Between that and many "banks" offering you to "invest" in crypto straight from their mobile apps home page... it seems like they're trying to milk whatever is left in the pockets of the bottom tier
Debt is a powerful tool when used by educated people for legit reasons, buying a new TV or chicken wings isn't one of them.
>Debt is a powerful tool when used by educated people for legit reasons,
Debt is a dangerous tool when used carefully and intelligently. When used carelessly or unintelligently it is a ruinous monster. We live in a world that allegedly is more educated than ever, but I don't think education is sufficient to avoid this pitfall.
Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV
> Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV
That stopped being true a long time ago, at least in the US. TVs can be had incredibly cheaply nowadays. A quick Amazon search shows many models available for circa $100. That's like less than a dozen fast food meals.
If you need a TV, save your money and buy one you can afford. A predatory payment plan should not be used.
Not really - for something like a TV you can wait or get a more modest model. And if waiting would take too long then it's probably not a reasonable expense for you.
Since we're already dealing in absurds here, what if one were to Doordash 50 servings of wings as a emergency/backup catering option for a banquet or wedding? That could easily top $500-800. I sure some consumers—including financially secure ones—would appreciate an interest free loan option on that.
Obviously there is also the opposite dark and pessimistic take here, but there are potentially good things as well?
The sort of person who would order wings as their backup catering for a wedding doesn't shouldn't be borrowing for this, one would think. If they did need the loan they were already stretching themselves far too thin for a wedding event.
This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all.
In the long run, customers who should have been blocked from purchasing due to lack of funds will instead write bad reviews about their experience being sent to a collector over a cheeseburger and they’ll bounce off your platform.
“Short term profits ruin everything” for 200 Alex!
My (ex-)sister-in-law would have burritos delivered from the Moe's that was a literal (in the middle-aged sense of that word) ten minute walk* from her house. She was not a wealthy person.
This was NOT the fault of DoorDash.
I rarely order food delivery, for all the obvious reasons, but if there is a market for this stupid luxury (assuming cooled fries and a soggy hamburger bun qualify), good on DoorDash.
Food delivery is not addictive, this is on the free agent spendthrifts who care not for tomorrow.
B) They could go buy the cheeseburger themselves. It'll be twice as cheap too. (I've seen DoorDash screenshots on Reddit, it's obscene how much extra they charge)
>This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all.
Accepting credit cards theoretically allows businesses to sell to customers that don't have the money. Is this bad, and should we chastise businesses for not limiting themselves to debit payments only?
I low-key have a preference for businesses that don’t take credit, since they’re theoretically operating with lower overhead. (Though in practice this is limited to my barber, and my neighbourhood Vietnamese bakery and Montreal bagel shops.)
To your actual question, credit cards are tricky because a bunch of services are wrapped together in the same product, and there’s no practical way for businesses to accept charge cards and not credit cards. The number of variables and intermediaries here suggest that this is really a job for regulators - probably not to ban selling to customers that don’t have money, but to make it financially unappealing, e.g. by capping APRs, limiting advertising, etc.
US credit cards, for all their predatory faults, are a competitive marketplace, accessible by anyone able to follow a few steps [0], and provide effectively-free 30-to-60 day loans.
If someone can't get a credit card in the US, I'd question if they have sufficient financial literacy to take on micro-loans.
Credit cards have some brakes because they only extend credit to people they think will pay it back.
Klarna’s marketing pitch is “no credit check”. They then just send an automated ACH to your bank account. If the funds aren’t there they send it over and over, hoping to punish you with returned-payment fees or overdraft fees. It’s quite different than a credit card and significantly more predatory.
(Particularly pernicious is their claim if they do run a credit check it’s only a “soft pull”… what they are doing should be a hard pull and create a new trade line for an installment loan, albeit a bizarre 4 payment 4 week term one. Creditors are legally obligated to report accurate information. Klarna is conspiring not to do so.)
This is one of those things where it makes people feel very smart to dunk on it, but if you think critically for a minute, the behaviors this enables are already available in objectively more harmful ways: credit cards and payday loans.
This makes things better, not worse.
Obviously people wouldn't be doing this ideally, but that's the world we live in, and this isn't some new phenomenon or some sign of the times.
Edit: since it might vary by location, here’s what footnote 6 says for me, in part:
> A $1,000 purchase might cost $181.04 per month over 6 months at 28.99% APR.* *Rate ranges from 7.99%-33.99% APR based on creditworthiness and subject to credit approval…
It appears that a simple bit of corporate 'synergy' camouflage has tricked you into thinking this is not a payday loan. Maybe those dunking on it are on to something.
or maybe it'll help highlight how dependent we've become on credit cards meditating almost every financial transaction.
i distinctly remember ~20 years ago a that a friend bought a cup of coffee using a credit card and we all made fun of him for it because we thought he was trying to show off. "credit cards are for emergencies and big things like plane tickets, not a three dollar coffee".
It's a tough one. To what extent do we need to go to protect people from their own stupidity?
I remember doing something similar about 15 years ago. A pizza place accepted PayPal including a 'pay after delivery' option. This actually resulted in the payment being taken about 7 days after the order was placed and it was a handy way to get some food when I was broke right before pay day (they didn't check your balance before placing the order).
]
Is it a bad idea to order takeout on credit - yeah usually it is. But if people want to do it why should we stop them? There are certainly legitimate use cases (e.g. placing a very large order for a group/party and having time to collect from everyone instead of having to front the cash yourself).
As a principle, we don't protect people from their stupidity unless we can profit more from being a nanny.
Anyone can walk into a liquor store and buy enough alcohol to kill themselves or waste all their money at the casino. Who cares about people borrowing money for lunch?
This country absolutely does not care at all for the poor (unless we've built an institution of exploitation disguised as benevolence)
If we are going to extend liability protections to investors, it goes hand in hand that we also tell them they can't run liability free scams, and punish them when they try.
> do we need to go to protect people from their own stupidity
Speed limits, casino rules, food ingredients legislations, weapon and gun legislation… depending on where you live the cursor is between freedom and stupidity protection.
I can easily and happily find alternatives for the exemples you provide. Here in EU the credit (card) culture is way less loanistic: what we call “credit card” are often delayed debit cards and the real credit cards are used by the richest percentiles.
Isn't there at least a little bit of social responsibility where the chances that the real utility is very small?
If the feature was really about parties/large orders, how about enabling it for orders over $100? I don't think this is a real scenario. Otherwise it's just predatory and an anti-consumer dark pattern.
See the current arguments about sports betting, there's some clear evidence that they aren't an entertainment product and there are clear predatory and anti-social product patterns at work.
I don't believe in protecting people from their own stupidity but I also think we should call out blatant net-negative things lke this.
For me, I think the "oh shit, this can't be good" moment came about 10 years ago when I learned that people couldn't afford tires (not wheels/rims, we all know how absurd those are) for their SUVs that cost as much as my house. Back then, I read some long-form article about how they were financing new tires.
Admittedly, doing the same for delivery food is more extreme still, but one wonders what legitimate problem this could ever solve. I suppose there is someone out there who can afford the meal but they're tapped out until payday, and yet I wonder why they don't have an (unused until this point) credit card to tide them over until Friday. Neither savings nor card, something's gone horrendously wrong.
As someone who's been broke and making bad credit decisions to float things along, I'd say it's often a mindset, getting in a mental rut where you just keep doing the same thing because it solves the problem for today.
I'm not talking here about people who are truly poor and have insufficient income, but people who have money coming in and going out but always seem to be a couple months behind. So lots of stuff goes on credit and costs interest, and they pay a lot of late fees and sometimes overdrafts. But they never fall further behind, so they feel like if they could just get over the hump, they'd be okay. And if you look at their numbers, they're right. But if you handed them a couple months' income so they could get caught up, they'd probably be right back in the same situation within a year, because "barely keeping up" feels normal to them, so the difference between that and "in the black" feels like a buffer they can safely spend down.
What it probably takes (what it took for me, anyway) was not just a new job with a regular salary, but a change in mindset, especially starting to keep a budget so I know where every paycheck is going before I get it. I haven't paid a late fee or a dollar in interest (except my mortgage) for five years, and that's saved me thousands of dollars over what I was spending before. Life is expensive when you're broke.
Readit News
Debt is a powerful tool when used by educated people for legit reasons, buying a new TV or chicken wings isn't one of them.
Debt is a dangerous tool when used carefully and intelligently. When used carelessly or unintelligently it is a ruinous monster. We live in a world that allegedly is more educated than ever, but I don't think education is sufficient to avoid this pitfall.
That stopped being true a long time ago, at least in the US. TVs can be had incredibly cheaply nowadays. A quick Amazon search shows many models available for circa $100. That's like less than a dozen fast food meals.
If you need a TV, save your money and buy one you can afford. A predatory payment plan should not be used.
Obviously there is also the opposite dark and pessimistic take here, but there are potentially good things as well?
Someone who can't probably shouldn't be spending $800 on wings.
In the long run, customers who should have been blocked from purchasing due to lack of funds will instead write bad reviews about their experience being sent to a collector over a cheeseburger and they’ll bounce off your platform.
“Short term profits ruin everything” for 200 Alex!
This was NOT the fault of DoorDash.
I rarely order food delivery, for all the obvious reasons, but if there is a market for this stupid luxury (assuming cooled fries and a soggy hamburger bun qualify), good on DoorDash.
Food delivery is not addictive, this is on the free agent spendthrifts who care not for tomorrow.
* it was uphill a bit
B) If someone can't afford a cheeseburger, which other platform are they going to switch to?
Accepting credit cards theoretically allows businesses to sell to customers that don't have the money. Is this bad, and should we chastise businesses for not limiting themselves to debit payments only?
To your actual question, credit cards are tricky because a bunch of services are wrapped together in the same product, and there’s no practical way for businesses to accept charge cards and not credit cards. The number of variables and intermediaries here suggest that this is really a job for regulators - probably not to ban selling to customers that don’t have money, but to make it financially unappealing, e.g. by capping APRs, limiting advertising, etc.
If someone can't get a credit card in the US, I'd question if they have sufficient financial literacy to take on micro-loans.
[0] https://www.creditkarma.com/credit/i/how-to-build-credit-fro...
Klarna’s marketing pitch is “no credit check”. They then just send an automated ACH to your bank account. If the funds aren’t there they send it over and over, hoping to punish you with returned-payment fees or overdraft fees. It’s quite different than a credit card and significantly more predatory.
(Particularly pernicious is their claim if they do run a credit check it’s only a “soft pull”… what they are doing should be a hard pull and create a new trade line for an installment loan, albeit a bizarre 4 payment 4 week term one. Creditors are legally obligated to report accurate information. Klarna is conspiring not to do so.)
Deleted Comment
This makes things better, not worse.
Obviously people wouldn't be doing this ideally, but that's the world we live in, and this isn't some new phenomenon or some sign of the times.
https://www.klarna.com
Edit: since it might vary by location, here’s what footnote 6 says for me, in part:
> A $1,000 purchase might cost $181.04 per month over 6 months at 28.99% APR.* *Rate ranges from 7.99%-33.99% APR based on creditworthiness and subject to credit approval…
i distinctly remember ~20 years ago a that a friend bought a cup of coffee using a credit card and we all made fun of him for it because we thought he was trying to show off. "credit cards are for emergencies and big things like plane tickets, not a three dollar coffee".
now, i go weeks without having any cash on me.
I remember doing something similar about 15 years ago. A pizza place accepted PayPal including a 'pay after delivery' option. This actually resulted in the payment being taken about 7 days after the order was placed and it was a handy way to get some food when I was broke right before pay day (they didn't check your balance before placing the order). ] Is it a bad idea to order takeout on credit - yeah usually it is. But if people want to do it why should we stop them? There are certainly legitimate use cases (e.g. placing a very large order for a group/party and having time to collect from everyone instead of having to front the cash yourself).
Anyone can walk into a liquor store and buy enough alcohol to kill themselves or waste all their money at the casino. Who cares about people borrowing money for lunch?
This country absolutely does not care at all for the poor (unless we've built an institution of exploitation disguised as benevolence)
Speed limits, casino rules, food ingredients legislations, weapon and gun legislation… depending on where you live the cursor is between freedom and stupidity protection.
I can easily and happily find alternatives for the exemples you provide. Here in EU the credit (card) culture is way less loanistic: what we call “credit card” are often delayed debit cards and the real credit cards are used by the richest percentiles.
If the feature was really about parties/large orders, how about enabling it for orders over $100? I don't think this is a real scenario. Otherwise it's just predatory and an anti-consumer dark pattern.
See the current arguments about sports betting, there's some clear evidence that they aren't an entertainment product and there are clear predatory and anti-social product patterns at work.
I don't believe in protecting people from their own stupidity but I also think we should call out blatant net-negative things lke this.
Admittedly, doing the same for delivery food is more extreme still, but one wonders what legitimate problem this could ever solve. I suppose there is someone out there who can afford the meal but they're tapped out until payday, and yet I wonder why they don't have an (unused until this point) credit card to tide them over until Friday. Neither savings nor card, something's gone horrendously wrong.
I'm not talking here about people who are truly poor and have insufficient income, but people who have money coming in and going out but always seem to be a couple months behind. So lots of stuff goes on credit and costs interest, and they pay a lot of late fees and sometimes overdrafts. But they never fall further behind, so they feel like if they could just get over the hump, they'd be okay. And if you look at their numbers, they're right. But if you handed them a couple months' income so they could get caught up, they'd probably be right back in the same situation within a year, because "barely keeping up" feels normal to them, so the difference between that and "in the black" feels like a buffer they can safely spend down.
What it probably takes (what it took for me, anyway) was not just a new job with a regular salary, but a change in mindset, especially starting to keep a budget so I know where every paycheck is going before I get it. I haven't paid a late fee or a dollar in interest (except my mortgage) for five years, and that's saved me thousands of dollars over what I was spending before. Life is expensive when you're broke.
- Doordash to pay drivers with free bets on FanDuel?
- UberEats to develop a credit monitoring business?
- SkipTheDishes to offer home liver function tests with every booze order?