Since we're on the subject of credit cards. Retail credit cards increasingly come with perks — and a 25 percent interest rate I've come to the opinion that if a major part of your business model involves profiting off of the poor financial decisions of other people, you're not running an ethical business. This applies to everything from credit cards to predatory lenders to shady credit collections companies that try to slap crazy fees and penalties on top of the debts they're trying to collect. I could go on a huge ass rant, but I'll just say that I think debt is dangerous, constrictive, and counter productive. After I got out of debt, I switched to paying for everything in cash. My spending, both impulsive and planned, dropped way down and I'm in a much better place for it. Money and spending habits don't come up in every day conversations, but when it does, I never hesitate to tell people to consider cutting back their credit card use. It's amazing the amount of difference it can make.For retailers, store cards have become a way to drum up customer loyalty while bringing in extra cash to make up for narrowing profit margins. Macy’s, for example, made 39 percent of its $1.9 billion profit last year from credit card fees, according a Morgan Stanley analysis cited by the New York Times. The company’s credit card, issued by Citi, comes with a 26.24 percent interest rate.
I think it's more complicated than "credit companies are unethical." As with any wide ranging social problem (e.g. obesity), the question of why are people making these seemingly destructive choices needs to be addressed. Lack of cash on hand seems to be the reason people end up financing mundane things like breakfast or bus fare. I think part of the problem can be boiled down to effective marketing from some of these companies, but the bigger issue is that the disposable incomes of a lot of the middle and lower income groups is just smaller than it should be. It's easy to come by unbelievable statistics about how many people can't afford an unexpected $500 expense, and in life those types of expenses come up pretty damn often. Although I agree that in most cases better choices would have helped any given individual, what we really need are better public policies that promote paying people more and collecting less taxes from the lower and middle class. In that scenario, maybe that unexpected $500 expense is covered by your cash in the bank. As long as our incentives promote high interest lending, that's what we'll get. Hate the game, not the player.
I think we're on the same page, but we're looking at things differently. You're saying, part of the reason credit cards exist is to help people in vulnerable positions. What I'm saying, is that debt in general and credit cards in particular, when used by people in vulnerable positions, make them more vulnerable. My argument is that business practices that exploit people financially and then exacerbate their hardships are inherently unethical because they're not creating anything of arguable social value and they are actively participating in social harm. Credit card plans that have hidden fees and gotcha terms and interest rates that balloon out of control as soon as you hit about $2,500 worth of debt? Grifters. Pay-Day loan companies that charge anywhere from 300-3000% interest on short term loans? Grifters. Credit collectors that somehow manage to slap hundreds of dollars of fees and interest and charges on a small debt before even contacting the debtor about the debt? Grifters. The fact that these companies invest in studies in law and math and psychology and marketing to try to get their "customers" to behave in a way that's most profitable to them for both short term and long term gains? Grifters. Grifters. Grifters. Yeah. Wages suck. Yeah, lack of social safety nets suck. Our medical industry sucks. Our rampant consumerism sucks. Our lack of education sucks. But companies that look at all of those problems and see dollar signs? They suck the hardest and I have no empathy for any of them.
Yeah, I need to start doing this. Use the credit card and pay it off immediately (yay free cashback), but taking out $X in cash every week for groceries and going out is probably a good idea. Just need to figure out what that $X should be.I switched to paying for everything in cash.
If I had to cough up $100 cash every month, I wonder if I'd still feel a smart phone and data plan was worth it or if I'd get a flip phone.My spending, both impulsive and planned, dropped way down and I'm in a much better place for it.