Half of American now carry credit card debt, many with no plan to pay it off | Hacker News Reader

Half of American now carry credit card debt, many with no plan to pay it off

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19 pointsspeckx22 comments

That makes sense; it's a predatory business model. It's like auto title loans. They want you corner you, offer you money when you're at your most helpless, then take your car away. If not that then they want to lock you in a debt spiral you'll never get out of and just be a leach on your paycheck forever.

Everyone I've ever talked to has an antagonistic view of these companies and most other american institutions, and the more you hate them and recognize they hate you, the better off you are financially.

It’s predatory if you have a poor credit score, but the alternative is that you have no availability of consumer credit, which is the story in Europe.

You want to take out a loan to start a small business and aren’t well connected? Tough luck. Want a 30 year fixed rate loan to buy property on a median income salary? Take a hike. In a world without consumer credit the 99% become the permanent renting class.

Not to mention RE: payday loans/credit cards, paying 30% APR might seem bad, but if you've got a broken car and a $1000 repair bill, taking the 30% APR loan, paying it off in a year, and incurring $169.85 worth of interest in the process, is probably better than you losing your job. Sure, it'd be better if everyone had an emergency fund so they never need such high APR loans in the first place, but banning such "predatory" loans isn't going to magically make that happen.

The predatory part is how they are marketed to people who have no ability to pay them back, not that they exist as a product at all. If they stuck to offering them to people with steady reliable income that just need a hand out of a hole, no one would have much of a problem with them.

What are you talking about? These things are all available in Europe, without having to build up some credit score. If I want to get a loan for my business, I go to my bank and get one. If I want to buy property, I get a mortgage. If I want to buy a consumer good without having money on hand, I can use a credit card or use a BNPL provider. Credit here is granted based on not currently having debts, rather than being perpetually in "the right amount of debt".

I am surprised the number is that low - I have believed for decades now that Americans generally consider this heavy use of credit cards to be normal behavior.

Using credit cards is normal. Carrying a balance is a poor financial decision. I think credit card interest rates are 22% these days. Pretty sure anyone who can get a credit card can get a line of credit from their bank at 10%. I ain’t a math-magician but pretty sure 10% is less than 22%.

I guess I have never really understood what the point of using a credit card is if you are not going to carry a balance. If you can actually afford to buy the thing, why would you not just buy it? What is the point of borrowing money and immediately paying it off?

To me this seems like asking for trouble. I don't trust myself to keep track of so much money moving around; it would be too easy to overspend.

In the US at least, you get cashback, extended warranty, travel insurance, and better fraud protection, to name some. all of which can be had for free if you pay by credit card.

I used to think that, until I went to buy my first house and had no credit. Not bad credit, just no credit. I couldn’t get a mortgage, even though the payment would have been half what I was paying in rent, because I was financially responsible and had never needed a credit card.

Now I use a credit card as my default way to pay, and never carry a balance. I get travel rewards, and have an 800+ credit score. It’s a frustrating game we have to play in our current system.

The other replies are correct but to explain the credit “game”, using credit cards is the easiest way to get started showing banks how responsible you are about paying back credit. For large purchases which most people will need credit for, e.g. new car or house, banks want you to have a good record as a borrower.

As to the overspending issue, that is indeed a problem that many have. I think credit issuers mostly want to walk a very fine line, accepting that some really won’t be able to repay their debts while others can and simply spend more of what they can but might not if they weren’t using credit.

I can't speak for all Americans, but the ones in my neck of the woods consider a heavy use of credit cards (meaning routinely carrying more than a trivial balance) to be a problem. Not normal at all.

Similar news is always presented as a scandal, but it's similar to saying 'half of americans have mortgages' or 'half of americans have student loans', the plan to pay it off is to continue to pay the minimums until it's either paid off or they die. It's not a great situation, but it's basically one way that you can survive in our economy.

The difference is that credit card debt comes with a crushing interest rate.

I've stopped ignoring stuff like this because it's overly sensational. I don't care about how many people have debt, the fact that 50% of people have it only speaks to how popular these products are.

What's really important here are the actual delinquency rates. The only mention of this is:

>And the credit card delinquency rate is at its highest point since 2011.

But the article stops short of mentioning what that rate is or how it has grown.

This type of "investigative journaling" completely misses the point there are tons of credit cards with 12/18/21 months of 0% rates. Of course it makes sense one would carry debt if there's no interest to pay on the balances.

The only reason 0% intro rate exists is because many people never pay off the balance before the interest kicks in. Also in some cases the entire interest from the start is then due so the 0% means nothing at that point.

That may be true, but none of that information is in the article. It's just fear mongering click-bait.

> Thirty-four percent of debtors say inflation and 32% say high interest rates have made their credit card debt burdens worse since the beginning of 2022.

32%?! That is absolute highway robbery at that point. It brings me great anger when I think about the interest rates at which banks typically take out loans. Especially when said loans from banks are then used to loan people money at borderline criminal rates. Best of all, when shit hit the fan, who bailed who out again in 2008?

Wages have not kept up with living costs because of a decline of unions and labor bargaining power over the last few decades. People fill the wage living cost gap with credit, which then takes more from them through interest and fees. If wages go up, the need for this credit declines. If wages do not go up, the need for credit remains, as well as the burden of carrying this debt.

The need for high priced credit is an economic story.

32% is referring to the survey respondents, not an interest rate. Although that is by no means an unheard of interest rate for credit cards.

Crap, you are completely right. I misread the initial text I quoted.

What a shit website. Not only does it block eu/eea countries, its gets them wrong too. I’m not in either

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