The mortgage bit is the key there. Red-lining started out as a phenomena in mortgage offerings, so it makes sense that they'd be going over and above to keep their noses clean. Credit cards as a general thing though? Nah. Though I'd be stoked to see that change in the years to come.
Hmmm... ok. The antidote I shared is when I was hanging out with the mortgage folks. I assumed it was applied to the credit card division. It is surely possible, and an acceptable solution.
Agree that health skepticism is warranted here but it might also be that they are trying to re-think the credit card experience to improve it for everybody.
I'm not sure I follow. They were still motivated by money. I doubt there was some altruistic revelation that got them incredibly interested in processing credit cards.
We do not agree and have people using the site today that claim the visibility (interest rates, payment history, credit score, etc.) and automatic planning gave them exactly the edge they needed to start making significant progress. These products (credit cards) were designed to be opaque and difficult to manage.
I wonder if it's just economically more advantageous for the credit card companies to absorb the debt and simply nudge interest rates up a bit to recover their losses.
It was news to me, actually. I thought the credit card companies just wanted to get lots of nearly insolvent customers because they were old fashioned loan sharks, not because they wanted to resell their debt as securities.
they're probably going to get bitten on this, fairly hard. imo, of course.
if they do this, it'll drive away at least some of those pristine payers who they do get profit from. maybe not huge profit, but it is reliable profit.
and once those guys are gone, it'll look like the subprime market. credit will be being given to people who are less responsible and have fewer means to repay their credit debts. it'll be a cycle of giving them money to use, and then having to lose money to pick up their assets when they don't pay you back.
this is whats happening now anyway, but the companies are making good $ off of the people who do repay in a reasonable time period. once those people leave for greener pastures, the CC companies are going to be stuck with a chewed up field full of manure.
I still believe credit card companies redline communities in America. I have gotten better cc offers in the better--strike better; richer postal codes. I can't prove it though.
One of my biggest mistake was using a credit card. I wish I threw out that first one I received upon graduation.
I wonder how much of this is premediated vs people getting addicted to credit or having a drop in income and naturally reaching their limit before going bust?
The white paper suggests it's "primarily a first-party fraud scheme".
The ideal customer for a credit card company is allowed to stay just within their limits and just able to make minimum payments, never repaying the capital. It seems natural that will inevitably result in some customers being pushed too far.
Whoops, you did say that, way back in the first post in our thread. Sorry, I've been focused on credit cards — all is clear now. I hadn't thought at all about that wrinkle of Stripe.
I suppose it's (only partially) balanced by the higher AMEX, etc fees.
This allows them to open chequing accounts in the future and become a bank so they can create more loans in the future for the credit cards they created earlier. Or so I've heard.
As much as this makes a scary headline, credit card debt is almost exactly in line with wages. From January 2020 to today credit card debt grew 11%.[1] Over the same period nominal wages grew by 16%[2].
So if anything the current US consumers have a healthier ability to service their credit card debt than the already healthy numbers pre-pandemic. This is corroborated by the credit card delinquency rate which is still lower than any single year in pre-pandemic history[3]
Scare headlines like this are good for generating clicks, but ignore the basic reality. Most years credit card debt will hit a new record, because most years total GDP and consumer spending increases.
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