[kaycebasques]

Poverty, By America talks about companies like Klarna briefly. Poor people in the US are systematically shut out of a lot of credit channels that the rest of us take for granted. Klarna steps in to fill the void. It's an OK deal if you can pay on time, but if not then the interest skyrockets and you get a mark on your credit report.

> Economic security leads to better choices, not the other way around.

> Financial literacy training doesn't do anything if you're only offered bad deals.

If my assumption is correct that companies like Klarna are more commonly used by lower income people and we agree that poor people generally face a lot of exploitation, then it's super harsh to just write the users of these services off as "stupid people" or "finanically illiterate".

[TedDoesntTalk]

> Poor people in the US are systematically shut out of a lot of credit channels

Not credit cards. If you have a minimum wage job, you can easily get a Visa with a $600 credit limit to start. If you use it and pay the bill on time, they will double your credit limit in 6 months. Another 6 months with the same track record and you'll have a credit limit of many thousands of dollars.

And that's where a lot of people get trapped: they buy more than they can pay off 100% each month. Credit card companies love that because they collect interest.

But if you can manage your desires and wants, you won't get shut out of credit even with a minimum-wage job.

[gottorf]

> If my assumption is correct that companies like Klarna are more commonly used by lower income people and we agree that poor people generally face a lot of exploitation

I can agree with the former but not the latter. I know someone who lives in a mobile home, does not have a high income, yet felt the need to drive a Mercedes because he can "afford $800 a month". We all know people like this; just swap Mercedes for a F-250 Tremor or whatever.

I mean, I guess you could call it exploitation for some loose definition of the term, but that removes a lot of agency from such people. It's a supremely bad financial decision, perhaps facilitated by car salesmen seeking commissions, but at the end of the day nobody held a gun to their heads to sign on the dotted line.

As an immigrant, one thing that really struck me about the broader American culture was that so many people had no interest in saving and frugality. I don't think it's accurate to say that "society" somehow "exploits" people into spending money they don't have in cases like Klarna or buy-here-pay-here car lots.

I mean, if someone lives in a coal town where the only job is to mine coal and the employer doesn't even provide PPE, then you could call that exploitative. People using credit to buy things they don't need and can't afford, that's something else.

[TedDoesntTalk]

Agree. I dated a woman once who was a waitress at Applebees (a chain diner/restaurant). She told me she was buying a loaded F-150 Ford pickup in a year whether or not she could afford it. Why? "Because I deserve it." This attitude sinks people financially, for decades if not life.

[kaycebasques]

Your argument seems to rest on the crux of an anecdote. This one person I know who lives in a mobile home bought a Mercedes, therefore they all are probably making indefensible decisions like that. But again I'll mention this idea from the book again because I think there's a profound truth here:

> Economic security leads to better choices, not the other way around.

I can pull up a bunch of examples of exploitation from the book if you're curious to hear more. The other one that comes to mind is overdraft fees of banks. They don't need to be as high as they currently are and they might not even need to exist at all. Other countries already cap them at much more reasonable percentages.

> People using credit to buy things they don't need and can't afford, that's something else.

You're making a lot of assumptions here. Here's a simple counterexample using the concert ticket example that someone else mentioned. A poor person buys concert tickets. They get behind on payments and it damages their credit score. Unnecessary purchase? Maybe. Maybe not. What if it was a single mom who had bought the concert tickets for her teenage boy's birthday to distract him from the shooting that he had witnessed on his street? Might sound like an extreme example, but if you can consider for a moment that it's not, then you can see how it changes the whole discussion significantly. I can say for a fact that my mom never splurged on herself during the years she raised my brother and me on her own, but she racked up major credit card debt by buying us Christmas presents, because she felt guilty about having to work all the time and wanted us to have amazing Christmas experiences.