Comment by nindalf | Hacker News Reader

Comment by nindalf | Hacker News Reader

This entire thread is focussed not on BNPL, but whether the entire concept of consumer debt makes sense.

Some folks say consumers should never take on debt for purchases, when they can save up instead. Others point out that it’s unavoidable in some cases. You may need a car to get to your job, meaning the asset you purchased creates value that helps you pay for it.

And yet others point out that you shouldn’t be financing food delivery. If you can’t afford that delivery now, then you probably can’t afford it spread over 12 months.

But ultimately this comes down to risk vs reward inherent in any financial transaction. The amount of leverage each is person is willing to take depends on their risk appetite. And everyone’s risk appetite is different. The folks frustrated with those who take out a lot of debt can’t fathom why others have greater risk appetite. The folks who do take that debt can’t fathom what’s wrong with doing so when it’s within their appetite.

That’s it, that’s the thread.

I see a lot of non-americans comments got down voted very much just because they say they won't take debt. Why is it so offensive?

Makes the Americans feel bad.

I don't think Americans understand that their credit card rewards/etc simply don't exist in Europe.

There is literally no reason for me to ever use a credit card, it just costs me money.

From Europe. Genuinely never used anything other than the card provided by the bank. But there are some nefarious companies which require a SEPA mandate for recurring deductions and make it hard to cancel. I also have my reservations about always using a card directly linked to my bank account but so far so good.

Yeah, it can get problematic. I got into some infinite loop of a plane ticket system one day. They charged me around £800 per iteration continuously until the charges got rejected.

It got reverted within a day or so, but having your current account wiped without knowing when will it get resolved and whether any money you put back there will disappear as well is not a great situation to be in. Having at least two different accounts in that case is good.

Yeah there's also non-credit card that has the same fraud protection, contactless, separated balance, plus mobile app that's very fancy that can even pay street food shop.

Its fucking amazing how backwards the US financial ecosystem is, and I don't really understand why.

This applies to more than just banking. They were the first to innovate. Thus they get stuck with first generation technology while other countries leapfrog ahead.

Example: back in 2009 I got an American Express card with contactless technology. It was one of the transparent cards with the blue square in the middle so you could see it right inside the card. Problem was, no store had a terminal it could be used with. After a few years, Amex gave up on it and my new cards didn’t have it. Meanwhile the rest of the world is starting to roll it out. After a few more years (last 4-5 years) cards finally got contactless again, after the rest of the world had had it for years.

There is more to it than that. Europe tends to write laws with consumer protection in mind. The US tends to treat companies and people as equally powerfull, with the courts protecting both. After decades of different legal philosophy, we see these differences:

Europe tends to be a whiney nanny state, but lacking enforcement means companies can violate legal rights for years and then be very surprised when they get slapped with more and harsher enforcement. Facebook is learning this right now.

The US, meanwhile gets 'adequate protection' against fraud, credit scores, identity theft, frivolous lawsuits and binding arbitration. If you're unlucky, the US gov and corporate system will grind your life to pulp for no reason, and the powers that be won't even notice they did something

As an european, I vastly prefer what I got above the US system and avoid credit cards as an unsecure mess that gets your money stolen. But maybe that's just because I never learned to navigate the US system.

Clearly both systems can function and both have big holes.

Precisely the advantage of credit cards is that your money can never be stolen, only the bank's money. People keep talking about fraud protection, but that's the difference between a debit card and a credit card. When your debit card or actual bank account information is stolen or used fraudulently, your money is gone, until the bank deals with the situation. When your credit card is stolen, the bank's money is gone. You never owe it, you never pay for it, you have exactly the same amount of money you had before the card was stolen. You're not suddenly short money until some process runs to completion. You are at most dealing with the inconvenience of not being able to charge that card anymore until you get a new one.

A surprising amount of people also get away with spending the bank's money and never paying them back, which I suppose some people also see as a benefit. They probably do pay enough late fees, interest, etc. in their life that the bank comes out ahead anyway, but I know multiple people who simply didn't pay on a credit card - ever - and nothing happened to them, other than a few-years credit hit that didn't stop other companies from continuing to offer credit.

There was a credit card attached to my bank account. If I buy something, the money disappears from my bank account on a fixed day of the month. I have no idea about how to influence that payment, and it seems not available in the web UI. I have no idea how not to pay that money, or how to dispute charges with it. Presumably I can visit the bank. But it has no chip and pin, so if anyone has the number and means ill, my money disappears. So it basically behaves like a very insecure debet card with a delay, i.e. I have to manually validate the payments corresponds to what I've done every month. It mostly seems a hassle to me. As I have no credit score that I know of, I also have no idea about how the bank wants to punish me if I don't pay them. I got it in the past to buy stuff from US websites, but payment processors accept my other means of payment by now. In fact, it expired over a year ago and I never saw a need to renew it.

+ it is generally possible to set up autopay for credit cards in the US, but it is not the default and I have never seen it not be very obvious on how to turn off. There's regulations about this in the US.

+ US debit cards and credit cards virtually all have chip and pin, but you can use only the number as a fallback for things like over-the-phone or Internet transactions, so it doesn't do much good. Terminals do usually require the chip, which presumably hinders skimming. AFAIK the old stamp machines are even still supported, though I haven't seen one in a while.

+ disputing charges on US cards generally consists of 1. login to the website 2. select the charge / hit the hamburger menu next to the charge 3. click dispute transaction.

Yeah, Americans often stick to the first version of something that worked well enough. Examples: election system (indirect), constitution, 110V sockets, iPhones, imperial system of units... It's hard to break established practice.

It's always kind of wild to watch people write a check and then use the much more convenient and secure contactless.

(Usually the store electronically submits the check at the time of sale...)

Regulatory capture, institutionalised, legal corruption.

What card has the same fraud protection?

In the US, debit cards do have "fraud protection", in that if someone steals my card or number somehow and spends $500, after an investigation it will be restored to me.

With a credit card, I am never out the money. I see a charge, report it, and none of my money is ever missing. I will never have to pay the $500, and it will never come out of any account that belongs to me.

The UK has stronger consumer protection for credit purchases over something like £100. So even without rewards it's worth it. But yeah, I guess that isn't an eu consumer directive but an actually unique British one?

It decouples your obligation to repay from the service rendered or product delivered. This can be good or bad, just like a software abstraction.

For a lot of people the "American dream" is going to college and buying a house, even if your family can't support those aspirations. That's not doable for the vast majority of Americans unless they take on some amount of debt. And tbh it's often a good idea from a financial perspective as long as you're thoughtful about when to use leverage

> The amount of leverage each is person is willing to take depends on their risk appetite.

You say "risk appetite" like it's a preference for vanilla over chocolate, but we are in fact talking about people enticed into making objectively bad financial choices that are destructive to their lives.

Yes, people are stupid. People are very old or very young, or don't speak the language well. None of these are excuses to lure people into bad financial decisions.

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