"Americans spend $19 billion dollars using credit cards in one month"
Fixed it for you. A whole lot of us use credit cards exclusively. And we pay it off each month.
Could be. The article tries to paint a picture where that isn't quite the case:
"Wells Fargo reported on Fed data showing several regions experiencing a tightening in credit availability and an uptick in delinquency rates, pointing to a growing financial burden on households."
"Specifically, the New York Fed noted an increase in financial pressure among families with high debt burdens. Similarly, the Philadelphia Fed observed a widening gap where low-income households are reducing their spending but incurring more debt, contrasting with high-income households that continue to spend freely."
It's not a complete picture so I guess people are free to fill in the gaps as they please, but I don't see anything definitive here.
Well and the month they’re talking about happens to be November. Gee, I wonder why so many Americans were making purchases in November.
Sure, but the graph in the article shows a continuing increase. November is when it crossed the $5 trillion mark, and it was surely boosted due to holiday shopping, but the trend is ever-increasing.
I'm close to a thousand £ back in rewards over the few years I've been using it. It costs me £2 every month and i get a minimum of £20 back per month. But if I can pay for my car insurance or something truly big? Oh boy do my cash back go through the roof!
Could i live on debit alone? Sure. But then i wouldn't get hundreds back every year for simply using my card.
Plus guaranteed insurance on purchases. Doesn't show up and paid by cc. Reverse it. Paid by debit card, tough luck.
For a while, i wondered why Americans tend use their credit cards instead of debit cards but then it occurred that they are encouraged to use credit cards because you cant get into debt using debit cards and debt is very profitable.
There's that, but there are also more legal consumer protections against fraud with credit cards than with debit cards.
Also debit cards don't earn cash back or points. I visit my cousins on airline points. Monitor your cards and make sure you don't exceed your budget, same as a debit card.
They do if you use a credit union. I bank through two, and both offer cash back equivalent to any credit card, multiple overdrafts without fees, higher intrest rates on both checking and savings, access to better loan intrest rates, and I'm keeping my money in my community.
I love my credit union, and while my debit card does get points my credit card gets more points
This is not a thing at any credit union around me.
6% on groceries adds up.
You also have to have credit to get loans. I ran into this issue when I bought a house. I hadn't had a credit card in years because it was too easy to get into debt. The only thing that saved me is I am on one of my folks credit cards for rare emergencies if I'm watching their house and something goes awry (like the dehumidifier shits all over the basement floor and needs replaced).
Do you understand why there are so many incentives to use credit cards? Your reply and those under you are listing why credit cards are the better choice, however I wonder if they all know they are being played.
Those that use their credit card and pay it off in full are subsidized by the number of people that spend beyond their means.
Those that use their credit card and pay it off in full are using them responsibly, the way they should be used.
FTFY, the rest of your comment is just wrong.
Right. So the extra features are paid for by swipe fees. So why don't debit cards have the same set of features? Because banks want you to use the type of card that has the most return potential. Not wrong, just a difference of opinion.
Those that use their credit card and pay it off in full are subsidized by the number of people that spend beyond their means.
That’s both factually wrong, other users already explained it to you, and patently ridiculous. How exactly is someone who uses a card and then pays the bill in full every month subsidized? I don’t think you understand the word subsidized.
So why don't debit cards have the same set of features? Because banks want you to use the type of card that has the most return potential.
This is also wrong.
The Durbin Amendment capped interchange rates on debit cards and debit card rewards programs began disappearing because of it.
You make multiple factually incorrect statements. Whether it’s better to use a credit or debit card is a matter of opinion, your other statements are just wrong.
How exactly is someone who uses a card and then pays the bill in full every month subsidized?
Receiving a service for free means it is subsidized.
The Durbin Amendment capped interchange rates [snip]
I'm sorry, you have mistaken me for an American.
You make multiple factually incorrect statements.
You have yet to convince me that.
It is obvious that banks have the ability to make more off their users bad choices when using credit cards than they do debit cards. It is also obvious that it is in the banks best interest to push credit cards more than debit cards. Just because you and I are capable of managing our funds well, isn't the case accross all. I worked for a UK bank for 4 years (2004-2008), however the opinion I am portraying here doesn't need any inside knowledge, its just common sense.
Receiving a service for free means it is subsidized.
It’s not free. It costs an interchange fee, just like a debit card. That’s not paid by users of the card. At most it’s “subsidized” by the business, or maybe everyone if those interchange fees are built into the product price, in which case the card user is indirectly paying for it.
I'm sorry, you have mistaken me for an American
Almost like banking regulation isn’t universal, making your claims ambiguous rather than outright wrong. Especially without any supporting evidence to your claims.
You have yet to convince me that.
Ok, whether you’re convinced doesn’t change the fact your statements are wrong.
It is obvious that banks have the ability to make more off their users bad choices when using credit cards than they do debit cards.
Prove it. Many banks (in the US) charge exorbitant overdraft fees that make them billions and f dollars a year.
Just because you and I are capable of managing our funds well, isn't the case accross all.
Explain how one persons inability to manage their finances is the responsibility of someone who manages theirs responsibly? Banks engage in plenty of dubious, and sometimes outright illegal, activities. Blaming them because an individual doesn’t have the common sense to spend more on a credit card than they have is patently ridiculous.
I worked for a UK bank for 4 years (2004-2008), however the opinion I am portraying here doesn't need any inside knowledge, its just common sense.
Opinion. Your opinion isn’t in question. The statements you make to support it, without any evidence, are. You seem to think that when you have an opinion any claim you make around that can just be supported by how you feel.
You know what’s just common sense? Understanding that if you have X amount of money, spending X+1 on a credit card is a poor choice because you can’t pay it. That’s personal responsibility and trying to pass that responsibility on to people who are “being played” by not doing that is blame-shifting.
I see it glaringly obvious that banks make more money from credit cards than debit cards and therefore offer incentives to use them.
In fact in /any/ business, if one product is being pushed with incentives, its because that product has the best ROI. Its just economics, and the consumer should be aware of that. Nothing is free in this world, and most large companies are predatory.
Yes, it is my opinion, I didn't state that I have hard evidence. I didn't interview a bank CEO.
I get the feeling you think this is a personal attack on you and others like-minded, not at all. I'm sorry you don't see things the same as I do and that is fine, I don't mind. I like to try and learn from these exchanges, maybe not from this one.. yet.
So far I've understood:
That last two points, can you help me understand why banks incentivise credit cards when interchange fees for cards are so similar? Or is that 0.1% the big deal?
You’re getting played if you don’t use one. All those rewards are not from the people racking up credit card debt, it’s from swipe fees.
If you don’t use a credit card you pay the same price as the ones paying with a card, except the ones with a card get rewards. The ones without pay extra since stores charge extra to cover the fee
They even lobbied successfully to prevent merchants from passing this on to credit card customers. Which means they pass it on to all customers instead.
The fees are currently capped at 2.5% but that’s just for the swiped. There are other fees as well that end up costing the merchant more.
I would totally use my debit card more if it has the same level of fraud protection that credit cards have.
It'd be nice to be able to do a chargeback on a debit card transaction.
I'm gonna wait and see if you can figure out how your statement relates to credit cards being more profitable for the ruling class than debit cards...
If you’re responsible with them you get a number of perks. Many cards have some mix of the following:
I’ve never paid interest on a single card in my life because I always pay my balance in full. Works out great for me. If you’re bad with money, I’d stay way.
This!
There are a lot of consumer protections on credit cards that do not apply to debit cards. I pay for basically everything with a credit card. I pay the card off every month.
We also can't get cashback rewards with the vast majority of debit cards. It adds up.
It’s also because a lot of people see the rewards as ways of getting free money. However that’s really only the case if you pay your card regularly. As well some Americans truly don’t have the required income to live. So they go into debt. It’s terrible, sad, and wrong on so many levels, but it’s a major part as well.
because you cant get into debt using debit cards
Lol that's cute. They've recently started changing this shit, but at least when I was in college, banks were 100% putting people into debt and making tons of money on overdraft fees. For using debit.
They had a program called, "overdraft protection" that customer service loved to sign you up for if you accidentally overdrafted. That should fix things right?
Lol no. Turns out what they meant by "protection" was "protection from your card being declined." In other words, if a purchase was going to put your account into the negative, instead of simply declining the transaction and preventing the customer from incurring a fee, it makes sure the purchase goes through, and the customer is charged $35 for overdrafting.
They also had a practice of re-ordering a customer's transactions in order to maximize overdraft fees. I believe this one has been illegal since Obama though.
Frankly I use my credit card as my debit card. Hell I don't even have a physical debit card. Why you ask? Rewards points.
All to the benefit of the oligarchs of this nation, which will get bailed out if they don't anyway.
oooOoOoo - getting dangerously close, aren't we? What happens when say people take out more credit than US banks can actually honour?
This... Americans Are Tapped Out
Fair... but what I was alluding to is a banking crash that will make the "great recession" seem like a fart in the wind.
Think the LA riots, but in every major city, military being mobilised, civil war, the next violent revolution, what have you - because that debt hole will make a crater out of society.
And no, you don't want violent revolution. Why? Germans didn't become Nazis overnight. The economic collapse after WW1 put Germans in the position of being forced to bring wheelbarrows of cash to the store for a single loaf of bread. This made German people so desperate and angry that... well, you know the rest.
Why do you sound excited? This would literally ruin the entire century and maybe the next one.
...I did? I'm sorry, that was not the intention. Could you please point out which phrases and sentences that raised concerns?
Or was it the first post? The "oooOoOoo" part? Maybe I was a bit hamfisted, but I was trying to allude to historic cases of massive bank defaulting. Perhaps I was a bit brash.
You're fine, it did come off a bit like some accelerationist fanfic I've heard
BUT THE ECONOMY IS BOOMING!!
This is definitely an order of magnitude calculation, but doesn't that correspond to $60 per person in the US? Is this big number scary article?
Depends. Are you dividing by total population or actual cc holders? Because the latte isn't as big.
That's an espresso way to debt central that's for sure
Mocha money mocha problems amirite
Stats from some googling. Assuming there are 250 million adults in US, and 80% have credit cards, that gives me 200 million holders, or ~$100 per person. That's not really a whole lot of money anymore. Not in a world where taco bell costs $20.
Ya I just checked and you're right. However, we could still infer certain trends.by examining the shift
Agreed. The article also includes a consumer debt trend over time. It seems to outpace inflation by about 33% which is more noteworthy to me.
This could be another indicator that we are going into recession. I did not read the article (because who does that? 🤣) but when you look at rising credit card debt combined with the mass layoffs, it usually means folks are on their last legs, financially speaking.
That is assuming there actually is a problem with higher credit card debt and the topic is ‘t being sensationalized, of course.
Another indicator to watch out for is falling revenue in earnings reports. Falling revenue, particularly in retail and consumer goods spaces means recession is inbound.
I firmly believe that, absent some additional support, we will enter a recession within 2 years.
Note: I don’t claim to be an economist, but I am old and I have lived through a few of these downturns.
Hooch, hookers and coke or wage theft?
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