Post New

https://www.newsweek.com/student-loan-delinquency-...

Student Loan Delinquency Rate Skyrockets
Published Aug 07, 2025 at 7:48 AM EDT

https://www.foxbusiness.com/economy/young-american...

Young Americans drowning in credit card debt as delinquency rates climb near 10% in Q2
Gen Z increasingly turns to 'buy now, pay later' services for purchases as small as coffee

Gen Z increasingly turns to 'buy now, pay later' services for purchases as small as coffee

Technically, using a credit card for a cup of foo-foo coffee is using a "buy now, pay later" service. With merchants increasingly reluctant to take large denomination bills, more people are simply using a credit card for everything, rather than carry around large numbers of low denomination bills.

As proposed, elsewhere, I would not be surprised if #47 picks up where #43 left off, making it progressively harder for people to file personal bankruptcy.

enacted 2005:

Referred to colloquially as the "New Bankruptcy Law", the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy under Chapter 7; some of these consumers may instead utilize Chapter 13.

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

Steve

Part of the problem in the US is a lack of education about the proper use of credit. Credit, in my mind, is the same as cash - just offset by a known time interval. It is a contract which is non-optional and which, if broken, is subject (rightly) to significant penalties for breaking your word.

When I was in business, almost all of my customers purchased on credit (our standard terms were 30 days). Almost all of our purchases were made under the same terms. As long as everyone plays by the same rules, life is beautiful. I found it very beneficial to pay my vendors on time, as over time once they realized this could be depended on, it give me an almost unlimited line of credit at the vendors, as well as better prices than a company my size should have expected. On that side of the balance sheet, I benefited by the fact that most firms ignored their credit terms. On the other side, various classes of customers were notoriously slow payers (hospitals, lawyers, doctors, general contractors come to mind) and I basically fired them as customers and specialized in government work (government agencies generally paid on-time if you did the proper paperwork and excelled on providing what the ordered).

So, for me, while I never borrowed money in order to pay for a capital item over time, utilizing creit was an integral part of my business life.

In the more than 50 years that I have been using credit cards; I have never paid a penny in interest. From my standpoint, credit cards provide three major functions:

Purchasing conveniently, but not having to carry much cash, minimizing pulling it from ATM's

Cash returned in consideration of my usage (1%-4%, depending on what the purchase is)

Taking advantage of bonuses paid in consideration of opening new credit cards (I am currently using between 2-6 new credit cards to pay off a cruise using just the bonus amounts of each - providing approximately a 15% rebate in cash and/or frequent flyer points - the cards will be closed in a couple of months). It has been many years since I've bought a seat on any flight of over a few hours in length for cash.

So, while someone looking at my payment history (zero blemishes) is happy to bribe me to chose them to provide credit, apparently no one looks at the cost of that credit history to the banks.

So, over my life, having good credit has been very beneficial, not to mention convenient. I use credit cards as if I'm spending cash - which in fact I am, as I pay them off in-full (after reaping a month of interest on the float).

People who treat credit cards as a way to put off paying as long as possible end up paying usurious interest rates and constantly end up digging themself deeper into debt. The MOST important thing to stress to someone beginning to use credit cards is that there is an obligation to pay them off on-time. If the item is large enough that you can't, then get a loan from a bank with a set (understandable) interest rate.

Jeff

Part of the problem in the US is a lack of education about the proper use of credit.

Smiling

Jeff,

First, we'd have to convince the unwashed mob not to scratch lottery tickets. Good luck.

Life is not a zero-sum game. Life is made up of contributions. Some folks make the worst contributions possible.

Taking advantage of bonuses paid in consideration of opening new credit cards (I am currently using between 2-6 new credit cards to pay off a cruise using just the bonus amounts of each - providing approximately a 15% rebate in cash and/or frequent flyer points - the cards will be closed in a couple of months). It has been many years since I've bought a seat on any flight of over a few hours in length for cash.

So, while someone looking at my payment history (zero blemishes) is happy to bribe me to chose them to provide credit, apparently no one looks at the cost of that credit history to the banks.

Banks are actually delighted to give you the sign up bonus, even if you later cancel. Here are how the economics works: For these types of cards, there is typically an annual fee and a minimum spend requirement to get the sign-up bonus. And sometimes there is a second bonus for additional spend. Banks of course get the swipe fees, so they will earn a decent amount on fees. And you have to have pretty good credit and income to qualify for these kinds of cards. So their downside risk is pretty well capped.

But people tend to keep rewards cards longer than other cards, because you also get benefits with the airline (like maybe a free checked bag and early boarding) plus you keep earnings points, hence earning swipe fees for the banks. Having a minimum spend also means you CAN spend that amount, so you're the type of customer they want.

It works for the airlines too. Banks buy frequent flyer points at a discount from the airlines. This is a good deal for the airlines because they are getting paid up front for a seat that hasn't been booked yet. Basically, it is interest-free float. But the airlines can restrict the rewards seats, preferentially towards seats with low demand. The incremental cost of adding one additional passenger as opposed to flying an empty seat is pretty small. The free checked bag costs them almost nothing extra, and providing early boarding costs them nothing extra at all. And you're also now enrolled in the airlines frequent flyer program. So you'll like wind up buying a few more trips with them than you otherwise would have.

That's why airlines push these cards so hard. Airlines make as much or more money from their rewards programs than they do by flying airplanes. And note, the airline rewards programs has been moving away from how much you fly, to how much you spend on the card. And now *everyone* has early boarding and lounge access, they just aren't the perks they used to be. Airlines have responded by devaluing the rewards and making it harder to get elite status by actually booking trips on their airplanes.

So if you have reward points of any type, spend 'em while you got 'em. They don't earn interest and are likely to be devalued in the future, so no reason to hoard them.

So, while someone looking at my payment history (zero blemishes) is happy to bribe me to chose them to provide credit, apparently no one looks at the cost of that credit history to the banks.

Oh, someone looks.

*****historical context*****

I opened my first credit card in the late 70s, with a princely $500 limit. Once into the 80s, bleeding people with fees became a thing. Visa started charging me, iirc, a $20/year fee, on a card I used little, preferring to pay cash the vast majority of the time.

One day, an offer floated into my mailbox, from another credit card company, offering "no fee for life" in writing. I signed that form and fired it back in the next day. Once I had that "no fee for life" card in hand, I called Visa, asking them to waive the $20 fee. I heard the agent go typeity type type, and he said "I can't make that a no fee account". I said "fine, cancel the card". I presume what the agent was typing about was looking to see how much interest they had made off me in recent years. That would be $0.00, which made me expendable.

In recent years, the bank that now handles the card program that made that "no fee for life" guarantee to me, 30 years ago, tries mightily to get me to shift to a different card. Nope.

*****takeaway*****

Seems probable that all the other credit card companies think they can induce you to spend more than you can pay, in a month, even though your current card servicer has failed to do that. Their optimism reminds me of the indomitable spirit of the Black Knight.

Monty Python and the Holy Grail - Black Knight

https://www.youtube.com/watch?v=kRwCPUEND1U

Steve

Post New

US Policy FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.