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So you shouldn't take super high interest loans to buy crap online?
Nvm it was clearly unavoidable.
Also racist and sexist 🤡
In Netherlands they limited the maximum interest rate. Plus borrowers should check if people are credit worthy without that credit score. Basically it is assumed there are enough people who are terrible with their finances. The last bit is preferable over victim blaming.
I have a 800-810 credit score. I have positive networth. I have no mortgage, no student loans and one car loan with less than 5k left. The best interest rate on a credit card i could find was over 18%. I didn't actually apply so the rate might go lower but still, that's criminal imo.
All credit cards are 0% if you pay the balance in full every month. Then it's just a matter of if the perks are worth the fees (if that's not something you're already taking advantage of).
Edit: reworded to not use the word balance twice in different contexts.
Many of them have 'hidden' fees, annual charges etc that add up to a hefty chunk. Interestingly the credit cards offered to high net worth individuals (rich people) have much lower rates and no hidden fees, even things like automatic overdraft protection and robust identity theft protection not offered to the rest of us.
That's a fair point. Credit card companies are not our friends, and it's absolutely in character for them to try and nail us in the fine print.
For my part, I know of my annual fee and the rewards I get more than offset it (though not considerably) but it's certainly not always so clear cut.
Yes, because they make their money from volume with them, instead of rate. Free overdraft protection being free to people who never overdraft with millions in the same bank....ffs....what a mystery
I haven't paid a balance in a decade but here's the thing: I'm probably a small minority of your <250k earners. Combined our household AGI is ~150k so it's anecdotal at best. For those who have to use the card it's stacked so far against them it's insane.
Not in Canada. They're 3 percent but only at purchase. I dont use my cards no more.
Where do you go when there are maxed ??
Note: I am not a financial expert. And my limited knowledge is for the US credit system.
You want your monthly credit use to be pretty low. I believe under 10% is generally considered good. If you have a low enough limit that maxing it is a concern, then you'll want to limit the amount of your monthly expenses you put on a credit card.
Credit unions offer much lower interest rates. My credit card is 10% interest, and 8% for cash advances.
Credit cards at any interest rate are stupid if you are carrying a balance. Take out a proper loan.
Yeah I've got no one to blame for me not looking into then more. I have a savings account with them for my "car loan" which is just me putting money away for the next car and it's got a great interest rate. I really should move my banking to them but they aren't really local.
I had a 7.99% fixed card for a long time. Then after having a few kids we didn’t use it for a while and I went back to look at it they had raised the rate to 15.99% (this was years ago now). We also have credit over 800. Absolute garbage (yes, I know it’s in the TOS). Dropped them and changed companies to get the same 15.99% rate with other perks since the original didn’t have any.
These CC companies seriously need more regs. They can’t be trusted to do anything in the interest of consumers and don’t deserve their business anymore, quite frankly.
I assume you mean "lenders". I mean, sure, they'll check and they have expertise in finance, but the job of a lender isn't to handle a borrower's personal finances in a sane fashion. The job of a lender is to avoid being defaulted on. Like, they'll permit the absolute maximum amount of debt that they're comfortable with, which probably is more than what a borrower should be comfortable with.
That’s pretty recent I think - and it’s only limited to like 30% I think ?
In Australia, at least at the beginning, bnpl services managed to bypass all money lending regulations based on the fact that they don't charge interest. I know that there were discussions about fixing that but haven't been following the topic in a while.
Like the other person, I also assume you meant lenders, not borrowers. Lenders WANT people that are terrible with their finances. Visa makes very little with me paying off my credit card in full every month, just some merchant fees. On the other hand plenty of Australians are in constant credit card debt and pay something like 18-22% interest on the money they borrow.
Good on the Dutch government to try and control that.
Why is that statistic racist and sexist? Sorry for not getting it.
It was sarcasm...also if you add black, hispanics and women together, you basically have the general population except white men.
Why would you add those together? They aren't distinct groups. They overlap.
The main issue is parents (and the school system) aren’t teaching kids about budgeting and how CCs work because they don’t know how it works either. It’s perpetuating.
It says in the article that the loans aren't high interest. They're low to no interest.
They're no interest if you make the payments, if you miss one and keep a balance they can be 30%, which is how the services make money
I'm sorry but you're wrong. The specific BNPL loans being discussed in the article really are 0% interest and don't have late fees. The entire point of the article is that this is so appealing to people that they overextend their finances to get things they don't really need, and then get stuck making payments for years.
They work like credit cards. If you pay off the debt then there's no problem, you are essentially just pulling money from the future, when you will have it, into the past, where you don't have it, which can be useful if you 100% know you'll be able to cover your debt by the end of the month.
But if you are going to do that you might as well just have a credit card. Banks love it when you do stuff like that, their all time favorite customers are people who regularly pay off their debts and never require any communication from them. Banks don't like it if they have too many people indented to them, because a certain percentage won't pay off their debt. Banks have other less risky means of making money, mostly through safe mortgages and bank fees.
But these loan companies only make money by people having debt. So the risk reward calculation is different for them, so they actively encourage people to get into debt in a way that banks tend not to.