4 ms·

I can't speak for bankruptcy filings, but I've sat through small claims sessions on a few occasions and probably half are for credit card debt. Most of the time

by ilamont 6mo ago

I can't speak for bankruptcy filings, but I've sat through small claims sessions on a few occasions and probably half are for credit card debt. Most of the time the defendant doesn't show and assuming the bank wins, damages can be trebled in my state. And: Credit card rates are way, way up compared to just a few years ago. Earlier this year WSJ reported average APRs in the US were over 24% (https://www.wsj.com/finance/banking/the-credit-card-rate-cap-has-stalled-and-issuers-are-doing-just-fine-0694af05&ved=2ahUKEwjOjsaoqZGUAxU5NlkFHcANMTwQFnoECBkQAQ&usg=AOvVaw13P6GbBXbVNqYkp7iUiSA5 https://www.wsj.com/finance/banking/the-credit-card-rate-cap...). Most people do not read the fine print on their credit card applications, or compare them to what rates used to be like.

Loughla 6mo ago
What good would it do to compare rates to what they used to be?
- ilamont 6mo ago
  If you've had credit cards in the past, your minimum payments and debt servicing will be a lot more expensive than before.
- egypturnash 6mo ago
  Your mom: Why don't you have a credit card? It helped me so much when I was in your situation. You, a young adult who doesn't check: I'll get one! runs up debt with an interest rate 4x what your mom had to deal with thirty years ago HELP I'M SUPER BROKE AND BANKRUPTCY IS A LOT HARDER THAN IT WAS THIRTY YEARS AGO TOO You, a young adult who checks: The interest rates are 4x what they were when I was in your situation. This looks like a much shittier deal than it was for you.
  - simpaticoder 6mo ago
    There needs to be a name for the way people think the world hasn't changed since they were a young adult. I'm not convinced it's just boomers; it's just that they had it so good the contrast is higher. Gen Xers do the same thing, I'm sure, for example assuming that kids ride their bikes to school and have textbooks and the leading cause of death isn't GSWs.
    - brailsafe 6mo ago
      Seems like an appropriate term would be the opposite of recency bias; primacy bias. I definitely see it in older Gen Xers who basically coasted their whole lives while ironically idolizing boomers, didn't think about the future at all, and seem to hate trying hard at anything. Obviously not all GenX, just like not all boomers, but those people in both generations anecdotally seem to be fairly characterized as accumulating as much material garbage as possible. The Gen Xers in my life went to school for no reason and then held it up as a bastion of prosperity despite their degree having very little to do with the jobs they had
munificent 6mo ago
I wonder if there's a death spiral there: 1. Economy gets worse and some people are no longer able to keep up with their credit card payments. They default. 2. Credit cards increase rates to compensate for the increased risk since a greater fraction of their users are failing to pay. 3. People who are financially stable and literate see the increased rates and put fewer things on credit. 4. The remaining pool of people using credit now has an even greater fraction of people who aren't financially solid. 5. Go to 1.
- yurishimo 6mo ago
  This is a good theory. If anyone is wondering how to escape this cycle, the solution is pretty straightforward; don’t buy things you cannot afford with cash/debit. If putting your credit card balance on autopay is scary to you, you probably shouldn’t have a credit card. Also, having a credit card doesn’t mean you can ignore the charges and settle up at the end of the month. Credit is a tool that can be abused and misused like any other tool. Personally, I’m anti credit in general and don’t have credit cards or a credit score. But I also moved to Europe where credit is not nearly as important as when i lived in the US.
  - john_strinlai 6mo ago
    >Personally, I’m anti credit in general and don’t have credit cards or a credit score. if only people could choose to have or not have a credit score. that would be cool. unfortunately, equifax/transunion/experian are some of the original data vacuums and assign one whether you want one or not.
    - simpaticoder 6mo ago
      In the US, credit score is used for hiring and rental agreements. It is not something you can opt-out of.
      - phil21 6mo ago
        Yep. I'm old enough to remember when credit agencies were considering dubiously legal. It was illegal (in my state at least) for a group of merchants to run a shared 'blacklist' of customers back in the day. The credit agencies side-stepped this. It was pitched as an "opt in" sort of situation where if you wanted cheaper credit or to finance a car or some optional thing in life, you could do so. They were not even used (as much, at least) for house mortgages - the bank would go through financial records and check income vs. debt and your banking history instead. Your credit score (or lack of it) was irrelevant. Then they slowly became endemic to simply participate in life at all. Good luck renting a spot with a poor credit score even in the early 2000's. My second apartment I had to show my (private mom and pop) landlord a great reference from my previous rental plus supply him with a 3mo security deposit since I had zero credit. I learned then that it was a non-optional part of society and I had better play ball or go entirely off grid hermit style. Then credit agencies started even more BS like putting in your salary history (mined from employers), any criminal records, etc. It's a social credit score in everything but name and likely implemented far broader and wider in society than anything China currently has. You will literally be frozen out of many careers and entire areas to live if you do not maintain it.
eddyg 6mo ago
For ref, fere’s the FRED chart on credit card debt: https://fred.stlouisfed.org/graph/?g=1Vus3 https://fred.stlouisfed.org/graph/?g=1Vus3

by ilamont 6mo ago

Loughla 6mo ago

What good would it do to compare rates to what they used to be?

ilamont 6mo ago
If you've had credit cards in the past, your minimum payments and debt servicing will be a lot more expensive than before.
egypturnash 6mo ago
Your mom: Why don't you have a credit card? It helped me so much when I was in your situation. You, a young adult who doesn't check: I'll get one! runs up debt with an interest rate 4x what your mom had to deal with thirty years ago HELP I'M SUPER BROKE AND BANKRUPTCY IS A LOT HARDER THAN IT WAS THIRTY YEARS AGO TOO You, a young adult who checks: The interest rates are 4x what they were when I was in your situation. This looks like a much shittier deal than it was for you.
- simpaticoder 6mo ago
  There needs to be a name for the way people think the world hasn't changed since they were a young adult. I'm not convinced it's just boomers; it's just that they had it so good the contrast is higher. Gen Xers do the same thing, I'm sure, for example assuming that kids ride their bikes to school and have textbooks and the leading cause of death isn't GSWs.
  - brailsafe 6mo ago
    Seems like an appropriate term would be the opposite of recency bias; primacy bias. I definitely see it in older Gen Xers who basically coasted their whole lives while ironically idolizing boomers, didn't think about the future at all, and seem to hate trying hard at anything. Obviously not all GenX, just like not all boomers, but those people in both generations anecdotally seem to be fairly characterized as accumulating as much material garbage as possible. The Gen Xers in my life went to school for no reason and then held it up as a bastion of prosperity despite their degree having very little to do with the jobs they had

munificent 6mo ago

I wonder if there's a death spiral there: 1. Economy gets worse and some people are no longer able to keep up with their credit card payments. They default. 2. Credit cards increase rates to compensate for the increased risk since a greater fraction of their users are failing to pay. 3. People who are financially stable and literate see the increased rates and put fewer things on credit. 4. The remaining pool of people using credit now has an even greater fraction of people who aren't financially solid. 5. Go to 1.

yurishimo 6mo ago
This is a good theory. If anyone is wondering how to escape this cycle, the solution is pretty straightforward; don’t buy things you cannot afford with cash/debit. If putting your credit card balance on autopay is scary to you, you probably shouldn’t have a credit card. Also, having a credit card doesn’t mean you can ignore the charges and settle up at the end of the month. Credit is a tool that can be abused and misused like any other tool. Personally, I’m anti credit in general and don’t have credit cards or a credit score. But I also moved to Europe where credit is not nearly as important as when i lived in the US.
- john_strinlai 6mo ago
  >Personally, I’m anti credit in general and don’t have credit cards or a credit score. if only people could choose to have or not have a credit score. that would be cool. unfortunately, equifax/transunion/experian are some of the original data vacuums and assign one whether you want one or not.
  - simpaticoder 6mo ago
    In the US, credit score is used for hiring and rental agreements. It is not something you can opt-out of.
    - phil21 6mo ago
      Yep. I'm old enough to remember when credit agencies were considering dubiously legal. It was illegal (in my state at least) for a group of merchants to run a shared 'blacklist' of customers back in the day. The credit agencies side-stepped this. It was pitched as an "opt in" sort of situation where if you wanted cheaper credit or to finance a car or some optional thing in life, you could do so. They were not even used (as much, at least) for house mortgages - the bank would go through financial records and check income vs. debt and your banking history instead. Your credit score (or lack of it) was irrelevant. Then they slowly became endemic to simply participate in life at all. Good luck renting a spot with a poor credit score even in the early 2000's. My second apartment I had to show my (private mom and pop) landlord a great reference from my previous rental plus supply him with a 3mo security deposit since I had zero credit. I learned then that it was a non-optional part of society and I had better play ball or go entirely off grid hermit style. Then credit agencies started even more BS like putting in your salary history (mined from employers), any criminal records, etc. It's a social credit score in everything but name and likely implemented far broader and wider in society than anything China currently has. You will literally be frozen out of many careers and entire areas to live if you do not maintain it.

eddyg 6mo ago

For ref, fere’s the FRED chart on credit card debt: https://fred.stlouisfed.org/graph/?g=1Vus3 https://fred.stlouisfed.org/graph/?g=1Vus3