Klarna's Losses Widen After More Consumers Fail To Repay Loans 97
Klarna's net loss more than doubled in the first quarter [non-paywalled link] as more consumers failed to repay loans from the Swedish "buy now, pay later" lender as concerns rose about the financial health of US consumers. Financial Times: The fintech, which offers interest-free consumer loans to allow customers to make retail purchases, on Monday reported a net loss of $99 million for the three months to March, up from $47 million a year earlier.
The company, which makes money by charging fees to merchants and to consumers who fail to repay on time, said its customer credit losses had risen to $136 million, a 17% year-on-year increase. The increased failure to repay comes on the back of gloomy economic sentiment in the US, where a closely watched measure of consumers' confidence last week fell to its second-lowest level on record. US President Donald Trump's trade war has driven expectations of higher inflation. Further reading: The Klarna Hype Machine.
The company, which makes money by charging fees to merchants and to consumers who fail to repay on time, said its customer credit losses had risen to $136 million, a 17% year-on-year increase. The increased failure to repay comes on the back of gloomy economic sentiment in the US, where a closely watched measure of consumers' confidence last week fell to its second-lowest level on record. US President Donald Trump's trade war has driven expectations of higher inflation. Further reading: The Klarna Hype Machine.
As expected (Score:5, Insightful)
Make loans to people who can't get or responsibly use credit cards, this is the expected result.
I mean......you'd have to be ridiculously optimistic to think otherwise.
Why do rich people invest in shit like this?
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Why do rich people invest in shit like this?
Maybe they weren't (around and) paying attention in 2008 to the lesson that securitizing bad loans doesn't turn them into primo credit accounts?
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Except that it did for a long time, until it didn't. History isn't merely about the end, it's about the big fat middle where people profited from those alleged "primo credit accounts".
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Why do rich people invest in shit like this?
Maybe they weren't (around and) paying attention in 2008 to the lesson that securitizing bad loans doesn't turn them into primo credit accounts?
More likely, they paid too close attention to both the rise that gave us the 2008 crisis, and the end-result, where several folks made a *LOT* of money off the economic crash, and think they're smart enough to play the game and be the winners the next time around. There's a lot of brain power being thrown into watching for the slide and catching the failure, plus, if the owners have enough investments, the government will step in and bail them out when the crash happens, so it's not like they really have to
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>Why do rich people invest in shit like this?
Because it is Fintech!!! and anything with "tech" in it is awesome!!!!!
*sigh*
It doesn't differ much from Uber or Lyft (Score:2)
putting poor bastards to work who have nowhere else to go and try to rob them of their earned money at each turn.
Re:As expected (Score:5, Informative)
Because of the predatory interest rates they can charge. It's the same reason VC exists, the failure rate may be "high" but so is the return on what doesn't fail.
Exploiting the disadvantaged is extremely profitable, that's one of the reasons Republicans like to create so many disadvantaged. You aren't as smart as you think you are.
Re:As expected (Score:4, Insightful)
republicans have had control of the federal government for at least half if not over half of my entire life.
well you're getting everything you wanted from them today so in 3 more years lets see how much better the nation is doing on all those fronts.
oh...
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Republicans created this awful incentive for them to come and the
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Yes, Democrats havent been successful at solving complex problems no country has ever 100% succeeded in solving. Better to vote for the people who want to cut funding to Medicare to pay for a tax cut for the wealthy, right?
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Re:As expected (Score:4, Insightful)
Because of the predatory interest rates they can charge. It's the same reason VC exists, the failure rate may be "high" but so is the return on what doesn't fail.
Exploiting the disadvantaged is extremely profitable, that's one of the reasons Republicans like to create so many disadvantaged. You aren't as smart as you think you are.
This. This in spades.
Slumlords end up as millionaires because people who have little have very few choices. If you've got a good job and a few coins to your name you can buy a house, if you don't you have to rent and who you can rent from is very limited, especially in countries where governments don't enforce equality laws or explicitly allow exploitive landlords... Like Republicans.
Had I been born in the US rather than Australia in the 1980s, I would have been blind if not dead by the age of 10... Thanks to Australia's Medicare system I got the surgery I needed despite being born to an unemployed single mother, 40 odd years later I've a good job paying a good wage living half a world away.
Re:As expected (Score:4, Informative)
Hey, you should consider creating a new account with a new username. People might listen to you. I mean, you could also work on the swearing but honestly it would go a long way if you just had a username that says something other than "I'm an asshole".
Re:As expected (Score:5, Informative)
As far as slum lords go, the nastiest, shittiest places I've lived run by the worst scummiest most evil people were in extreme far left shit holes like the San Francisco area.
Try Flint, noob.
You're painting a false caricature of the US you got from terribly inaccurate misinformation sources.
ahhahAHaHAhaHaHahaHAHAHAHahahHAHA
You think SF is worse than the actually worst shitholes because some reich wing podcasters said so, then you want to say that shit? Get all the way the fuck out.
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And the life expectancy is less than 1st world countries even if they survive to adulthood.
All while paying more $
You'll never catch me talking dumb shit about your country.
You do it all the time you idiot.
Like when you claim 50% of Chinese don't have electricity.
. You're painting a false caricature of the US
Medical bankruptcy
Trump making a big deal about simple basic medicine being outrageously expensive.
Everybody knows this
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I love when foreigners talk about my country and say things that just aren't true but they say them with such confidence.
Here's an anecdote to match your anecdote:
My college gf's high school bff, unemployed, age 19, got knocked up by a no-show 20 years ago old. Her kid was missing about 20% of its brain, required heart surgery and intense life long care to keep it alive (it still is and still gets that care). This was 30-40 years ago that her nearly brain dead kid got heart surgery and a bunch of other treatment I was told cost over a million dollars at the time. And it is still getting free care. In the US. And will for life. Since there's now nothing wrong that will kill it early and it gets daily medical care (yes for 'free'), it will likely out live you or anyone else you've ever known. For free. In the US. Did I mention it was free, in the US and the child would have been still born or died soon after birth without intense medical care? In the US?
You foreigners crack me up. You have no clue about the US but are so certain about the things you don't know.
As far as slum lords go, the nastiest, shittiest places I've lived run by the worst scummiest most evil people were in extreme far left shit holes like the San Francisco area. Once again, you have no clue wtf you're talking about. Is there -anything- you know about the US that is actually true? Haven't seen an example of that, yet.
You'll never catch me talking dumb shit about your country. I'm smart enough to know (low bar you failed to step over) that you can't understand a place you haven't lived in and personally experienced for many years. You're painting a false caricature of the US you got from terribly inaccurate misinformation sources. If everything you know about life came from slashdot you'd know a lot of things but most of it would be false.
Case in point: He responds to wild claims from a foreigner about the US with contradictory factual anecdotes. Result: Modded "Troll" by people who don't like to hear the truth. Typical Slashdot.
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I'm smart enough to know (low bar you failed to step over) that you can't understand a place you haven't lived in and personally experienced for many years
As far as slum lords go, the nastiest, shittiest places I've lived run by the worst scummiest most evil people were in extreme far left shit holes like the San Francisco area. Once again, you have no clue wtf you're talking about. Is there -anything- you know about the US that is actually true? Haven't seen an example of that, yet.
So how long did you live in San Francisco then?
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I think you would have got it in the US too. Poor children get healthcare through Medicaid. At least, my niece was born with pretty severe deformities and got dozens of surgeries etc despite her parents having no stable income.
Healthcare in the US is already mostly socializ
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I think you would have got it in the US too. Poor children get healthcare through Medicaid. At least, my niece was born with pretty severe deformities and got dozens of surgeries etc despite her parents having no stable income.
Do they get one of the best paedo-optical surgeons in the country? I did.
As such, didn't need dozens of surgeries. 3 were enough (and the 3rd was when I was 10) which fixed the problem for life. Had full optical care for free until I was 18, at that point everyone was satisfied that the issue wouldn't re-occur.
Healthcare in the US is already mostly socialized. The government pays for more than half of it, once you include federal, state, VA, and also federal subsidies for reduced-cost private plans (which a lot of sources fail to include).
No, the US has a lot of taxpayer funding into medical services, but it's the opposite of socialised. Your tax money is paying private corporations to increase their profits.
A lot of people seem to assume that if the US went full single-payer, then all our costs would go down to levels seen in other nations that are already single-payer. I don't think so. It wouldn't magically fix our system of highly-paid physicians with high training costs and high malpractice liability. Nor our deep respect (to put it one way) for the intellectual property rights of drug developers. It wouldn't suddenly create a world in which healthcare is 'free' and therefore anybody can demand whatever treatment they think they need - there still has to be a bad guy somewhere in the system deciding what is medically necessary and cost-justified.
Your entire post has pretty much been trying to convince yourself that lies are true.
If the US adopted Australia's semi-public system your health care costs would drop dramatically... if you ado
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Re: As expected (Score:2, Troll)
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Re: As expected (Score:2)
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The colonies had parliamentary systems. Guess what? Parliamentary systems suck. The states went with regularly scheduled elections and primaries. Primaries are where the various factions join together before the general election so we have a government immediately after an election. As opposed to trying to create a coalition government (your idiotic proportional representation) after the fact, then having more elections when a coalition can't be made. Also we have separate elections for executive (Presi
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You have primaries where only the most extreme bother to vote, then you have one election with a list of candidates from dog catcher to President where the list is to big for most voters to be knowledgeable for most of the candidates so they just mark D or R across the board. Then months later you get a new government after the losers may have had months to legislate shit to fuck up the new government. Then due to your fixed elections, you can get governments that can't do the most basic task of government,
Re: As expected (Score:2)
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Ah yes. Republican bad. Very astute.
That must be why every democrat run city and state is doing so marvelously well on issues like homelessness, drug addiction, and poverty.
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It's not ill advised loans, it's Tech! And SaaS! Infinite scaling!
As corruptly expected. (Score:5, Insightful)
Make loans to people who can't get or responsibly use credit cards, this is the expected result.
I mean......you'd have to be ridiculously optimistic to think otherwise.
Very true. However, this was the primary reason we had the 2008 crash; lending to everyone and their dog. So, we had to be corruptly stupid to think this wouldn’t happen again. And we were. And we are.
Why do rich people invest in shit like this?
Not sure. At least with a failed home or car loan, there’s something of value to repossess. Repo men are coming for your pizza loan about as hard as they’re after the STD collected with a Coachella mortgage. I blame money laundering. Only loss that makes sense. Just another UK candy shop.
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Make loans to people who can't get or responsibly use credit cards, this is the expected result.
I mean......you'd have to be ridiculously optimistic to think otherwise.
Why do rich people invest in shit like this?
Good question - the IPO was going to be 15 Billion, and that's on 701 Million.
Christ, this sounds like something the subprime loan people would love.
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Why do rich people invest in shit like this?
They don't, they use money from university endowments, sovereign wealth funds, insurance, pensions, and take a big cut if there is a profit and let the suckers take any loss.
Re:As expected (Score:4, Funny)
Exactly they use someone else's money to buy in and then they use everyone else's money to keep the gravy train going as long as possible.
1) Get the endowment your buddy manages to invest in a fake business plan
2) IPO fake business without every being profitable
3) Throw more endowment money at it
4) Invest their money while the share price is going up
5) Work the political side to get easy money policies from central banks, and fiscal policies from the politicians that do things like create grants and forgivable loans to employee plebs to do economically useless activity, engineer stuff like student loan forgiveness to put money into the pockets of the tragically stupid (rsilvergun's kids for example).
6) collect their cash into fake corp make it look like fake business plan might actually profit in the next couple decades
7) start selling while consumer confidence is at a high
8) start writing the financial letters about how fake business is in fact doomed
9) start shorting as consumer confidence falls
10) wait for an election to flip the script again to easy money off
11) tell everyone their doomed
12) wait for an election to flip the script back to easy money
13) pause until everyone feels good and starts buying stuff, not because they can afford to or conditions have really changed but because their tired of feeling doomed.
14) return to step one (1)
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But it's endorsed by Shaq! A celebrity wouldn't mislead people for money would he?
Re:As expected (Score:5, Interesting)
Make loans to people who can't get or responsibly use credit cards, this is the expected result.
I mean......you'd have to be ridiculously optimistic to think otherwise.
Why do rich people invest in shit like this?
Umm. it's not always people who can't use credit cards, there is a debt trap. Be glad you've never fallen into a debt trap in the US.
I used to work retail in college, and the number of people I saw who were one step away from insolvency was insane. These weren't bad, or terribly irresponsible, people. Many had made one mistake that kept them on a cycle that literally kept them poor.
How about a guy who ends up in jail over child support because the plant closed so he lost his job, was unable to pay, racked up arrears, ended up in jail, had to pay fees for jail with "privilege" of work release, and so on, racking up ever more debt, until there is literally no way to dig out without winning the lottery. I've seen it in some employees, and in states where it can rise to felony levels, good luck ever digging out.
How about the gal with the kid(s) from that guy who is always on payday loans. I mean, school taught them abstinence but the rest was against JEEBUS so they didn't get any other sex education. She's pregnant, they might or might not get married, but stuff goes downhill, she ends up alone with the kid(s), and is always one bill away from bankruptcy. You steal from Peter to pay Paul, have no real insurance, and so on, a kid gets sick you miss work. You miss work you lose your job and then you're near homeless.
These are just two examples mate. There are plenty of debt traps in the USA. We've spent 50+ years with stagnant wages and rising costs, because we decoupled pay from productivity to benefit a tiny number of people. Also don't think the wealthy won't get paid. Certain people in politics have been making it ever harder for people to declare bankruptcy. There are two sets of rules: Those for the wealthy and companies, and those for the peons. Don't ever forget that because, unless you're in the upper 2%, you're a peon and you live under the rules of the poor.
I've expect to be seeing a lot of temporarily embarrassed millionaires crying out "WHY ME?!?!" over the next couple years as they fall into debt slavery.
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Be glad you've never fallen into a debt trap in the US.
You have made a huge assumption.
And guess what? It is a false assumption too.
Try not to assume things, especially based on virtually no information whatsoever.
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Make loans to people who can't get or responsibly use credit cards, this is the expected result.
Even just witnessing it taught me not to make that assumption about people without hard proof.
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Doubt anything you like.
That and shitting in your hand will give you a handful of shit.
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BNPL are great interest-accruers for anyone.
Those poor sods paying interest and fees etc. and funding everyone else getting 3 month's interest free money.
Take out money. Put it in saving account. Get 5% savings interest back on it. Pay it back out in 3 month's time. Keep the 5% savings interest.
Even just deferring a payment so you don't have to dip into savings... same thing.
But as with anything credit, the "free" part means that somewhere, some other poor sod is paying not only for their own debt, but
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Because they're rarely investing their own money. Typically, these types of ridiculous investments happen when interest rates are low and the the economy is booming. They borrow money, promise not to use it for gambling, use the loan to pay off something they had liquid funds to pay for, and then use the excess funds to gamble on these investments.
And Klarna seems like a decent investment when the economy is good. "Hey, everyone's making more money! They can pay it off! Also, we'll charge the merchant for e
People are desperate (Score:2)
They aren't "irresponsible."
They have to pay their rent and put food on the table. If business owners paid living wages, people wouldn't be playing games just to survive.
There are no shortage of stores you can go into today where these "job creators" have one poverty wage employee working.
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The smart ones started the company and funded it early, oversaw its growth and cached out on the hype they had built up. The dumb ones are the ones that purchased it from them.
I'm not rich, but I think I'm very naive as the OP here is. I see an idea and evaluate it based on its long term success. That does not matter if you are not investing in the long term and have some control over its short term fate. This is what
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Make loans to people who can't get or responsibly use credit cards, this is the expected result.
You're begging the question. What makes you think this is just about people who can't get or responsibly use credit cards? There are many people who don't want credit cards and have no desire to use them. Payday loan schemes that are administered directly with the seller at checkout is nothing more than offering an alternative payment method.
I know, you're probably American and therefore can't comprehend the idea that someone voluntarily doesn't have a credit card, but this is literally the norm in Europe.
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Right.
And all those people who default are the Klarna loans are people who choose not to have a credit card, and are very responsible people, who somehow, accidentally forgot to repair their Klarna loans.
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Why in the world would I take a loan on a website. If I need a loan, I head to the bank.
My kids don't have credit cards. If they need a loan, they go to bank of mom and dad.
Klarna is extending credit to people who can't afford it or borrow without having a clear plan of how to pay it
"Buy now, pay later" (Score:5, Insightful)
That mantra has been around my whole life. And it has always been predatory. It lives in the space created by the inexplicable belief that tomorrow's income will be different than today's, despite there being no clear path to that place. At least payday loan companies wear their predation on their sleeves. Klarna seems to pin its financial hope on reluctant delinquency - that people will get in trouble but pay the penalties. That's very shady.
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Poor now, poorer later.
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Maybe we grew up in different eras? I'm 55. Pay,ent plans with exorbitant interest was everywhere. "No interest or payments for 24 months" was in every poor neighborhood. Buried in the paperwork was the catch - if you didn't pay the full amount before the grace period was up, the interest would appear for the entire amount, backdated to day 1.
Layaway was easily the better option. No interest, and you could walk away clean if you need to. No credit damage. But you didn't get instant gratification.
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You're not wrong, but I think the whole story is more complicated than that. Typical credit card companies don't like delinquent accounts. Klarna loves them. See their Wikipedia page, controversies section. It's a matter of degree. And a spectrum.
What I get from credit card companies is of great utility to me. They do provide a highly useful service. But... I do not ever carry a balance.
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The difference is, that with a proper loan, the one giving the loan is obliged to make sure you can actually likely pay it off and give you realistic figures in advance. Yes, that does not always work. But things like Klarna just let people go into dept with no controls and no (real) warnings on the whole thing.
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Indeed. It targets people who have trouble handling money responsibly. It universally makes their situation worse and, in the end, society pays for the damage.
It is high time to make things like this illegal.
net loss of $99 million (Score:2)
They kinda broke online-banking in Germany (Score:5, Interesting)
They had/have a service called "Sofortüberweisung" for which you should give them access to your online-banking interface. Instead of rightfully declaring that illegal, Karna worked on forcing legislation to force banks into providing interfaces for them. This meant that banks were axing already established, and very safe, interfaces for much less secure ones... which are also harder to implement from a legal point of view.
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Don't they use SEPA Direct Debit (SDD) like everyone else? I mean, I allow SDD from my utilities because it's convenient and I trust them to do the right thing, but I would never give direct debit access to my bank account to something shady like Klarna. But again, I never had the need to rely on a buy now, pay later scheme, so I'm likely not their target audience.
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Well their service worked like that. You gave Klarna access to your bank login, and they would do the bank transfer for you and guarantee the shop that the money was on its way. Therefore the shop would get the money more quickly.
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You gave them what?!?
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Your username and password, as well as the TAN from your second factor. Yes such a business model should be illegal. Klarna thought otherwise.
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They had/have a service called "Sofortüberweisung" for which you should give them access to your online-banking interface.
Naturally we have that here in the USA too. For example Experian offers to raise your credit score in exchange for your bank login info. They say if you give them your credentials so they can access your account, which they pinky swear not to do anything bad to, they will use that access to verify that you are making regular payments on things like rent and utilities and then raise your credit score "up to" hundreds of points. They also manipulate users (many if not most of whom got their accounts in the fi
Very Interesting! (Score:3)
I've always marveled at these awful companies' ability to profit from those that are already on the edge of bankruptcy. To me it seems like far too many of them can successfully make absolute fortunes from it.
I wonder what else is at play in this particular case to cause it to fail with what is typically a successful model.
Re:Very Interesting! (Score:5, Interesting)
"Those" weren't "already on the edge of bankruptcy". People's situations change, when Republicans gain power it gets worse.
"To me it seems like far too many of them can successfully make absolute fortunes from it."
Stop electing Republicans, bring back corporate regulation.
"I wonder what else is at play in this particular case to cause it to fail with what is typically a successful model."
It's not a failure, it's just the casualty half of a zero-sum game. For predators to eat, others must die; predators do not contribute to the GDP, they are takers.
Banks do not produce product, they take profit out of the hands of those that do. Banks do this by multiplying the earning power of capital that is not theirs, taking all the profit of the earning power of imaginary money they have manufactured. To do this they must have borrowers, when the economy is saturated with loans they have to find increasingly poor risks. Then the economy turns and those overly invested in risky loans take the losses.
It doesn't matter to the wealthy, they profit no matter what. There's a whole industry to exploit failing and distressed people and businesses, the wealthy own that too. Real Estate flipping is nothing more than exploiting the disadvantaged, it is taking big chunks of equity out of the pockets of distressed people, it is an example of business that feeds on carrion, for it to thrive there must be churn and death. The system is designed to exploit suffering that it causes.
This is what capitalism is and there are plenty here that worship it. The irony here is posters doing a victory dance because they've spotted the "bad part" as if there is a "good part". You don't get to look at the shiny part and pretend that's all there is.
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Stop electing Republicans, bring back corporate regulation.
Ummm, this is the USA you are talking about. The only other option is to vote Democrat... and Democrats have more than shown that they are just as usurious in nature as the Republicans... it is merely expressed differently.
For the common person, it doesn't matter if there is a Republican or a Democrat in charge, the common person will get an unfair deal. The only question is which type of unfairness. With Democrats, I think we risk all out nuclear war less than with Republicans... but if everyone is enslave
Re:Very Interesting! (Score:4, Funny)
Um, except this "awful company" hasn't profited from those who are already on the edge of bakruptcy - it lost $99mn in the last year. Assuming it would be a worthwhile goal, should we praise Klarna for progressively distributing investors' capital to those less able to pay?
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Sorry, $99mn in the last three months, not year!
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I've always marveled at these awful companies' ability to profit from those that are already on the edge of bankruptcy. To me it seems like far too many of them can successfully make absolute fortunes from it.
I wonder what else is at play in this particular case to cause it to fail with what is typically a successful model.
The fine article is headlined with "Klarna's losses worsen" which would tend to indicate that they aren't making money.
However to answer your question, it can be extremely profitable to exploit the poor. Slumlords make a huge habit of it, people who can barely afford the rent have almost no options to rent or buy somewhere else. Klarna just exploits greed as well as need.
They were basically a legalised loan shark on very shaky legal ground, being regulated out of business is far from the worst thing t
Re:Very Interesting! (Score:5, Insightful)
I've always marveled at these awful companies' ability to profit from those that are already on the edge of bankruptcy. To me it seems like far too many of them can successfully make absolute fortunes from it.
I wonder what else is at play in this particular case to cause it to fail with what is typically a successful model.
The model isn't to make profit, well, at least not in a sustainable way. The goal is to IPO - which is exactly what Klarna was trying to do before it got hit by the deteriorating economic outlook.
If consumer spending hadn't hit headwinds, then their plan would have been to keep 'growing' sales (loan issuance) while keeping delinquencies at an okay level. Engineer a couple of quarters of profit, and then do an IPO with the promise of some sort of exponential increase in revenue due to leveraging their large user base and partnerships with merchants blah blah blah.
The VCs and early founders cash out and then what happens to the company after that is not really their concern.
These buy now pay later companies have been around for ages. They periodically collapse when it turns out that the 'asset' of loads of unsecured loans from people who have no money (i.e. it's not even worth pursing them though the courts), is basically worthless in any kind of economic downturn. As far as I can tell, the main leverage they have to make people keep paying the loans is the offer of more loans. As soon as this process breaks down (you decide you really don't want to keep giving them more loans) then it all comes to an end quite quickly.
Ooh! I Have An Idea. (Score:5, Funny)
Maybe they can get a short-term loan. Maybe they can convince the IMF to lend them some money. I'm sure Klarna will gladly pay them next Tuesday.
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Re: Ooh! I Have An Idea. (Score:2)
Wimpeynomics.
Leopards ate my face (Score:4, Funny)
Gee who thought a business model that revolved around people not repaying loans would suffer when people didn't repay those loans?
Never understood how they made money to begin with (Score:2)
Re:Never understood how they made money to begin w (Score:4, Insightful)
Of course if Klarna or their ilk are raking 5% off the top then the natural inclination for stores is to bump their prices up to compensate for this and everyone suffers. The less middle men the better for everyone.
Re:Never understood how they made money to begin w (Score:4, Insightful)
I imagine the delayed payment thing is funded by the merchants (vendors) because it presumably encourages people to buy more and/or allows smaller shops to compete with bigger retailers who might offer their own credit programs. Merchant card fees are quite high (around 2-4%) especially for smaller vendors, so if they can force out other payment providers with this 'deal' then that could be a net win for them. I also imagine they get a certain number of customers switch over to credit at high interest rates because of the low friction.
The real scam in all of this is how merchant payment processors have inserted themselves into the process in a way that is transparent to the user, and then they absolutely fleece business with no ability to negotiation. A business I owned used to take credit card payments over the phone. We were low volume but high value items, and one day Visa or whatever rang us and said they had to up our fee for no reason. We asked why and they said most of our customers were platinum card holders so it cost them more to give them all the rewards, and basically, we were going to have to pay for that. It was easy for us to just bump a bit more onto our prices, but I realised how dumb it was that all the guys flashing around their fancy credit cards and bragging about the 'free' stuff they were getting were actually just paying for it (and then some) at all the high end shops they spent at.
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You put the prices up for everyone. So the people not using credit cards are subsidizing those that do.
So you may as well get the "free" stuff like everyone else. You're paying for it anyway.
Re: (Score:3)
They expect to punish the people who don't pay back so harshly that they will profit from giving everyone else free credit, basically.
No different to why you get different rates and introductory offers and free balance transfers and cashback and VIP lounges at airports etc. on credit cards. None of that is profitable for them... it's only profitable when one of those same customers suddenly become unable to pay back the full amount owed before it incurs interest and hits incredible interest rates that hold
Good (Score:2)
Shocking (Score:2)
Who could have predicted it was a bad idea to make your business focus on continuously loaning money to young adults who needed 4 months to pay off a sandwich?
Can't they just package them all up (Score:2)
Re: (Score:2)
Idiotic (Score:2)
As a Swede, good riddance! (Score:2)
I hated this bullshit from the first time I saw them popping up, and they've managed to insert themselves into so many retailers here.
MoviePass anyone? (Score:2)
MoviePass convinced investors that it could sell tickets at a loss, and make up for it in volume. Klarna's business model seems equally unsustainable to me.
There's a reason payday lenders aren't "nice" people. They know that people who have trouble paying their bills, have trouble paying their bills. They know they'll have to go after a significant portion of their customers. Klarna thought they could be "nice" and still make money. Unfortunately, there will always be investors looking for the latest new gi
Today at Lowe's (Score:1)
In just a few minutes, I will be heading to Lowe's to buy $5000-$6000 in appliances for our new kitchen. I COULD pay cash. I COULD pay with a credit card and get 3% cash back (as much as $180). I can also sign up for the Lowe's credit card and get 12 months 0% financing OR 5% cash back ($100 limit, I think). The rate on the card is something like 31% and applies to the balance from day 1 if you miss any payments during that 12 months, or fail to paying off before then.
I know at least some people end up pa
Illusion of wealth (Score:2)