Just wait till you learn about pay day loans and 700% APR interest.

I agree, and these are somewhat lowish interest rates over here. A lot of the cards start off at 19% and if you have bad credit, it's more like 25-30+% with $75-150 annual fees.

Yeah damn. Didn't know they go that high.

Laughs in UK English.

30+% credit cards are advertised everywhere.

Currently holding a 22.5%, an 18% and just closed a 26% I think. (I pay no interest on any of them, they are held purely for delaying payment to spread cost of large items or for deals where I profit).

A quick Google on a private window (so these are the rates they are ENTICING people with):

John Lewis 21.9% APR

Capital One 34.9% APR

HSBC: 23.9% APR and another of 29.9% APR

Barclaycard: 22.9%

Barclays: 33.9% ("Credit building".... such a scam) and 75.0% ("Rewards").

Banks aren't tricking anyone- they make it really clear in your statement what your interest rate is. These people are buying things they wouldn't otherwise be able to because they are using credit.

We live in a free society. People should be allowed to make bad decisions. And if one has any interest and an internet connection, all the information he would ever need is a few clicks away.

Credit analyst for a bank.

You’re wrong. We don’t like increasing interest rates and it usually doesn’t have a large effect on net earnings. Although we collect more interest our default rate climbs and it usually wipes out any gains we make. In fact, a rising rate environment can lead to increased bank consolidation because banks with poor management and underwriting standards have their default rates climb faster than interest payments can cover. This leads to a bigger bank buying them out or worst of all the FDIC shutting them down and auctioning them off to another bank.

Furthermore, what you call “financially illiterate” are often people dealt a bad hand or in a really hard place (minorities especially). What do you want us to do? Return to a system that basically red lines entire groups of people because they’re struggling? Lines of credit are extremely important for not only businesses but giving people some flexibility. There are absolutely people that can’t handle their debt and that’s exactly why banks have credit departments monitoring underwriting and making sure the bank is in compliance with the FDIC or other regulatory agencies.

They are still making a large amount of money from you in credit fees paid by the retailer and your yearly fee with almost no risk .

Banks dont hate when you do this… it’s not ideal and their not maximizing revenue. But they don’t hate it, they still make interchange income when you use the card.

As long as you don’t spend proportionally to your credit limit increase you’re fine. Most banks have a credit limit increase program such that a good percentage of customers will start spending more on their card collecting the measly interchange and some will actually miss payments and go into debt - even more profitable.

You’re actually the best kind of customer for a bank. Chase makes half of their credit card income (1.4 billion last I checked?) from transaction fees when you swipe your card. You’re basically a risk free money maker.

“Banks hate when people do this”

citation needed

Im confused, why is this the case? I would assume that the card balances being higher means they can charge less interest for the same revenue. Is it not the card balances that are being charged interest?

Can you feel sorry for people who want to buy houses and cars they can afford but can't find any?

>The reason houses and cars are so expensive is because people are willing to borrow immense amounts beyond their means to have huge/luxurious instead of basic

I think you haven't seen the basic housing costs of something very, very, very far from luxurious.

People want to enjoy their lives, not spend them in a cardboard box, a tiny single room, a single town, or even in a roomshare with others.

If you want to own a home, you need to get into debt. The biggest debt that you'll ever have, and a debt that virtually everyone in any developed country has had. It's that simple.

Cars... it's nothing to do with that. A cheap car is a cheap car and that's great if you're prepared to maintain it yourself, pay for continued maintenance, risk not being able to get to work, etc. etc. I spent my life with £200 cars. It's okay, you can get along, but it's a life full of shock expenses, having to cancel work occasionally (fortunately I had very understanding clients/employers), hassle, stress and trying to rapidly buy a replacement once something goes wrong.

I bought myself my first ever brand-new basic model car in my 40's. Yes, it was damn expensive. It was a pure luxury, that I expected not to ever have it pay back in value. But I haven't had to worry about tests, safety, extraneous costs, etc. for the last 7 years of owning it. It starts first time, every time, guaranteed. I don't have to worry about bits falling off or whether it's going to fail each year. I have had precisely ONE BULB blow on it, in terms of potential test failures. In those 7 years, I've spent less on my car than I have on cars previously. Hell, one car I owned ended up costing me more in oil than it had cost to buy!

And that's the most expensive way I could have bought a car, but it still ended up working out. When you're paying several thousand for a small second-hand hatchback, just enough to get to work, yes, some people are going to need a loan, finance, etc. to do that. That's MONTHS of earnings just to operate the basics and in many parts of the world, even in many parts of highly developed countries, that cost would be far more trying to arrange public transport etc.

I couldn't afford a season ticket into London each year on public transport, for example. It would cost more than my car has cost me over the last 7 years to do so. Employers in London often have to give employees a season ticket loan where they pay the bulk price of the annual ticket, and the employees pays it off each month from their salary. And, no, it's not always the case that just working in London (which is a HUGE CITY, not just a tiny high-earnings area) will earn you enough to compensate for that. If anything, I'm moving and working further and further away from London as my salary increases... because I can and because it's better value to do so!

The reason houses are so expensive is because in many countries government isn't building enough of them, and there will always be a constraint on how many you can build in a given area. There will even come a crunch point where you CAN'T BUILD ANY MORE to accommodate those who might want them safely.

The reason cars are so expensive is that cars are literally allowing you to do an incredibly dangerous activity safely and they allow you to greatly increase the range of everything from your shopping to your employment to your leisure activities. I know of families who couldn't operate without a car - they wouldn't be able to get their kids to school, they certainly wouldn't be able to take them swimming or to the theatre, they wouldn't even be able to get anything more than the most basic of groceries (nope... not even delivered!), and they would be unemployed or on pathetic wages working locally.

Almost every single person I know is in "debt over their heads"... because almost all of them have a huge multi-hundred-thousand £ mortgage that literally relies on them having to go to work every single month in order for them to sustain that. And that work, more often than not, requires a working vehicle for them to get to it, or huge expense on public transport.

The two things you cite as examples are the two unavoidable expenses in almost every working person's life.

The data source (St. Louis Fed) states "Credit Card Balances". Aren't all credit cards revolving by definition?