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54 sats \ 5 replies \ @JulienPH 6 May 2023 \ on: How US banking system pushes people into debt bitcoin
Good post, but it does not answer my question: what can they buy on credit?
Unless I misunderstand something, you buy on credit when you have no capital left to buy. Americans have an average income of +70000$ : https://data.oecd.org/earnwage/average-wages.htm
What kind of lifestyle can push you to credit with that? If interest rates are 20%, it's not for investment (margin your life). And for consumption, everything is cheaper than in France for exemple (where we earn much less)
It's something I don't understand.
No, you buy stuff on credit always, even if you have enough money in your accounts. To get good credit score you need to do this. Let's say you have $100 000 in your bank account, you still borrow money, e.g. $50 (using credit card) for a month and return it after the month ends. If you repay within the month, you don't pay any interest, if it takes you more months, then the interest rate applies.
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Wait, what ? The only bank cards Americans have are credit cards? How is that morally and technologically justifiable?
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They also have "debit cards" (sometimes called "bank cards"), but those don't participate on your credit score, so if you want to rent or mortgage, you are forced to use credit cards. Sometimes e.g. to young students you will give a debit card, because there they can't get over the limit (that easily, but again they try to catch you on overdraft).
So yeah, this is the reason for why us people are on average so indebted.
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What is the banks' rationale for debit cards not offering a good "credit" score by default?
Someone who never takes credit has a better chance of repaying one (real estate, for example) when it happens.
This situation is crazy
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The banks don't want you to return the money, they can squeeze more money out of people, if they get more people into debt.
Also this whole system encourages more spending on stupid stuff, which in turn increases GDP of the country and so... welcome the the Keynesian world...
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