slightly more indirect way, thus you are not in disagreement.
thephyber 1y ago
You are conflating what actions would maximize the long term returns to the individual with the status quo which is that credit increases liquidity of the average family, who has most of their wealth tied up in home equity.
janalsncm 1y ago
Not sure what you mean by the “average person” here but the biggest kinds of debt are mortgages ($12T) and cc debt, student loans, and car loans (roughly 4T total). Is your position that taking debt to buy a house is bad unless you can sell it for a profit? Is working for the mortgage lender to accomplish that not worth it? You can avoid it by renting, but then you’re just working for the landlord, so there’s no avoiding it.
- Jcampuzano2 1y ago
  Every single thing you mentioned outside of cc debt (though arguably you should never reach for a credit card outside of using it for the points systems they provide) could be categorized as something used as a tool to make more money.
  - eptcyka 1y ago
    Vast majority of new car sales will not let the new owner make more money and were financed with debt. If all of those buyers bought used for cash, nobody would be able to afford used cars for cash. It really is only businesses that can convert debt into income, most consumers do not want to. There is nothing I can spend on to get a higher hourly rate.
    - john01dav 1y ago
      You can buy investment properties to convert debt to income and get nice returns. While this is technically a business, there are ways to make it quite passive and thus more like an investment than a business. Margin stock accounts also exist, although I don't know enough to know what situations it makes sense to use them in.
      - hnbad 1y ago
        Don't ever look into where the money you make with "passive income" comes from, I guess? Passive income just means other people are working for your income. At some point, someone has to be poor enough to have to do the actual labor. You can abstract this away with as many financial constructs as you want but it boils down to that. If you can "make money" from mere ownership, we can't all own things that make us money because then we wouldn't have to pay anyone and nobody would have to pay us.
msgodel 1y ago
I tried using one of these offering a 0% intro APR to finance an upgrade to the boat I eventually moved into (saving me 10s of thousands in rent.) They wouldn't let me do it despite having an upper 700s credit score. It's not clear to me how they pick people to lend to.
- tonyhb 1y ago
  It’s not just the credit score - the APR offered is also chosen by the retailer. 0% financing costs the retailer 8%(ish) of the total amount, which is how the lender makes their money. So in your case, the retailer didn’t want to lose that much of their margin.
- avianlyric 1y ago
  Yeah a high credit score isn’t what that lender is looking for. They don’t make money of people who actually repay the loans, indeed they tend to loose rather a lot (cost of capital + cost of account admin). If someone is offering you a 0% APR loan, it’s either because they’re hoping you’ll move your loans to them, and become unable to leave once the 0% period has ended. Or they’re trying to sell something else (either more of something, or the same thing at a higher price), and want use consumer debt to artificially increase market demand. You upgrading a boat, so you can save money in the long term, is literally the opposite outcome they’re looking for here.
  - jack_riminton 1y ago
    Exactly. The thing I always have to remind myself: issued loans aren't liabilities for companies, they're assets. Assets need a return!
- astura 1y ago
  0% intro APR offers are somewhat predatory in that they rely on a large portion of people keeping a balance after the intro period in order to be offered, or at least building a relationship with other financial products. It wouldn't surprise me that they would reject someone in the high 700s, they might have been looking more for people in the low to mid 600s. There's also a lot of reasons one might be rejected for a credit line that have nothing to do with credit score. Some lenders have specific policies in addition to credit score, like Chase's 5/24 rule. Some are also just looking for "relationships" and won't offer you their best products unless you have a bank account with them, etc.
scarface_74 1y ago
And this has nothing to do with buy now pay later since you aren’t charged interest
- PostOnce 1y ago
  Owing money you don't have has disadvantages even without interest. For example, if you make 5000 dollars a month and get a 5000 dollar BNPL loan for a stereo, payment due in a month, then even without interest, you now either starve or default on the loan (or incur penalties, i.e. the interest you thought didn't apply).
  - scarface_74 1y ago
    You realize almost every phone in the US that you buy through the major carriers has worked like this for decades?
    - immibis 1y ago
      Why would you buy your phone through a carrier? Is it the good old US lack of regulation so it's the only option carriers let you have? I get my phone and my SIM card separately.
      - scarface_74 1y ago
        Why not? It’s an iPhone the same as any other iPhone with no carrier bloatware. It usually comes at a discount with monthly credits. Even if I do buy directly from Apple using the Apple credit card, it’s still 2 years with no interest and the same BNPL in all but name. And now it’s all eSIM anyway. If I go to another country I just activate the second eSIM. And it was never about the phone makers not letting you have the phone. Some low end phones even today don’t support all of the carriers frequencies and back in the day you had phones that had to support CDMA vs GSM and even then different parts of spectrum were used by different carriers. Mobile phones at first “free” with a two year service plan and later as a second line item has been the most popular way to buy phones in the US since I was selling them at Radio Shack in the mid 90s. I would get a commission based on a $300-$400 phone and the customer paid $1 up front.
ProAm 1y ago
This is so wildly qrong I dont know how to start. Im assuming this person is not in America, where a lot of the population (unfortunately) uses these practices to buy things that are needed/non-essential) its a shell game the creditors were willing to pay. But now its a lot so its going to affect credit (which is should have to start).
goldfishgold 1y ago
One flaw with this reasoning is that ignores the time value of money. A dollar today is worth more than a dollar a hundred years from now, if only because we’ll all be dead a hundred years from now. From that perspective and with favorable terms it can make sense to sell the future to buy the present, if someone is willing to take that trade.
lm28469 1y ago
> the average person is using The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning. The entire system is based on growth and consumption, I have a hard time blaming "the average person"
- john01dav 1y ago
  I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipulation to make people do things that make no sense (see what Alfred Sloan did to GM, for an early example) — it's toxic and should be absolutely avoided.
  - mathgeek 1y ago
    You can’t block all of it all of the time, and children (some of the most vulnerable) especially can’t.
    - razakel 1y ago
      And that's why government regulation was invented.
      - datameta 1y ago
        You mean corporations regulating the government? Oh wait...
    - tnel77 1y ago
      True, and this is why you shouldn’t just hand your kid an iPad and peace out. I’m all for technology and video games for my kids, but I’m vigilant to keep my kids’ eyes away from ads. As a result, my kids aren’t foaming at the mouth for the latest and greatest toys and games which was my experience as a child.
forrestthewoods 1y ago
> the average person I’m pretty sure the median American does NOT carry a monthly CC balance. They pay it off in full every month. But it’s very close to 50%. And may swing one side or the other depending on how fubar the economy is at that moment in time. So what you said is true for roughly half of Americans. But not true at all for the other ~half. I think.
- dgfitz 1y ago
  I looked it up, and most of the sources seem sketchy (quora, lendingtree), but they agree with your number. I think the kicker is, the ~50% of people who don't pay them off in full every month can have a massive amount of CC debt and struggle to even make a dent in it.
vintermann 1y ago
Are you familiar with the boots theory of socioeconomic unfairness?
- bonoboTP 1y ago
  That's basically a special case of the Matthew principle.
andruby 1y ago
Do you also think that way about buying a house with a mortgage (credit)? I don't. A mortgage isn't used to make more money. It's used so people can own a house after saving for a few years, rather than waiting until they've saved for a few decades.
- leereeves 1y ago
  Often, a mortgage is either used to make money (from rising house prices) or save money (when the mortgage is cheaper than rent).
  - jltsiren 1y ago
    Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent. Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essentially unrelated to the monetary value.
    - rwmj 1y ago
      In addition, you get countries like the UK where renting is very precarious. You might be forced to move every year, after a year your landlord can turf you out with only a few months' notice, you aren't allowed to modify the house in any way even putting a picture-hook into the wall or redecorating a room, etc. Since most people cannot afford to buy a house outright, a mortgage is necessary to avoid this.
    - JKCalhoun 1y ago
      You can believe that if you like of course, but I am definitely not teaching my children that. Renting cheaper than owning sounds like a very short-term view. My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same. It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a person with a typical 30-year mortgage would have paid each month 30 years ago. Because one of those two is still paying the same monthly amount today and about to have an asset they can pass along to their kids or spouse (or cash-out if they want to retire to live in a trailer in Eloy, Arizona).
varjag 1y ago
No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.
- al_borland 1y ago
  Of those who carry credit cards in the US, 60% of them carry a balance [0]. There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600. If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average" person has solid fundamentals, where credit cards are being used as a strategic tool. People also tend to spend more when using credit cards [2], which negates most benefits someone may get from using credit card for the points. So even those with solid fundamentals, who are using it as a tool, are probably still losing, just in a less obvious way. [0] https://libertystreeteconomics.newyorkfed.org/2025/03/why-are-credit-card-rates-so-high/ https://libertystreeteconomics.newyorkfed.org/2025/03/why-ar... [1] https://www.empower.com/press-center/37-americans-cant-afford-emergency-expense-over-400-according-empower-research https://www.empower.com/press-center/37-americans-cant-affor... [2] https://link.springer.com/article/10.1023/A:1008196717017 https://link.springer.com/article/10.1023/A:1008196717017
  - deleted 1y ago
    [deleted]
  - ndriscoll 1y ago
    [1] is better interpreted as 40% of people who are willing to work for less than minimum wage answering marketing surveys don't have $400 for an emergency. It could still be true, but the bias in the methodology is obvious.
  - tristor 1y ago
    > Of those who carry credit cards in the US, 60% of them carry a balance [0]. Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rates, yet even in that case selling investments and paying taxes on them and forgoing future earnings on those investments to pay off a credit card immediately vs over a few months is not necessarily the right decision. Credit cards are about providing you float so you can smooth out cash flow. As an example, I am about to do some home renovations, I expect to spend ~$40k to do so, I also expect to earn and pay off that $40k over the following 4 months. My options are I can carry a balance on a credit card, I can keep my home in a partially renovated state for longer to pay cash, or I can take our a HELOC which has a high origination cost and acts as a secondary lein on my house. The credit card + carrying a balance for 4 months and having my home back in a finished livable state faster is clearly the best choice, but it means I'm in that 60%. These choices aren't binary, the problem is that many people are not financially literate enough to consider their options and outcomes and choose the best choice, they either have a default choice with no consideration, or no real choice, both with negative outcomes.
PicassoCTs 1y ago
For the average consumer, debt is selling its future self as slave.
- immibis 1y ago
  Which is a good deal if the slave you sell is dead. When there's no future, selling the nonfuture for the price of a future is a good deal.
otikik 1y ago
Only the bourgeoisie can be trusted to handle credit responsibly. The proletariat is too illiterate and short-term-focused to be trusted with it.
- fancyfredbot 1y ago
  If you really believe the only responsible use of credit is to buy productive assets then this is a tautology. As soon as anyone uses credit buy productive assets they cease to be proletarian and become part of the capitalist class.
  - otikik 1y ago
    Try reading my comment again with a more sarcastic tone.
potato3732842 1y ago
I'm really sick of this sort of look down your nose at a huge fraction of consumers type behavior. It's the same sort of stupidity that underpins the famous "surely everyone else is wrong" behavior that is exemplified by principal skinner[1]. I eat garbage by the standards of anyone who gives a crap about food and you don't see me going around looking down on everyone for wasting resources on fancy food ingredients and fancy cookware and whatnot. At the end of the day these unnecessary things bring enough perceived benefit to people's lives that they seem worth it, whether that's you overpriced LeDouchebag brand enameled dutch oven or a financing service for consumer garbage doesn't really matter. It's all a "needless" expenditure at the end of the day that people find worth it. I've never used these services and probably never will, nor am I saying the prevalence of these things is optimal at scale, it's probably not, but I'm not gonna sit there and act like 1 in N consumers, probably hundreds of millions of people, is wrong or ignorant for using them or that I know better for not. -shitposted from my 8yo phone while driving my $500 car through traffic on bald tires [1] https://knowyourmeme.com/memes/am-i-so-out-of-touch https://knowyourmeme.com/memes/am-i-so-out-of-touch
- suddenlybananas 1y ago
  Le Creuset pots are genuinely great though
  - eric_the_read 1y ago
    Absolutely! But they're not, IME, 6x as great as a $50 Lodge dutch oven. They don't solve a categorically different problem or solve the same problem in an innovative new way. They're just really nicely made, is all.
  - lurking_swe 1y ago
    well built and work well - yes! However i bought one and regretted it immediately. I think i just don’t like dutch ovens in general. The pot is heavy as hell. I gave mine away to a friend for free lol. Carrying a 25 pound weight in the kitchen / dining room is not my idea of fun. :) I use an All-Clad stainless steel pot now instead. Weighs half as much and it will last forever.
Forgeties79 1y ago
I like to occasionally use BNPL to spread out big purchases for things even if I can already afford it.
yobbo 1y ago
> the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. As long as inflation is higher than the interest rate, it means having to work less than an hour in total. (But it's unsustainable in the long run ...)
ta1243 1y ago
When I was in my 20s it would take me 20 hours work to earn 100 units 15 years later it takes 3 hours work to earn the same amount If I borrow 100 units in my 20s at 4%, it cost 4 units per year I save 20 hours work, and it costs me 4 units a year. That's 48 minutes work in year one, reducing to 8 minute after 15 years. Overall it costs an average 20 minutes a year for 15 years, or 5 hours of work, then I repay the capital which is 3 hours. I've spent 8 hours of work rather than 20 hours.
Tangurena2 1y ago
In some states, your FICO score is used to determine how much your electric utility charges you. Or whether you can be permitted to rent an apartment. Sample: https://www.wsj.com/articles/SB109469015834513166?gaa_at=eafs&gaa_n=ASWzDAhFEuDl0E4dPMYE3VhncocjKcSVPg0Cq7Zcu_2ejypzi_C9RJJCg8_3z3AVKDU%3D&gaa_ts=685aa423&gaa_sig=CGXU6AkuBH1XxsfLUTc9wT9gaQ2FXP3nFVV24cqAGnRM5U248vcAbPynlWXMij4O3EzqnngZBIWDKG3ldSmyHA%3D%3D https://www.wsj.com/articles/SB109469015834513166?gaa_at=eaf...
game_the0ry 1y ago
I like to think of it as "debt productivity" - for every $1 of debt, the result of utilizing that should be more that $1 + interest. Consumer debt, obviously, almost never follows that logic.
JKCalhoun 1y ago
> It'd have been nice had they taught me this in school. Yeah, even at a basic level, it should be made clear that cars depreciate and real estate, by and large, appreciates in value. One of those is "good money" and the other is "bad money". Kids should learn coming out of school to be able to distinguish which of the two they are throwing "good money" at.
- barchar 1y ago
  Eagh, real estate depreciates too, just more slowly. Imo the actual difference is that (many) cars are a very expensive way to meet your transportation needs compared to alternatives.
deleted 1y ago
[deleted]
deleted 1y ago
[deleted]
throwaway98797 1y ago
sometimes you make money in lumps debt allows people smooth that out and lending companies take a fee for that service nothing evil or wrong about it
- BJones12 1y ago
  Yes. Or to rephrase, debt/interest is a way of moving money through time.
DiscourseFan 1y ago
You forget that you don’t pay taxes on debt.
psunavy03 1y ago
OK, we'll tell the average worker who can't afford a house or a car by paying cash not to responsibly use a mortgage or a car loan, because some person on the internet said so. And yes, I'm aware cars are depreciating assets, so spare me the lecture on financing one. I don't currently have a car loan.
jvanderbot 1y ago
Credit cards however, can be used to get free stuff from rewards. Credit loans or payment plans can also be used to get a higher credit score, making the first item easier. Conversely to your example of credit making cash, Cash can make you money through investing, so Credit can also be used to keep higher amounts of cash on hand when purchases are made. , e.g., buying a car on credit and using the car money to invest. But we're saying the same thing there.
- kiba 1y ago
  Credit card rewards are just discounts, discounts that are charged to the merchant. It's not a free lunch by any means.
  - BenjiWiebe 1y ago
    And as a merchant, yes it's annoying, but it's also nice when a customer pays with a credit card, because we actually get paid then.
  - jvanderbot 1y ago
    I think that's a technicality. From my perspective 100% discount is called "Free", and I get that a few times a year when flying (tickets, upgrades, etc) I calculate 100% based on the amount I get from my preferred airline for paying cash for groceries (0) vs the amount I get by using a card they issue (a few imaginary points/$). Then I trade those points for things I couldn't have had by paying cash. As long as I don't pay interest, we're in "Free" territory.
    - lxgr 1y ago
      No, you’re still paying for all of that to some extent. Less than people carrying a balance and/or paying with cash or debit cards, sure, but more than zero. (It would be a pure redistribution from cash to card payers only if issuers made no profit or even a loss on never-balance-carrying cardholders, but if they didn’t, why would they still have them as customers?) It’s still the rational thing to do from an individual perspective, of course, which is why these rewards are so sticky.
dragonwriter 1y ago
> Theoretically, credit should be used There are at least as many ways that this can be finished accurately (for some theory) as there are theories of what should guide human behavior, generally. But this one: > to make more money. Is really more apt to theories of appropriate behavior for arms-length business organizations whose only shared interest among their owners is profits than the common ones for individual people.
_ZeD_ 1y ago
the goal is to die before you run out of hours
whatshisface 1y ago
People living paycheck to paycheck need (in your "franchise" language) food and basic clothing as opex for their human capital, and possibly even entertainment, something that is provided to our troops. Trust me the military would not allow for leisure time if they did not think it had a purpose. Eating enough food and wearing a shirt without holes in it does let people make more at work.
ameliaquining 1y ago
Since no one has done so yet, I'll link to (without necessarily endorsing) patio11's defense of BNPLs: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
RC_ITR 1y ago
>Theoretically, credit should be used for one thing: to make more money. (not less) This is prima fascia false. Credit, especially artificially low interest rate credit like this, can be used for a ton of reasons, including 'beating inflation.' I bring this up because so many diligent savers in 2019/2020 got screwed by waiting to buy big tickets items.
_DeadFred_ 1y ago
I bought a boat on credit. It was the dumbest financial thing I could ever do. It was the best thing spiritually/emotionally I ever did. All of those weekends/vacations boat camping with my kids when they were young. All those times going out after work. So many experiences I would not have gotten to enjoy if I waited until I was 60 to buy in a smart way. There is such a thing as opportunity cost. Putting dinner on a credit card is dumb. Putting a dinner on credit that ends up being a first date creating a memory and connection with your future spouse is life making. Or dinner with grandparents and kids that might not be around long. You have completely ignored opportunity cost in your factoring. And it is probably the most important 'human' factor and is just as tied to your 'time' argument. We have 60 some rotations around a star, and stages in life during that time. That needs to go into your 'optimization' as well.
JumpCrisscross 1y ago
> Theoretically, credit should be used for one thing: to make more money. (not less) Credit moves money across time. That’s it. (Analogous to paying a shipper to move stuff across space.) Not all consumptive debt is bad.(And not all consumptive loans are wealth destroying. I opted to borrow when I bought my car because the rate was so much lower than what I figured I could earn with the money.) And not all cash-flow positive wealth is good. We should be more scrutinising about how debt is used. But especially for folks with volatile incomes, accumulating debt for consumption is fine as long as it doesn’t snowball.
netbioserror 1y ago
This is what happens when interest rates are artificially suppressed. "Buy-now-pay-later" would not exist if the market were able to properly price the time value of money and wasn't backstopped by the Fed and nil reserve requirements.
Guvante 1y ago
Buy now pay later at 0% is what these programs offer which does not align with what you are saying at all. Used properly these provide liquidity by spacing out payments. Certainly there are economic concerns about not being able to afford groceries today but liquidity (especially free liquidity) isn't fundamentally worthless.
- lxgr 1y ago
  Used properly, BNPLs are strictly inferior to credit cards. That said, one of their practical advantages is that they’re harder to use improperly than credit cards.

Neywiny 1y ago

I think that's a bit disingenuous. It's not always delaying work. There's only so much time and there are some people who cannot afford to live with the time in the day, the skillset they have, and the market conditions (both income and expenses). Your tone and word choice shows you don't understand the problem at all. If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.

PostOnce 1y ago
Obviously there are edge cases. Debt can be a form of insurance for the individual. However, I stood in line behind someone who financed a bowl of noodles with afterpay, and it got me thinking. Those are the folks I'm talking about.
- Neywiny 1y ago
  Sure, but could that not be an edge case? I'd imagine most people aren't sharing the sadder parts of their life. Or, is it possible they spent the rest of their money on everything more important? Could be argued they should cook at home but still.
- etchalon 1y ago
  So you're using a single person you stood behind in a line for a massive generalization but calling one of the largest sources of consumer debt in the US an edge-case? Neat.
- janalsncm 1y ago
  It’s not an edge case. The vast majority of debt is mortgages and student loans. Things that people pretty much need, unless you happen to have the upfront cash.

UltraSane 1y ago

I'm currently living off of investment gains from high interest consumer loans.

bufferoverflow 1y ago

[dead]

candiddevmike 1y ago

For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary until your business gets up and running).

gottorf 1y ago
> credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time In my experience, the average American has no concept of saving money, and those below average even less. It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it. What do you see in practice? You see people dashing over to the nearest rent-to-own rims shop. (If you don't know poor people, you may not know such businesses exist.) > Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US I doubt that greater availability of credit, perhaps facilitated through government subsidy, is what precludes the majority of such people from transforming their lives.
- Arainach 1y ago
  When everything around suggests that the system is rigged against you and care against you, it's no surprise that many people live for the moment and try to find some small bit of pleasure or joy in the moment without planning for a future that may not come. It's easy to say "why don't they save more?" from an upper or middle class stability, but when the price of everything keeps going up, the police are out to get you, and healthcare is just a fast track to debt that will take away any savings or assets you managed to have, what's the point?
  - bluecalm 1y ago

crazygringo 1y ago

> Theoretically, credit should be used for one thing: to make more money. I disagree. You use credit to buy a car or buy a house when you don't have the cash to buy them up-front. It's not so you can use them to make money, it's so you can use them to enjoy life. > At some point, you run out of hours available and the house of cards collapses. Only if you go too far. The point is to buy things knowing what they'll cost monthly and for how long, and to budget those as part of your monthly expenses. As long as you can always handle those, you will never run out of hours available and it's not a house of cards. Nothing collapses. You pay off your car; you pay off your mortgage. You seem to be treating this as something black-and-white when it's not. It's an incredibly useful tool when used with budgeting. Not "to make more money" but to have a better life for you and your family for when it matters the most. Nobody wants to wait until the kids have graduated from college to be able to buy their first house. And even with credit cards -- yes you generally want to be paying them off in full monthly. But if you want to take a vacation a couple months before you could otherwise fully pay for it, it's really nice to have that convenience too. Not to mention covering some expenses for a few months if you lose your job. They're a tool to be used responsibly.

deleted 1y ago
[deleted]
gottorf 1y ago
> They're a tool to be used responsibly. I used to hate to take the position that government should save people from themselves, but I've moderated a lot on it. Some people clearly cannot use credit responsibly.
- bonoboTP 1y ago
  Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing. It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Having opportunity means you may squander it. Too many guardrails on life paths and behavior blocks meritocratic social mobility as well as opportunities and motivation. Since conditions are changing too fast there is no appropriate crystallized wisdom about it. There is no wealth of myths that would define how to live. The best we are able to say is the non-instruction to "be free" and to tap into your authentic self and author your life path with freedom and agency. In biology one can distinguish evolved traits and behaviors (instincts) from learned ones. The latter can adapt much faster to the situation. Even better than learning from environmental feedback over one's lifetime is planning and simulating possible futures and deciding based on that. Somewhere between the individual lifetime and the genetic evolution levels, there is also the level of culture that used to reshape much slower than a single lifetime, taking lessons and condensing them over generations into templates. But more amd more as we diverge from the ancestral environmental conditions of the savannah and hunting-gathering in tight knit tribes and clans, we can less and less rely on biological instinct, cultural bedrock, wisdom from the parents' generation, what you learned a decade ago, and so on. We are forced to adapt and outmaneuver the shifting landscape faster than ever. More and more things pulling in entirely opposite directions. A vortex of stimuli to cut through with a machete-like mental strength. But most people are not built for this, and even those who are, constantly have to gamble and guess and rely on luck and hindsight.

ocdtrekkie 1y ago

I think my understanding has come to the fact that loans and interest can smooth out your financial situation: When I was single especially I had a lot of savings building, I was making interest and making money. Then when I had a kid, I end up paying that interest back, because expenses for a kid are way above what I can healthily operate in this economy, and I needed more financial products to cover that. But that's also not forever: As soon as a kid's in school and you aren't sending an entire paycheck a month to the daycare, you can establish a upward financial pattern again. It'd be nice if kids were an affordable choice for anyone expect Elon Musk, but you know, here we are. \o/

ajsnigrutin 1y ago

This is all true if you have enough for the basics and are looking above the minimum survival costs. Just to make the money you are making now, you need some stuff, be it a phone or a car, home AC, oven or even a washing machine at home (you can't go to work hungry in dirty clothes). If you don't have the money to pay with cash, you'll be buying that oven/stove with whatever delayed/monthly payment option is available. Yes, if you're buying franchises you can do the "make more money" calculations, but if your kids are going to be hungry soon, you often have no choice.

Jcampuzano2 1y ago
You are literally describing using credit as a tool to make more money, just some in a slightly more indirect way, thus you are not in disagreement.

thephyber 1y ago

You are conflating what actions would maximize the long term returns to the individual with the status quo which is that credit increases liquidity of the average family, who has most of their wealth tied up in home equity.

janalsncm 1y ago

Not sure what you mean by the “average person” here but the biggest kinds of debt are mortgages ($12T) and cc debt, student loans, and car loans (roughly 4T total). Is your position that taking debt to buy a house is bad unless you can sell it for a profit? Is working for the mortgage lender to accomplish that not worth it? You can avoid it by renting, but then you’re just working for the landlord, so there’s no avoiding it.

Jcampuzano2 1y ago
Every single thing you mentioned outside of cc debt (though arguably you should never reach for a credit card outside of using it for the points systems they provide) could be categorized as something used as a tool to make more money.
- eptcyka 1y ago
  Vast majority of new car sales will not let the new owner make more money and were financed with debt. If all of those buyers bought used for cash, nobody would be able to afford used cars for cash. It really is only businesses that can convert debt into income, most consumers do not want to. There is nothing I can spend on to get a higher hourly rate.
  - john01dav 1y ago
    You can buy investment properties to convert debt to income and get nice returns. While this is technically a business, there are ways to make it quite passive and thus more like an investment than a business. Margin stock accounts also exist, although I don't know enough to know what situations it makes sense to use them in.
    - hnbad 1y ago
      Don't ever look into where the money you make with "passive income" comes from, I guess? Passive income just means other people are working for your income. At some point, someone has to be poor enough to have to do the actual labor. You can abstract this away with as many financial constructs as you want but it boils down to that. If you can "make money" from mere ownership, we can't all own things that make us money because then we wouldn't have to pay anyone and nobody would have to pay us.

msgodel 1y ago

I tried using one of these offering a 0% intro APR to finance an upgrade to the boat I eventually moved into (saving me 10s of thousands in rent.) They wouldn't let me do it despite having an upper 700s credit score. It's not clear to me how they pick people to lend to.

tonyhb 1y ago
It’s not just the credit score - the APR offered is also chosen by the retailer. 0% financing costs the retailer 8%(ish) of the total amount, which is how the lender makes their money. So in your case, the retailer didn’t want to lose that much of their margin.
avianlyric 1y ago
Yeah a high credit score isn’t what that lender is looking for. They don’t make money of people who actually repay the loans, indeed they tend to loose rather a lot (cost of capital + cost of account admin). If someone is offering you a 0% APR loan, it’s either because they’re hoping you’ll move your loans to them, and become unable to leave once the 0% period has ended. Or they’re trying to sell something else (either more of something, or the same thing at a higher price), and want use consumer debt to artificially increase market demand. You upgrading a boat, so you can save money in the long term, is literally the opposite outcome they’re looking for here.
- jack_riminton 1y ago
  Exactly. The thing I always have to remind myself: issued loans aren't liabilities for companies, they're assets. Assets need a return!
astura 1y ago
0% intro APR offers are somewhat predatory in that they rely on a large portion of people keeping a balance after the intro period in order to be offered, or at least building a relationship with other financial products. It wouldn't surprise me that they would reject someone in the high 700s, they might have been looking more for people in the low to mid 600s. There's also a lot of reasons one might be rejected for a credit line that have nothing to do with credit score. Some lenders have specific policies in addition to credit score, like Chase's 5/24 rule. Some are also just looking for "relationships" and won't offer you their best products unless you have a bank account with them, etc.

scarface_74 1y ago

And this has nothing to do with buy now pay later since you aren’t charged interest

PostOnce 1y ago
Owing money you don't have has disadvantages even without interest. For example, if you make 5000 dollars a month and get a 5000 dollar BNPL loan for a stereo, payment due in a month, then even without interest, you now either starve or default on the loan (or incur penalties, i.e. the interest you thought didn't apply).
- scarface_74 1y ago
  You realize almost every phone in the US that you buy through the major carriers has worked like this for decades?
  - immibis 1y ago
    Why would you buy your phone through a carrier? Is it the good old US lack of regulation so it's the only option carriers let you have? I get my phone and my SIM card separately.
    - scarface_74 1y ago
      Why not? It’s an iPhone the same as any other iPhone with no carrier bloatware. It usually comes at a discount with monthly credits. Even if I do buy directly from Apple using the Apple credit card, it’s still 2 years with no interest and the same BNPL in all but name. And now it’s all eSIM anyway. If I go to another country I just activate the second eSIM. And it was never about the phone makers not letting you have the phone. Some low end phones even today don’t support all of the carriers frequencies and back in the day you had phones that had to support CDMA vs GSM and even then different parts of spectrum were used by different carriers. Mobile phones at first “free” with a two year service plan and later as a second line item has been the most popular way to buy phones in the US since I was selling them at Radio Shack in the mid 90s. I would get a commission based on a $300-$400 phone and the customer paid $1 up front.

ProAm 1y ago

This is so wildly qrong I dont know how to start. Im assuming this person is not in America, where a lot of the population (unfortunately) uses these practices to buy things that are needed/non-essential) its a shell game the creditors were willing to pay. But now its a lot so its going to affect credit (which is should have to start).

goldfishgold 1y ago

One flaw with this reasoning is that ignores the time value of money. A dollar today is worth more than a dollar a hundred years from now, if only because we’ll all be dead a hundred years from now. From that perspective and with favorable terms it can make sense to sell the future to buy the present, if someone is willing to take that trade.

lm28469 1y ago

> the average person is using The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning. The entire system is based on growth and consumption, I have a hard time blaming "the average person"

john01dav 1y ago
I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipulation to make people do things that make no sense (see what Alfred Sloan did to GM, for an early example) — it's toxic and should be absolutely avoided.
- mathgeek 1y ago
  You can’t block all of it all of the time, and children (some of the most vulnerable) especially can’t.
  - razakel 1y ago
    And that's why government regulation was invented.
    - datameta 1y ago
      You mean corporations regulating the government? Oh wait...
  - tnel77 1y ago
    True, and this is why you shouldn’t just hand your kid an iPad and peace out. I’m all for technology and video games for my kids, but I’m vigilant to keep my kids’ eyes away from ads. As a result, my kids aren’t foaming at the mouth for the latest and greatest toys and games which was my experience as a child.

forrestthewoods 1y ago

> the average person I’m pretty sure the median American does NOT carry a monthly CC balance. They pay it off in full every month. But it’s very close to 50%. And may swing one side or the other depending on how fubar the economy is at that moment in time. So what you said is true for roughly half of Americans. But not true at all for the other ~half. I think.

dgfitz 1y ago
I looked it up, and most of the sources seem sketchy (quora, lendingtree), but they agree with your number. I think the kicker is, the ~50% of people who don't pay them off in full every month can have a massive amount of CC debt and struggle to even make a dent in it.

vintermann 1y ago

Are you familiar with the boots theory of socioeconomic unfairness?

bonoboTP 1y ago
That's basically a special case of the Matthew principle.

andruby 1y ago

Do you also think that way about buying a house with a mortgage (credit)? I don't. A mortgage isn't used to make more money. It's used so people can own a house after saving for a few years, rather than waiting until they've saved for a few decades.

leereeves 1y ago
Often, a mortgage is either used to make money (from rising house prices) or save money (when the mortgage is cheaper than rent).
- jltsiren 1y ago
  Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent. Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essentially unrelated to the monetary value.
  - rwmj 1y ago
    In addition, you get countries like the UK where renting is very precarious. You might be forced to move every year, after a year your landlord can turf you out with only a few months' notice, you aren't allowed to modify the house in any way even putting a picture-hook into the wall or redecorating a room, etc. Since most people cannot afford to buy a house outright, a mortgage is necessary to avoid this.
  - JKCalhoun 1y ago
    You can believe that if you like of course, but I am definitely not teaching my children that. Renting cheaper than owning sounds like a very short-term view. My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same. It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a person with a typical 30-year mortgage would have paid each month 30 years ago. Because one of those two is still paying the same monthly amount today and about to have an asset they can pass along to their kids or spouse (or cash-out if they want to retire to live in a trailer in Eloy, Arizona).

varjag 1y ago

No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.

al_borland 1y ago
Of those who carry credit cards in the US, 60% of them carry a balance [0]. There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600. If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average" person has solid fundamentals, where credit cards are being used as a strategic tool. People also tend to spend more when using credit cards [2], which negates most benefits someone may get from using credit card for the points. So even those with solid fundamentals, who are using it as a tool, are probably still losing, just in a less obvious way. [0] https://libertystreeteconomics.newyorkfed.org/2025/03/why-are-credit-card-rates-so-high/ https://libertystreeteconomics.newyorkfed.org/2025/03/why-ar... [1] https://www.empower.com/press-center/37-americans-cant-afford-emergency-expense-over-400-according-empower-research https://www.empower.com/press-center/37-americans-cant-affor... [2] https://link.springer.com/article/10.1023/A:1008196717017 https://link.springer.com/article/10.1023/A:1008196717017
- deleted 1y ago
  [deleted]
- ndriscoll 1y ago
  [1] is better interpreted as 40% of people who are willing to work for less than minimum wage answering marketing surveys don't have $400 for an emergency. It could still be true, but the bias in the methodology is obvious.
- tristor 1y ago
  > Of those who carry credit cards in the US, 60% of them carry a balance [0]. Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rates, yet even in that case selling investments and paying taxes on them and forgoing future earnings on those investments to pay off a credit card immediately vs over a few months is not necessarily the right decision. Credit cards are about providing you float so you can smooth out cash flow. As an example, I am about to do some home renovations, I expect to spend ~$40k to do so, I also expect to earn and pay off that $40k over the following 4 months. My options are I can carry a balance on a credit card, I can keep my home in a partially renovated state for longer to pay cash, or I can take our a HELOC which has a high origination cost and acts as a secondary lein on my house. The credit card + carrying a balance for 4 months and having my home back in a finished livable state faster is clearly the best choice, but it means I'm in that 60%. These choices aren't binary, the problem is that many people are not financially literate enough to consider their options and outcomes and choose the best choice, they either have a default choice with no consideration, or no real choice, both with negative outcomes.

PicassoCTs 1y ago

For the average consumer, debt is selling its future self as slave.

immibis 1y ago
Which is a good deal if the slave you sell is dead. When there's no future, selling the nonfuture for the price of a future is a good deal.

otikik 1y ago

Only the bourgeoisie can be trusted to handle credit responsibly. The proletariat is too illiterate and short-term-focused to be trusted with it.

fancyfredbot 1y ago
If you really believe the only responsible use of credit is to buy productive assets then this is a tautology. As soon as anyone uses credit buy productive assets they cease to be proletarian and become part of the capitalist class.
- otikik 1y ago
  Try reading my comment again with a more sarcastic tone.

potato3732842 1y ago

I'm really sick of this sort of look down your nose at a huge fraction of consumers type behavior. It's the same sort of stupidity that underpins the famous "surely everyone else is wrong" behavior that is exemplified by principal skinner[1]. I eat garbage by the standards of anyone who gives a crap about food and you don't see me going around looking down on everyone for wasting resources on fancy food ingredients and fancy cookware and whatnot. At the end of the day these unnecessary things bring enough perceived benefit to people's lives that they seem worth it, whether that's you overpriced LeDouchebag brand enameled dutch oven or a financing service for consumer garbage doesn't really matter. It's all a "needless" expenditure at the end of the day that people find worth it. I've never used these services and probably never will, nor am I saying the prevalence of these things is optimal at scale, it's probably not, but I'm not gonna sit there and act like 1 in N consumers, probably hundreds of millions of people, is wrong or ignorant for using them or that I know better for not. -shitposted from my 8yo phone while driving my $500 car through traffic on bald tires [1] https://knowyourmeme.com/memes/am-i-so-out-of-touch https://knowyourmeme.com/memes/am-i-so-out-of-touch

suddenlybananas 1y ago
Le Creuset pots are genuinely great though
- eric_the_read 1y ago
  Absolutely! But they're not, IME, 6x as great as a $50 Lodge dutch oven. They don't solve a categorically different problem or solve the same problem in an innovative new way. They're just really nicely made, is all.
- lurking_swe 1y ago
  well built and work well - yes! However i bought one and regretted it immediately. I think i just don’t like dutch ovens in general. The pot is heavy as hell. I gave mine away to a friend for free lol. Carrying a 25 pound weight in the kitchen / dining room is not my idea of fun. :) I use an All-Clad stainless steel pot now instead. Weighs half as much and it will last forever.

Forgeties79 1y ago

I like to occasionally use BNPL to spread out big purchases for things even if I can already afford it.

yobbo 1y ago

> the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. As long as inflation is higher than the interest rate, it means having to work less than an hour in total. (But it's unsustainable in the long run ...)

ta1243 1y ago

When I was in my 20s it would take me 20 hours work to earn 100 units 15 years later it takes 3 hours work to earn the same amount If I borrow 100 units in my 20s at 4%, it cost 4 units per year I save 20 hours work, and it costs me 4 units a year. That's 48 minutes work in year one, reducing to 8 minute after 15 years. Overall it costs an average 20 minutes a year for 15 years, or 5 hours of work, then I repay the capital which is 3 hours. I've spent 8 hours of work rather than 20 hours.

Tangurena2 1y ago

In some states, your FICO score is used to determine how much your electric utility charges you. Or whether you can be permitted to rent an apartment. Sample: https://www.wsj.com/articles/SB109469015834513166?gaa_at=eafs&gaa_n=ASWzDAhFEuDl0E4dPMYE3VhncocjKcSVPg0Cq7Zcu_2ejypzi_C9RJJCg8_3z3AVKDU%3D&gaa_ts=685aa423&gaa_sig=CGXU6AkuBH1XxsfLUTc9wT9gaQ2FXP3nFVV24cqAGnRM5U248vcAbPynlWXMij4O3EzqnngZBIWDKG3ldSmyHA%3D%3D https://www.wsj.com/articles/SB109469015834513166?gaa_at=eaf...

game_the0ry 1y ago

I like to think of it as "debt productivity" - for every $1 of debt, the result of utilizing that should be more that $1 + interest. Consumer debt, obviously, almost never follows that logic.

JKCalhoun 1y ago

> It'd have been nice had they taught me this in school. Yeah, even at a basic level, it should be made clear that cars depreciate and real estate, by and large, appreciates in value. One of those is "good money" and the other is "bad money". Kids should learn coming out of school to be able to distinguish which of the two they are throwing "good money" at.

barchar 1y ago
Eagh, real estate depreciates too, just more slowly. Imo the actual difference is that (many) cars are a very expensive way to meet your transportation needs compared to alternatives.

deleted 1y ago

[deleted]

deleted 1y ago

[deleted]

throwaway98797 1y ago

sometimes you make money in lumps debt allows people smooth that out and lending companies take a fee for that service nothing evil or wrong about it

BJones12 1y ago
Yes. Or to rephrase, debt/interest is a way of moving money through time.

DiscourseFan 1y ago

You forget that you don’t pay taxes on debt.

psunavy03 1y ago

OK, we'll tell the average worker who can't afford a house or a car by paying cash not to responsibly use a mortgage or a car loan, because some person on the internet said so. And yes, I'm aware cars are depreciating assets, so spare me the lecture on financing one. I don't currently have a car loan.

jvanderbot 1y ago

Credit cards however, can be used to get free stuff from rewards. Credit loans or payment plans can also be used to get a higher credit score, making the first item easier. Conversely to your example of credit making cash, Cash can make you money through investing, so Credit can also be used to keep higher amounts of cash on hand when purchases are made. , e.g., buying a car on credit and using the car money to invest. But we're saying the same thing there.

kiba 1y ago
Credit card rewards are just discounts, discounts that are charged to the merchant. It's not a free lunch by any means.
- BenjiWiebe 1y ago
  And as a merchant, yes it's annoying, but it's also nice when a customer pays with a credit card, because we actually get paid then.
- jvanderbot 1y ago
  I think that's a technicality. From my perspective 100% discount is called "Free", and I get that a few times a year when flying (tickets, upgrades, etc) I calculate 100% based on the amount I get from my preferred airline for paying cash for groceries (0) vs the amount I get by using a card they issue (a few imaginary points/$). Then I trade those points for things I couldn't have had by paying cash. As long as I don't pay interest, we're in "Free" territory.
  - lxgr 1y ago
    No, you’re still paying for all of that to some extent. Less than people carrying a balance and/or paying with cash or debit cards, sure, but more than zero. (It would be a pure redistribution from cash to card payers only if issuers made no profit or even a loss on never-balance-carrying cardholders, but if they didn’t, why would they still have them as customers?) It’s still the rational thing to do from an individual perspective, of course, which is why these rewards are so sticky.

dragonwriter 1y ago

> Theoretically, credit should be used There are at least as many ways that this can be finished accurately (for some theory) as there are theories of what should guide human behavior, generally. But this one: > to make more money. Is really more apt to theories of appropriate behavior for arms-length business organizations whose only shared interest among their owners is profits than the common ones for individual people.

_ZeD_ 1y ago

the goal is to die before you run out of hours

whatshisface 1y ago

People living paycheck to paycheck need (in your "franchise" language) food and basic clothing as opex for their human capital, and possibly even entertainment, something that is provided to our troops. Trust me the military would not allow for leisure time if they did not think it had a purpose. Eating enough food and wearing a shirt without holes in it does let people make more at work.

ameliaquining 1y ago

Since no one has done so yet, I'll link to (without necessarily endorsing) patio11's defense of BNPLs: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

RC_ITR 1y ago

>Theoretically, credit should be used for one thing: to make more money. (not less) This is prima fascia false. Credit, especially artificially low interest rate credit like this, can be used for a ton of reasons, including 'beating inflation.' I bring this up because so many diligent savers in 2019/2020 got screwed by waiting to buy big tickets items.

_DeadFred_ 1y ago

I bought a boat on credit. It was the dumbest financial thing I could ever do. It was the best thing spiritually/emotionally I ever did. All of those weekends/vacations boat camping with my kids when they were young. All those times going out after work. So many experiences I would not have gotten to enjoy if I waited until I was 60 to buy in a smart way. There is such a thing as opportunity cost. Putting dinner on a credit card is dumb. Putting a dinner on credit that ends up being a first date creating a memory and connection with your future spouse is life making. Or dinner with grandparents and kids that might not be around long. You have completely ignored opportunity cost in your factoring. And it is probably the most important 'human' factor and is just as tied to your 'time' argument. We have 60 some rotations around a star, and stages in life during that time. That needs to go into your 'optimization' as well.

JumpCrisscross 1y ago

> Theoretically, credit should be used for one thing: to make more money. (not less) Credit moves money across time. That’s it. (Analogous to paying a shipper to move stuff across space.) Not all consumptive debt is bad.(And not all consumptive loans are wealth destroying. I opted to borrow when I bought my car because the rate was so much lower than what I figured I could earn with the money.) And not all cash-flow positive wealth is good. We should be more scrutinising about how debt is used. But especially for folks with volatile incomes, accumulating debt for consumption is fine as long as it doesn’t snowball.

netbioserror 1y ago

This is what happens when interest rates are artificially suppressed. "Buy-now-pay-later" would not exist if the market were able to properly price the time value of money and wasn't backstopped by the Fed and nil reserve requirements.

Guvante 1y ago

Buy now pay later at 0% is what these programs offer which does not align with what you are saying at all. Used properly these provide liquidity by spacing out payments. Certainly there are economic concerns about not being able to afford groceries today but liquidity (especially free liquidity) isn't fundamentally worthless.

lxgr 1y ago
Used properly, BNPLs are strictly inferior to credit cards. That said, one of their practical advantages is that they’re harder to use improperly than credit cards.