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Comment by panarky | Hacker News Reader

The $1.26 trillion Federal Reserve figure includes both balances paid in full every month and balances accruing interest.

Convenience spending by "transactors" (roughly 35% of cardholders) who pay in full every month is something like $200 billion of this.

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I'm shocked how small that part of the pie is. That's concerning.

There have been a couple of episodes of Simpsons where “credit card debt” was the subplot. Should give a good idea how “relatable” the experience it was even in the older days. Obviously I’m exaggerating, but you get the idea.

I can understand how someone right on the edge of disaster (and Homer was always on the edge) would get into debt, but those numbers would imply 2/3 of people are in what I would consider imminent financial collapse. Surely people couldn't exist in that state for lengthy periods of time. Right?

They could, and do.

If I remember the stats correctly, I believe in the US the lowest 50% of households combined have maybe 2% of the wealth

Sounds about right.

I mean does it necessarily imply that? You could pay just the minimum payment for a very long time with no consequences, I think. The main problem is you’d hit the credit limit and would have super high interest payments. But even then the minimum payment may be viable.

But yeah, reality is that most people are not white collar workers with decent income. HN is probably one of the higher income forums on the internet just because of tech. Definitely a bubble here

> those numbers would imply 2/3 of people are in what I would consider imminent financial collapse.

A suspect a lot of people also carry ongoing credit card debt because they're bad at math or just don't care, not all of them necessarily anywhere near financial collapse.

I have a friend who early in their career kept credit card debt for years, because he just liked to pay the minimum. As much as I tried to explain how dumb that was, it didn't help. Still, he was a software engineer making tons of money so nowhere near financial trouble, just financially dumb.

But of course there are also lots of people who truly are in credit card debt and can't afford to pay anything but the minimum.

There are people who most of the time only put stuff on the card that they can afford to pay off that month, but occasionally put something big on to pay off over time. They don't put anything else big on the card until they have brought that balance to near zero.

They are in the carrying a balance group but aren't necessarily in any financial trouble.

From talking to lots of working class friends, meaning, not white collar, yes - they are in a constant state of financial collapse.

I think people do not truly gauge just how poorly adjusted wages are and just how expensive everything is. A fast food meal is now anywhere from 15-20 dollars. That's about an hour of labor for many, many people.

To put into perspective, where I live a one-bedroom is gonna run you 1200 dollars a month minimum. And that's gonna be a sketchy one bedroom. At a wage of 20 dollars an hour and 35 hours a week, that's about 2800 dollars a month. So you can't afford a one bedroom, period. Bearing in mind, healthcare alone will eat a couple to a few hundred dollars a month. Food, another few hundred at least.

You can optimize, of course. Rent a house with three other people, eat only cheap cooked foods like beans, drive a beater. But it's gonna be a fierce financial struggle always. You get sick, you need surgery, your deductible is 7 grand - you're fucked. Fucked completely, and that's not counting the lost wages. Or the 300 dollars a month you've burned on a healthcare premium for years. These people have no savings, and certainly no investments.

And, to top this all off: 20 dollars an hour is a good wage in my state. 15 is not uncommon at all. If you're wondering why or how people work 2-3 jobs, this is how.

I don't get how people come up with the idea of paying interests on a credit card. The interests are extortion level, 20%? Wtf? A personal line of credit is like 8%

Do you have a citation for the 35% number? I wouldn't have thought it was that rare.

Let me Google that for you ...

Ah, here it is https://bpi.com/missing-factors-in-the-cfpbs-analysis-of-ris...

I'm surprised it's that high. While times have changed, the whole idea of the credit card was to purchase a thing you could not otherwise afford to.

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