I would add a third category…people like my bride and I who use our fee free and cash back Navy Federal Credit Union card as a bill consolidation service. We pay for almost everything with a single card and it’s our default ApplePay card. The bill gets paid in full online when it comes in. We’ve been doing this for many years now and write very few checks a month…6 or 7 typically maximum…and use very little cash as well. Even for something as simple as a couple of burgers from McDs…wave the watch at the terminal and then it’s a single payment once a month at billing time.
Fortunately…our financial position keeps us from having to worry about the buy something we can’t afford option…but back in the day when we had smaller salaries we occasionally split Christmas spending or vacation spending across 2 months for cash flow purposes…but it’s been probably 25 or 30 years since we did that.
This is essentially how we live. We use our credit cards as a tool, not as a method of buying because we don’t have the funds. The outstanding balance is paid in full automatically so we never pay interest. We’ve been able to travel extensively with the FF miles we’ve accumulated. It’s also an accurate record of spending when required for tax time.
It’s rare these days to have more than $50 in my wallet and it can last several weeks. I do keep $50 in my iPhone’s case for emergencies (flat battery, no wallet etc).
I think it was calion’s point that there are a lot of people in America who have no choice about living beyond their means, who don’t have any surplus cash to save, and that it’s patronizing to tut-tut them for being poor. If it’s a choice between having the electricity disconnected and using credit to pay it off until a paycheck arrives, well, at least Apple’s not charging interest.
Nobody here is saying that there aren’t people in dire financial straits.
But it is equally unfair to claim that everybody carrying a large balance is doing it because they have no other option. There are quite a lot of people who habitually spend more than they can afford on things they don’t need and then get in big trouble if they lose a source of income or when inflation rises or when interest rates go up. Things like BNPL won’t help these people - it will likely end up making their problems worse, because their problem has nothing to do with who is issuing their line of credit.
The discussion had focused pretty much exclusively on “people who spend more than they can afford on things they don’t need” and it’s a useful corrective to think as well about people who aren’t in that situation but are living lives of financial precariousness. Lecturing them about saving a bit every month or not carrying a credit balance does seem patronizing, because that’s not an option, and Apple’s solution is better than payday loans at usurious interest rates.
One thing that might be worth keeping in mind here is that Apple Pay Later isn’t a general-purpose way of spreading out expenses. It won’t be an option for most people, and it won’t be available for all expenses.
First, it’s only available to those who have Apple Pay, which by definition is only those who own Apple devices. That’s a lot of people, certainly, but still a subset. Only 24% of US iPhone users use Apple Pay. Plus, the need for an Apple device likely restricts the audience to somewhat higher-income people given that it’s always possible to spend less on an Android phone or Windows or Chrome OS computer.
Second, while Apple Pay Later is available for anything you’re buying with Apple Pay, that probably doesn’t include rent, electric bills, and many other hard-to-avoid expenses. It likely would include gas and groceries, since it’s fairly easy to find stores that allow Apple Pay for both. And given the cost of gas these days, I could see someone needing to fill up a tank and spread out the cost, knowing that if they can just get to their job, they’ll be able to make enough to pay off the bill.
A single-card approach is convenient, but after having cards compromised several times some years back, I’m always wary of having only one payment method available.
My experience with excess charges makes me wary of automatic payment. Billing screwups can happen; the worst I have seen was an $8000 overcharge by gas company after an estimated bill. If you want to use it, be sure to keep enough money in the bank to allow for unexpected fluctuations in billing.
Agreed. I try to avoid automatic bill-pay. The only exception in my case is with my TV provider, since I get a significant discount using it. But the automatic payment is via my credit card, not my bank account.
For any bills where it is possible (credit cards, mortgage, a few others), I use my bank’s bill-pay system to make the payments. For many, the bills are sent electronically to the bank, but in all cases, I need to manually schedule the payment via the bank’s web site or mobile app. So I always have the ability to catch a problem before the payment is made.
I don’t know about your local electric company, but I know none of my local utilities (electricity, gas, water) take any form of credit card. Cash/check/ACH transactions only.
I disagree. There should be discussion of people spending on things they wouldn’t normally purchase as that’s exactly the scenario that BNPL affords. There are also people who will be struggling and BNPL may offer a better option than a traditional credit card. As I said in an earlier post, we use our credit cards as a tool and if people can use it to avoid hardship that’s great.
No-one is tut-tutting or patronising people doing it tough. I grew up in a very poor household and know exactly what it’s like to struggle for every cent.
That reminds me that our bank does allow you to set a limit on automatic payments, and I have done that for AT&T Mobile. I had to raise the limit after we changed our service, but it’s a good feature to set for regular bills. That’s more difficult to do for credit cards because your bills can vary widely if you use them to pay for things like buying appliances or car repairs.
Rather than set a limit on my cards, I have my accounts send me alerts (via text message and e-mail) for a variety of events, including any charge over $100 and any charge from a foreign country (regardless of amount).
I get alerted as soon as the charge is made. If it’s unexpected, I have a few days to investigate and (if necessary) dispute the charge while it’s still pending.
I also log on to each card’s web site every evening, just to make sure there’s nothing unexpected present that I might have missed.
I have the exact same thing set up for my bank accounts as well as my CCs.
Any charge comes in above a certain limit I set and I get an SMS telling me about it. I have to admit, I have yet to see such a text message alert me to a bogus charge without my bank’s fraud protection also kicking in and sending me a text, calling me on my phone, and alerting me through their app. It’s all a bit involved, but when it comes to fraudulent charges, I admit I’d rather be safe than sorry. As a Cal faculty member, I was also fortunate enough to be exposed thanks to UC’s stupidity such that my SSN, DOB, email, phone, and postal address all got leaked to the dark web not long ago. I know by now I cannot afford to take these things lightly. It’s a mess, but on the positive side it serves to me as a strong reminder how serious we should be taking privacy and financial security measures.
Thanks also @Shamino for that mention of daily checks. I thought I might be the only one who’s anal enough to check his bank and CC accounts daily (after getting up at 5am and making coffee, usually one of the first things I do). It’s a drag and at times I wonder if it’s a bit neurotic, but at least it’s nice knowing that I’m not the only one who spends 10 min of his day trying to make sure I haven’t just become another fraud victim.
We have the same for anything over $200. I have a feeling the banks down here (Australia) do it by default. They’re also fairly good with suspicious or unusual transactions and they’ll call you to confirm their legitimacy. Once my card was suspended until they could confirm a purchase - another good reason to carry multiple cards.
Quicken Deluxe updates its records regularly, so you can use it to check all your bank accounts, credit cards, investments and Paypal account. They don’t get my bank information instantly, but it’s easier than having to check everyplace separately. I also watch for payments from people who pay me, e.g., clients for whom I work, a self-published book on Amazon, and eBay sales.
I think by this reasoning, Apple should stop selling products altogether, because people who can’t afford to will buy them and get themselves into financial trouble.
Certainly some people make poor decisions. That’s not a reason to deprive them of options. More options allows the possibility of better decisions, even if some people have lessons to learn.
