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:
Banks receive an "interchange" fee per transaction
The interchange fee was reduced considerably in US law
Banks incentivise the crap out of credit cards
Banks receive a marginally increased interchange fee (~0.1%)
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?
Banks receive a marginally increased interchange fee (~0.1%)
interchange fees for cards are so similar? Or is that 0.1% the big deal?
Back this up because they are not similar. Credit cards charge higher interchange fees and the more people you have using your card, the more you're making in fees. Seems like an incentive to try and get someone to use your credit card instead of a debit.
Banks incentivise the crap out of credit cards
Every for profit company tries to incentivize their product. I know there are grocery stores in the UK. When they run a sale, promotion, or discount like I've seen posted online for items close to expiration they are incentivizing the purchase of that product.
You made a claim that people who use cards responsibly and take advantage of rewards programs are being "played". How? You also seem to blame-shift the choices of those who spend beyond their means to those who don't. A person chooses to apply for a card, a person chooses to use that card, a person chooses to spend more than they can afford. That choice is on the individual making it, not some other person who doesn't make bad choices.
Debit and credit cards have their benefits and drawbacks but either is a viable choice when used responsibly and a bad choice when used irresponsibly. The thing you're upset with is poor banking regulation, not responsible card owners. The fact that a bank can charge multiple $10, $20, $30 dollar overdraft fees on a debit OR usurious interest rates is an example of a private entity not being kept in check and being allowed to exploit people.
Wow Americans really get shafted if those are the rates. VISA and Mastercard in Europe is 0.2% for Debit and 0.3% for Credit for consumer transactions.
Every for profit company tries to incentivize their product. I know there are grocery stores in the UK. When they run a sale, promotion, or discount like I’ve seen posted online for items close to expiration they are incentivizing the purchase of that product.
Yeah, they could be incentivicing the product that gives them the most return.
You made a claim that people who use cards responsibly and take advantage of rewards programs are being “played”. How? You also seem to blame-shift the choices of those who spend beyond their means to those who don’t. A person chooses to apply for a card, a person chooses to use that card, a person chooses to spend more than they can afford. That choice is on the individual making it, not some other person who doesn’t make bad choices.
Whoa, I think you've misnterprited the spirit of my original comment. Do you take offense to the term "played"? There is no blaming, or shunning of choices, its just economics. The guys selling the product /want/ people to be irresponsible with their finances. They are like "yea, spend more than you have, I don't mind, more where that came from"
Debit and credit cards have their benefits and drawbacks but either is a viable choice when used responsibly and a bad choice when used irresponsibly. The thing you’re upset with is poor banking regulation, not responsible card owners. The fact that a bank can charge multiple $10, $20, $30 dollar overdraft fees on a debit OR usurious interest rates is an example of a private entity not being kept in check and being allowed to exploit people.
I'm not upset with anyone. I think the problem here is the differences between the US and Europe banking systems. In Europe, overdraft fees are capped and the interchange rates are fractional in comparison. But credit cards are still what banks incentivise, and makes me question their motives. I don't trust banks or any large company for that matter to put my own best interests first. I have seen friends and family get into credit card debt over the years. Sure its their bad life choices that cause their own problems. No blaming between different types of people. However no-one denies that banks spread gold glitter on credit cards in an effort to bring in more punters. Debit cards, not so much.
I did learn something today. US banking seems more hostile to consumers than Europe conterparts. Is it because of regulation? I have read in the past that US politics are reluctant to add more regulation to services like banking, relying on "free market" and the lark.
You comment on a news article about Americans and credit cards and argue your opinion which has nothing to do with Americans or their credit cards.
In context your supporting statements for your opinion are factually wrong. You also have yet to explain your original comment.
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.
The slang term played usually means that you have been outwitted or used as a pawn.
How are they 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.
How are they being subsidized?
I’ll be flabbergasted if you can answer either of those questions in any way that makes sense in the context of Americans and their credit cards.
I hope you learned something because I’m pretty sure your spurious statements have made me dumber.
I stand by my comments as you've yet to provide arguments to the contrary.
Yes being played fits. There are people that jump into credit cards and get over their head by spending outside their means. Something that banks enable and it's the reason it is incentivised.
I see you're getting somewhat frustrated. Sorry neither of us could persuade the other. I'll leave it there as I think cultural differences are causing loss of understanding. I hope US banking gets some needed adjustment.
Receiving a service for free means it is subsidized.
I'm sorry, you have mistaken me for an American.
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.
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.
Almost like banking regulation isn’t universal, making your claims ambiguous rather than outright wrong. Especially without any supporting evidence to your claims.
Ok, whether you’re convinced doesn’t change the fact your statements are wrong.
Prove it. Many banks (in the US) charge exorbitant overdraft fees that make them billions and f dollars a year.
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.
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:
Banks receive an "interchange" fee per transaction
The interchange fee was reduced considerably in US law
Banks incentivise the crap out of credit cards
Banks receive a marginally increased interchange fee (~0.1%)
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?
Back this up because they are not similar. Credit cards charge higher interchange fees and the more people you have using your card, the more you're making in fees. Seems like an incentive to try and get someone to use your credit card instead of a debit.
Every for profit company tries to incentivize their product. I know there are grocery stores in the UK. When they run a sale, promotion, or discount like I've seen posted online for items close to expiration they are incentivizing the purchase of that product.
You made a claim that people who use cards responsibly and take advantage of rewards programs are being "played". How? You also seem to blame-shift the choices of those who spend beyond their means to those who don't. A person chooses to apply for a card, a person chooses to use that card, a person chooses to spend more than they can afford. That choice is on the individual making it, not some other person who doesn't make bad choices.
Debit and credit cards have their benefits and drawbacks but either is a viable choice when used responsibly and a bad choice when used irresponsibly. The thing you're upset with is poor banking regulation, not responsible card owners. The fact that a bank can charge multiple $10, $20, $30 dollar overdraft fees on a debit OR usurious interest rates is an example of a private entity not being kept in check and being allowed to exploit people.
Wow Americans really get shafted if those are the rates. VISA and Mastercard in Europe is 0.2% for Debit and 0.3% for Credit for consumer transactions.
Yeah, they could be incentivicing the product that gives them the most return.
Whoa, I think you've misnterprited the spirit of my original comment. Do you take offense to the term "played"? There is no blaming, or shunning of choices, its just economics. The guys selling the product /want/ people to be irresponsible with their finances. They are like "yea, spend more than you have, I don't mind, more where that came from"
I'm not upset with anyone. I think the problem here is the differences between the US and Europe banking systems. In Europe, overdraft fees are capped and the interchange rates are fractional in comparison. But credit cards are still what banks incentivise, and makes me question their motives. I don't trust banks or any large company for that matter to put my own best interests first. I have seen friends and family get into credit card debt over the years. Sure its their bad life choices that cause their own problems. No blaming between different types of people. However no-one denies that banks spread gold glitter on credit cards in an effort to bring in more punters. Debit cards, not so much.
I did learn something today. US banking seems more hostile to consumers than Europe conterparts. Is it because of regulation? I have read in the past that US politics are reluctant to add more regulation to services like banking, relying on "free market" and the lark.
You comment on a news article about Americans and credit cards and argue your opinion which has nothing to do with Americans or their credit cards.
In context your supporting statements for your opinion are factually wrong. You also have yet to explain your original comment.
The slang term played usually means that you have been outwitted or used as a pawn.
How are they being played?
How are they being subsidized?
I’ll be flabbergasted if you can answer either of those questions in any way that makes sense in the context of Americans and their credit cards.
I hope you learned something because I’m pretty sure your spurious statements have made me dumber.
I stand by my comments as you've yet to provide arguments to the contrary.
Yes being played fits. There are people that jump into credit cards and get over their head by spending outside their means. Something that banks enable and it's the reason it is incentivised.
I see you're getting somewhat frustrated. Sorry neither of us could persuade the other. I'll leave it there as I think cultural differences are causing loss of understanding. I hope US banking gets some needed adjustment.
Have a good day/evening.