A few weeks ago, I had breakfast with a friend who works for a bank in debt collection; she chases people who have failed to pay credit cards, personal loans or mortgages.
We were talking about society, morally, ethically and financially, and how far off the rails it seems and I mentioned gambling as an example. There seems to be a new online/mobile betting app every day and I wondered how people manage to pay for it considering the rising cost of living.
My friend said, credit. Yep, I figured.
Clearly some are able to pay for their habit [addiction?] however she told me of the incredibly large number of people in credit card debt, which they're unable to repay, due to Ladbrokes, Bet326, Sportsbet, Neds, BetR, Moneyball, BoomBet, Dabble and so on. - There's many many more betting apps besides those also.
Apparently, users do a cash transfer from their credit card to the betting app of their choice, sometimes multiple aps, and away they go, often proceeding to lose it and doing another transfer and so on in an endless cycle.
The interesting thing, and most people probably don't know this, is that the cash transfer isn't classed as a purchase and so interest is charged immediately rather than there being a 55-day interest-free period like there is on purchases. Hmm, that means a $100 transfer incurs interest charged at around 22-24% from the moment it's transferred. Yep, that's going to add up, and not in a good way.
I knew that cash transfers from credit cards are not considered a purchase and so that interest rate is charged immediately, but transfers to betting apps not being deemed a purchase was new to me; it makes sense though.
I don't gamble and on the odd occasions I did in the past it was a special occasion thing like when I'm in the casino in Monte Carlo or some such thing; even then, I have a limit €100 usually and once it's gone I just walk around soaking up the atmosphere. When back home in Australia, I never gamble. So many people do though and with the situation with the credit transfer thing...it's no wonder people get themselves into credit-debt trouble.
My friend also said they get people paying their mortgages and loans with their credit cards in exactly the same way and, that's not deemed a purchase either, so interest is charged immediately, at credit card rates, so 22-24%. Considering the variable home loan interest rate is around 5% currently it doesn't make a lot of sense to be using funds to pay it off that incur 22-24% interest right?
The conversation flowed on and away from nutbags who have no financial sense, or responsibility, but the thoughts lingered afterwards.
The cost of living in Australia is skyrocketing, with consumer goods and services up month on month and mortgage interest rates climbing. I know many are struggling and a lot of them are working on how to mitigate the impact.
I remember saying a couple years ago that this will happen and that the smart people are the ones preparing for it...I prepared, even though I'm not even that smart. Still, many are trying to work around it in innovative ways now and doing something late is better than doing nothing at all. Many are still doing nothing and I wonder what life will look like for them moving forward.
The gambling situation, well that's often an addiction that people need help to overcome...financial irresponsibility isn't an addiction though, however consumerism probably is.
The sad thing is, the answers, knowledge and understanding around simple financial matters like credit interest are all readily available. It's easy to blame the banks for making credit too easy to obtain, I blame them for it for sure, but what happened to people taking responsibility for themselves, purchasing habits and financial situations? Is it the banks fault people spend when they should not? Does the bank force a person to gamble their money away or buy things they don't need? Nope.
What's your thoughts on the matter?
Do you feel society is too quick to blame banks for the financial woes it brings upon itself? Have you been caught out with credit debt and not understanding the way interest on credit works? Do you have irresponsible spending habits that hold you in credit debt? Feel free to comment on this topic if you would like, I'm interested to hear your thoughts or experiences.
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The banking industry is sketchy, but in the end, they are offering a service with stated terms and costs. That said, our society has been pushed more and more to embrace debt as "financial management" instead of saving and investing. The banks and credit card companies profit off people with high time preference and little thought to long-term costs. This is a cultural problem.
The government central banks are another matter. They are inflating the money supply, which is the primary cause of price inflation for consumers; and they are manipulating interest rates on the cost to borrow for financial institutions and other corporate interests, which distorts the market in myriad ways with false signals about supply, demand, and time preference. These are the factors which create pressure for those of us just trying to get by. It is a deliberate choice by the political class to plunder society while others get the blame for the outcomes.
I agree completely, they have a lot to answer for, however, as I've said in another comment on this post, people have a choice, it might not be a good one, but they have it nonetheless. Go without something or put it on credit. Sometimes I tough decision however I know for a fact that much of what people buy on credit is avoidable, like gambling, cigarettes, alcohol, a pair of shoes in every colour because they're cute, a new phone because Apple brought out the 10 and one only has the 9. I think you get my point.
It's just humans being humans I guess, the banks and consumers/general population...Greed rules many decisions and actions.
Indeed, and too many are eager to blame the banks for the consequences of their own choices. If you borrowed, you owe.
In the US, student loans are a major topic of discussion. I didn't borrow. I don't owe. Now people who did borrow want "student loan forgiveness" that amounts to asking the government to saddle me with a portion of their debt. Yes, I think there is a predatory aspect to those loans, but the lender eager for profit and borrower making poor choices need to take the hit, not everyone who chose not to borrow in the first place, or paid back what was owed.
Dave Ramsey is a radio host and financial advisor who generally seems on the right track. If you're in a hole, stop digging. Make a budget. Sell luxuries. "Live like no one else so later on you can live like no one else" is his way of saying "suck it up and address the problem instead of keeping up with the Joneses if you want to build a foundation for future prosperity." He also advocates personal financial independence because it means opportunity for charity and public service when you aren't in the debt trap yourself.
Student debt (HECS) is in the news here as the government are upping the minimum repayment on it - interest doesn't apply - but people don't pay them seeing at the least important loan to repay. It'll be going up around seven percent when it increases with CPI.
I like the ethos that fellow has. I mean sure, I understand that banks are underhanded in many ways, but ultimately the human, the individual, makes the choice to spend on credit, to gamble, consume excessively, be wasteful and so on. Debt is a trap, one many put themselves into willingly and (sometimes unwittingly.)
I don't gamble - although like you I may have had the odd flutter in the past on a special occasion - but it was one offs. I haven't done it once for years now.
I don't really have too much short term debt. I just have my long term debt on my mortgage which is luckily capped. I use short term credit for company expenses but they are pretty good at paying back within 2 weeks and well within the payments terms for starting to pay interest.
However, I see people around me getting into impossible debt loops where they are using further credit to pay off bad debt. Is it a lack of education? I think it is largely desperation because people are backed into a corner. They may have overspent when credit was too cheap and are now paying the price.
You have to see credit as borrowing from your future self. Are you going to be happy in the future when you find you already have spent the money you are earning before it even hits your pocket?
Yeah, you're right about the future self thing. Also, people buy things on sale (using credit) then pay way more than the item is worth through interest. Bonkers.
I have a credit card I use for most things and linked to a frequent flier programme. I earn points and cash them in for gift cards to spend at the supermarket. Saves me a few thousand dollars a year. Of course, the credit card is always paid off at the end of the month. Always. No interest. I once bought a motorbike on that credit card for the points. Paid it off a few days later with the cash I had saved up for the motorbike and saved at the supermarket with the gift cards. 😁
I wonder when society changed and needed so many things they had to use other people's money to get them and then repay far more than those items were wotlrth in the first place. It wasn't like that before. People lived within their means. There's many factors I guess, but it's the individual who zips the credit card (paywave's or whatever it's called) at the register...so the individual who is responsible.
Financial education should happen from a young age and in high school. The problem is that the parents are often clueless themselves.
I'm a great believer in the phrase "money doesn't buy happiness". I have seen people in my travels where I have stayed in some very remote tribal villages with very basic standards of living, some happy and content people. However, I society has become obsessed with having to have everything right now. The over reliance in credit is insane sometimes.
I agree, financial education should start when people are young. My father taught me, he was like "sure, you can have a sound system. Go get a job and earn yourself the money for one."
You are completely correct about society needing more, more more and failing to understand that consumerism doesn't buy happiness. In fact, the constant drive at new or the latest things can more often than not bring disappointment and depression.
Imagine a person buying the latest phone release and feeling awesome...only to realise that the next new one has a better camera...Their first one, that they were content and happy with, now brings them anxiety; it's not the latest thing. So their brain justifies the new purchase and credit steps in. They feel good again...but only until the next best thing comes along. It's a slippery slope. People attach the feeling of self worth or esteem to the things they have but it often has the reverse effect.
I know just that type of person. One of my work colleagues literally sleeps outside the London Apple store when any new phone is coming to ensure that they have the newest phone possible on the day its launched. Their "feel good" therefore comes only with their feeling they have the latest not because of really enjoying and getting the value from utilising what they have.
I just don't get the mentality that drives people that way. My phone is 3.5 years old. It wasn't cheap but I use it heavily, and not by that, I mean I use it for a lot of different features it has. It is still a great phone and serves the purpose I have for it very well despite not being the newest. It was a good buy. I have more than consumed the value of the original purchase.
A total twat.
I have nothing against quality purchases, in fact, I put quality over quantity...But I certainly don't feel validated in any way through the purchases I make. I'm all about experiences, generally in life, rather than things. I bet that wanker that lines up at the Apple store won't be laying on his death bed saying things like, thank the almighty I bought that iPhone 13. (Or maybe he will.)
Man, people are crazy. Since I was a kid, I only put on my credit card what I know I am able to pay off at the end of the month. Carrying a balance is insane, except in the case of no interest deals (such as Apple gives on all Apple product purchases if you use their card), and even in that case it's a really bad habit to get into. Making cash transfers for the purpose of gambling.... I just can't imagine doing it. Does not compute.
Heh. I couldn't have said it any better.
It's easy to blame banks, but also easy to blame dumb people. A solution is probably somewhere in the middle. I think banks should make more of an effort to teach responsible credit card usage. At the same time, I fully realize the people most in need of financial literacy are probably among the most likely to complain about any effort to teach them common sense usage of a credit card. So I suppose, that is to say... I have no idea on any solution.
I know I'll teach my kids responsible usage.
I understand banks are partly responsible and agree that they should be taking some responsibility for what they do, the bait advertising and too good to be true deals...But humankind has endured due to the ability to think for themselves and I believe people need to take on the responsibility (and ownership) for their own actions.
Very recently on hive there was a disgusting pig who doxxed another user because they dared her to. She did it. I just wish someone dared her to jump off a very high cliff.
My point? Banks don't hold guns to people's head and force them to get and use credit cards. People make their own decisions, or should. Blindly jumping off cliffs because someone dared you to? Hmm, seems fucken bonkers.
I think that some education by the parent will go a long way, however that only works if the parent knows how, and with what, to educate the kids right?
Yeah, I do agree. Part of me always wants to help people so that influences me sometimes. Typical bleeding heart, eh? But yeah people do need to have more responsibility.
Yeah, and you are absolutely right about parental education only works if the parents themselves are educated on what they are teaching. Unfortunately probably a lot of irresponsible credit users learned it from their folks.
I understand man, many call me too hard, firm, brutal and stuff like that...but I'm not really. I apply ownership, responsibility and discipline to my life so don't see why others can't do the same. You know? It's difficult sometimes, but that's how life is. I'm not one to always seek the easy option because often achieving great results means doing difficult things.
Yeah, CC debt is tricky and difficult to get out of once stuck in it. That said, I have enjoyed going to the nearby casino, like you, with a set amount of money that I'm fine losing. It usually doesn't take long. 😁 The most fun I've ever had at a casino was way back in college. My friends and I went into the casino, each armed with a roll of quarters, and won enough quarters on the slot machines to spend the rest of the day leisuring in the arcade playing games.
Indeed, that's the whole thing of it and exactly what they want. (You know, the proverbial they.)
I'm not totally against gambling/betting, if done responsibly it can provide some light entertainment. I'm not into it myself though. I'm often amazed how many betting apps exist though, as stated above. Playing on the week minded? Hmm, probably.
They say, everything in moderation, although I call bullshit on that phrase...Is it ok to murder people for fun, but only in moderation? So, yeah, I think that phrase doesn't fly. However, when something like gambling cold feasibly be done in moderation, and do little harm to a person who has the financial capability. But unfortunately for most, it gets out of hand and we end up with people getting cash advances on credit to feed their addiction.
You mention a little 25 cent fun...fair call. Bust some don't know where to draw the line and that's where trouble starts, in my opinion...not with the banks.
Yep! Agree entirely.
Online wagering is a huge thing here. Online slots! Online roulette! And sports betting! And the advertising surrounding it makes it seem like everyone wins and wins big.
I can see the attachment to it. "Just one more. Just one more and I know I'll win. I'm due." The gambler's fallacy.
I figured it would huge in the States, probably Europe and UK too. It's a problem, for those who don't, but a massive money spinner for those capitalise on people's addiction.
Humans live in hope, it's always been that way...and so many hope to get something for nothing; whole industries rely upon it.
Hey there @galenkp
All this interest is compounded daily... Right ? Does that mean that your charged interest on the interest that was incurred yesterday ?
Hmm, good question. I don't know much about interest repayments as I don't pay them myself however I believe the interest is calculated daily on the principle only, not the interest itself, and has a due date. So, if the interest is paid by the due date I guess there's no additional penalty.
I guess it depends on the institution as they all have different terms and condions.
I often wonder if the interest rates on credit cards are so high is because of people who can find loopholes in them.
There is a whole movement of individuals calling themselves “churners” often times cards will offer nice signing bonus to new users, in a nutshell, get the card, keep the bonus, cancel the card. Rinse and repeat.
Yeah, I guess some do that, and possibly the interest rates reflect the losses the banks incurr because of it. I suppose, no different to how product aim stores (supermarkets for instance) all have a margin on them to account for loss (theft) that everyone pays, every time they shop.
I don't think we blame banks enough. Their gambling addiction is what got us the economic meltdown back in 2007-2008 and again with the recent meltdown of those banks the feds took over here. They take our money, gamble with it and give us a pittance for it and if something goes wrong start screaming 'bailout!' at the top of their lungs.
I've never gotten into credit card debt because nobody has been willing to give me a credit card. Didn't want one for the longest time and then when I did they wouldn't give me one because I didn't have any credit. It's worked out though, I don't buy anything until I know I can afford it and then don't have to worry about it any after I do buy it.
My little brother on the other hand has not been so, um, fortunate. Back in 2017 he bought about 50k USD of crypto on credit cards, which turned into about 300k when everything went moon in December of that year. Told him to sell enough to at least be able to cover debts but he never quite got around to it before the crash hit, ended up having to file for bankruptcy.
I agree, banks need to accept some blame; they're businesses designed to make money and they prey on people mercilessly. But I also believe people have the ability to show more restraint, make better decisions and choices. It's a broad issue.
I'm like you and don't have credit issues, mainly through discipline and an understanding of the ultimate cost of credit debt. I'm fortunate.
I feel sorry for your brother though, that was bad luck and possibly lack of attention also. It's a shame, I don't like hearing bankruptcy stories like this. It happens though, often; one can only hope lessons are learned.
I am not sure with percent interest rate here in my country for credit to cash but yeah one thing I am sure it is quite bigger rather than I usually use credit cards. Not unless, it would be the bank will offer , you can get it in .59%. Might think it was quite cheaper but if you will be paying the longer time , the interest is shocking to sum up 🤣.
I Was I caught up with credit card bills sadly, but not because I didn't understand the terms. But it was because I helped someone to pay her debt due to that betting apps*. And she didn't pay me, damn! Would you believe I am still paying it in the bank till now? Still a year left 🥹.
No, I don't have that irresponsible spending, I follow that motto if you don't have that amount in your debit card, don't spend using your credit card
Credit should be avoided as much as possible I think; it's too easy to get out of control unless as a person has strong self-discipline.
It's a shame you're in the situation with the bank due to someone else's failure to show ownership and responsibility. I hope you manage to clear the debt and move on. You'll be a little wiser too I think. Also, I like your motto, it's a good one to remember.
Oh yes, it should really, the reason why I am using a credit card was only for convenience..No need to withdraw cash, as I prefer doing transactions online.
I think, I will be fully paid on Nov 2024, weeew! I've learned my lesson well..And though I wanted to pull the hair of the person who was the reason, I opted not to.🥹.
I just wanted to live in peace, but she won't get any help from me! NO WAY
Yep, you learned a lesson. That doesn't mean helping others is wrong, just that maybe in the future you'll do it in other ways. That's called wisdom.
Oh yeah, helping in another way!
Thanks and have a nice day.
!PIZZA
My credit score is rock bottom. It's actually below the lowest score somehow lol. The funny thing is though, I never used a credit card - except for one brief moment as a kid basically in 2009 to get food.
I quickly moved abroad and built my career and life until this point never having used a credit card, going into debt at any point. I've been employed non-stop for 13 years, never had health issues, paid my bills, rent etc on time my entire adult life.
But unfortunately, because I left and forgot about that $100 or whatever I spent on food, my credit score is equivalent to somebody who goes bankrupt from gambling and alcoholism.
I paid it off as soon as I found out about it again just last month (plus a decade of interest), but its still on record as a permanent stain.
My point being, it's funny how such a silly little event in my young life, which bears no resemblance to the entirety of my adult life, can basically summarize me as scum who may never be able to get a mortgage etc, meanwhile the banks are bankrupting the world with their incompetence and arrogance with no consequences whatsoever to those who run the show.
Not sure how related that was to the post but oh well XD
Totally related.
It's bonkers that this stuff happens and it's more often than one may think.
I spend twenty years being a commercial and residential real estate agent and I've so many people fail to get finance over the line due to the sort of nutbaggery you mention. Videos not returned to the store (videos shows my age lol) and phone bills not paid, like one, just to name two. It's mad. And yet, the banks showboat around make billions in profits on the back of the general populace. It's pretty disgusting.
Look at what happened to you, then look at some asshole who implements banking policy that causes people financial stress, in the name of more profits. Hmm, seems like your $100 is a little inconsequential in comparison.
I'm not sure where you are, but here in Australia that would eventually be wiped from your record and your score will improve. Oddly, you can improve your store by getting a credit card and paying it off perfectly. I know people who have done so, just to get a mortgage later on.
Yeah this is my main issue - Why is my lifestyle needing to go into debt the only indicator that i'm good at paying off debt? Surely a quick investigation can see the fact that I Have a ton of savings, income, and a history of consistent payments should go into account? But nah. I have to use debt, credit. Which I never wanted to do.
I live in China but I'm from the UK, its the UK i'm referring to. I simply never needed credit having lived abroad my entire adult life, and if I did that in China, it doesn't transfer back to England anyway, no country's credit does. You could have incredible scores in the USA but you're starting from scratch if you ever move a bit North over to Canada.
So when I finally get out of this dystopia, I have a long road ahead of buying chocolate bars and light bulbs on credit cards just so I can satisfy the retarded status quo -__-
It's a big problem and another way banks are forcing people into credit. I remember doing the same thing as a kid of around 19. I got a credit card and used it to establish that I could pay credit. Before long the $2K limit was $10K and more. That's how they trap people. The fuckers didn't trap me though, I learned quickly. Many do not.
I can tell you're butter about it and justifiably so. We, (the general population) are treated in this way and worse and all we can mostly do is suck it.
When you go back, might I suggest Mars Bars and Toblerone and when you get light globes, consider LED ones.
Haha - only if they're better for building credit!
Each of the items mentioned have excellent credit-building qualities and two out of the three are good on the tastebuds, so a double win.
We're not there yet as it's always easier to blame others, rather than take responsibility for your actions. We're moving towards a new financial system, where you will be your own bank, you'll be in charge of managing your finances, but many has to die for this to be done right. This sounds terrible, but it is true. Quite many have no idea about how credits are handled, although, as you say, the details and information is there. Freedom comes with a lot of responsibility.
Humanity is on the verge of a massive fall. The signs are there, it's clear to see, and yet we move closer and closer each week and no one (not enough people) really seems to care. People are stupid, so maybe it'll be good for a few to be cleared out?
It is sad to see too many ppl struggling with their life due to poor financial knowledge. If personal finance was taught at school a high percentage of those struggling would probably be aware of what they can avoid reaching a position where they have a hard time covering monthly expenses.
You often read about the tech knowledge breach but hardly hear about the financial one, when the second one is as important as the first one.
I agree and yep, I think should finance be taught in schools there would be less in trouble. It's deeper than that though. People can't seem to stop spending, they're addicted to it, and so they do so, whether they have the money or not. It's a whole other issue.
I use credit pretty aggressively to maximise the impact of my offset account on my mortgage. It is always paid the day before the statement is due to incur any and all interest.
If I need cash, I just make sure that cash never hits the offset account.
It's worked well so far, but I'd rather it work faster, with less pressure on interest rates. My mortgage repayment has increased by $39 a week, which is still within in my means, but that's two less fancy delivered pizzas I could consume per week.
It's smart to find ways to save money, or redivert it to where it will work most effectively. Sometimes that's pizza.
Living within one's means is something many people don't know how to do, or simply don't want to. With the ease at which a person can get credit these days it's not surprising, but, then again, it's easy to find a bridge and jump off it, but I don't see people rushing out to do so. Just because its there it doesn't mean a person has to use it I guess.
It's even easier to find a rubber duck and a toaster. :)
Living below one's means is probably the better approach, but those means are a constantly advancing line chart, fuelled by money printers being refilled by perpetual ink.
Kick the can down the road, run out of road, then build more road; or redefine the definition of road, and keep going.
Indeed, life is complicated by many things and it can be difficult to see the right path; and the right one is different for all I guess. Personally, I'm looking for experiences, happiness, enjoyment, fulfilment and such things. They come in various ways and I always focus on ensuring they're me-oriented. I mean here, I'm not influenced by the media etc. That way there, the road ahead is more of my design and creation.
Almost sounds like a slogan of some sort I've read on HIVE before. :D
OMG!! 22-24% 😱😱. In that case I would prefer not to use the card. In fact I think who are using this may don't know the fact yet.
In my opinion gambling brings greed and greed in gambling lead us to loss everything. I don't support gambling and I suggest others not to do it..
I don't know what credit card interest rates are in other countries, but here it's well-documented and advertised. People know, and they don't seem to care. We're on the verge of a recession at the moment and that'll sort a few of the dumbasses out.
Also, I agree with you on gambling.
Guess who!!! 😍💋
I know who.
I knew you would recognize your Rebecca!
Lol, I just wrote a comment to you using the first letter of your real name...But yep, I recall that I dubbed thee Rebecca, all those years ago.
The one and only, all the others are fakes and wannabes😁 It's ok I don't mind if you use my name, not looking to be overly anonymous. I think it's hilarious that everyone thought that was my actual name and had to pick their jaw up from the floor when they realized it wasn't. The chaos and confusion was great!
I'm happy to have caused that chaos Rebecca. It was fun. Chaos is my middle name after all.
G-dog Chaos knucklehead.
I know, my parents didn't like me much.
I knew that was right up your alley! I dig the name... Parents aren't cool anyway what do they know!!
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I often wonder if the interest rates on credit cards are so high is because of people who can find loopholes in them.
There is a whole movement of individuals calling themselves “churners” often times cards will offer nice signing bonus to new users, in a nutshell, get the card, keep the bonus, cancel the card. Rinse and repeat.
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