SoylentNews is people
SoylentNews
There are substantial differences in the credit card offers that banks extend to different potential customers. Less-sophisticated borrowers receive offers with more back-loaded and hidden features, as well as more upfront rewards, visual distractions, and fine print at the end of the offer letter, according to Hong Ru and Antoinette Schoar in their new study, Do Credit Card Companies Screen for Behavioral Biases? (NBER Working Paper No. 22360). Banks also ratchet up these hidden features when their cost of funding increases, and when the credit risk of consumers is lower, which reduces the risk for the banks that customers default once they are hit with the unexpected charges. Hidden fees go up when state unemployment insurance benefits become more generous.
https://www.nber.org/digest/sep16/w22360.html
One more way in which Big Data is used against Little Guys.
(Score: 2) by TheRaven on Thursday September 08 2016, @09:14AM
I'm not saying it isn't worthwhile ($143/year is real money!)
It's often more than that, as I also put a lot of business expenses on the card. That's also ignoring the interest that you get on the extra money. If your monthly expenditure is $1,111, then that's an extra $1,111 that lives in a savings account at all times, earning compound interest. There's rarely a good reason to turn down interest-free credit for things that you can afford to buy without credit, because you can always lend the money to someone else (such as your bank). The important thing is not to avoid using credit, it's to avoid needing credit.
Oh, and the other benefit of having a credit card for a long time and paying it off every month is that it helps bump up your credit rating. The first mortgage that I had was quite difficult, because it was at the height of the credit crunch when the banks had a bunch of new rules about lending, and I was self employed. Having almost a decade of responsible borrowing on my credit report made the bank a lot less nervous. After buying my first house, my expenditure on mortgage payments was about half of my expenditure on rent previously - and I was living somewhere nicer.
but the complexities in the operation of the account (another account, another direction that money moves, another account to track and link into accounting software, another place where automated payments can break, etc.) easily exceed its value
The account credit card bill is paid automatically from my current account. It shows up in the mobile app my bank provides alongside my other accounts. I've had the card cloned a couple of times (both when I visited America) and the transactions were flagged by the card company and reverted before they every touched a real bank account.
I get far finer control for tracking my spending than when I use cash and a lot more buyer protection and other benefits than if I used a debit card.
sudo mod me up