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Comment by tomaskafka | Hacker News Reader

Whole Europe does this.

I never understood why whole nation wants to live in debt just to have one extra month of cash flow (which they’ll probably squander soon).

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This is arguably partly because the EU caps card interchange (at 0.3%, generally). So these reward schemes don’t exist, because there’s no money for them, so why would anyone use a credit card over a debit card or bank transfer unless they need the credit? Most people in the US presumably don’t start using credit cards thinking “I’ll get in debt, that’ll be great”; it’s the reward schemes.

Ex-European here. It is very common to overdraft your bank account in Europe. The overdraft interest fees are very similar to the credit cards here in the US. It is basically the same service but with a different execution.

Because it gives me 2.5% cash back, which is basically free money.

That comes out of the merchant's pocket, who has priced it into the sale price you are paying.

It is not, thus, free money, at all.

On a macro level, that's true. On an individual level, your avacados cost 3% more whether you use credit or debit, it's just your choice to recover 2.5% from that back in rewards or not.

>On an individual level, your avacados cost 3% more whether you use credit or debit, it's just your choice to recover 2.5% from that back in rewards or not.

I instead chose to live somewhere it's capped at 0.3% and then I don't have to fuck around to get my money back after the fact. As an added bonus, I don't even know what a medical bill looks like.

It can also be your choice to lobby your government to shut down the rent-seeking behaviour of Visa and MasterCard.

It can be done. The UK and the EU capped fees at 0.3% for credit cards and 0.2% for debit cards

How do you think they got that 2.5% to "give back"?

Yet many European countries have high household debt. Switzerland, Sweden, Netherlands, Denmark, some of the highest in the world. I guess it has to be mortgages, since it's true they are not that "big" on credit cards. Although Klarna is a Swedish company.

https://en.wikipedia.org/wiki/List_of_countries_by_household...

Speaking for NL, yes it's mortgages. And those come with monthly payments towards the principal in pretty much all cases. Also, those being mortgages the rates are like 5% or so, not over 20%. Soll

After 30 years, people generally speaking own their home and that's their biggest chunk of wealth. So basically, yes a high debt to income ratio, but it's building towards wealth and its not high interest debt either.

I'm American, and I don't use the extra cash flow (in fact, I make sure to keep more money in my checking account than I spend on the credit card, so I can always auto-pay my bill and therefore never pay any interest).

If I could get a debit card that gave me 2% cash back on all transactions, I'd use that instead!

Pay your credit card balance off every week, and it's an overly complicated debit card but you technically build up a score for future loans. Also maybe you get cash back on that?

Rational if you want a mortgage in the US at least.

I'm in Boston. I'll never earn enough to buy property here. I'll never have a mortgage.

I'm in <other US city>. It's possible to earn enough to buy property here. I already have a mortgage (as an immigrant, building a credit score from credit cards which in turn qualifies you easily for a mortgage is pretty nice).

Using a credit card isn't only about living on debt. Some people pay them off every month, and use them for the fraud protection and rewards.

While I hate that it's like this, you're leaving money on the table.

Currently you're keeping money in the bank accruing the bank interest to occasionally pay for stuff.

With a credit card you would get various bonuses/cashback/gameified returns by owing them money, and it costs you nothing as long as you pay them back once a month interest free.

If you however slip up/miss a payment it will cost you a lot.

Both cases suck, but the latter saves you money if you play that game.

That's from a EU perspective. From a US perspective you also require it from a credit score perspective, which EU thankfully hasn't adopted... yet.

as far as I understand it, the creditcard rewards are from the creditcard fee, which is capped in the eu, so you are not missing out much.

Cashback is definitely capped, I'm less sure on other forms of rewards, but by my napkin comparisons, I do get out more "value" from my credit cards than the fees and cashback caps. YMMV of course.

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