But...those things aren't driving the economy. Those examples are mostly driving the profits of credit card companies; if people saved more responsibly and used their money responsibly, the could likely (and ironically?) afford to buy more goods, and not less.

Instead of large chunks of their income going to credit card companies (via interest), it could instead be spread out among more stores.

For me, the "free" service of a credit card is not worth my neighbors being saddled with debt.

edit: That cartoon bothers me more the longer I think about it; I know it's supposed to be humorous, but does the author really think that lottery tickets are driving the economy?

>the could likely (and ironically?) afford to buy more goods

While that seems true it's messier than that. In your scenario people have to postpone consumption until they accumulate the cost of goods which would have a huge negative effect on the overall economy. The entire concept of interest rates is to smooth out this issue, rewarding those who can postpone consumption.

>but does the author really think that lottery tickets are driving the economy?

No. The joke in most SMBC comics involves taking some faulty logic and driving it to absurd conclusions.

It's a near-universal misconception that "the economy" depends on spending, without regard to what that spending is on.

> edit: That cartoon bothers me more the longer I think about it; I know it's supposed to be humorous, but does the author really think that lottery tickets are driving the economy?

Well, Wall Street is pretty much a giant casino, so it's not too much of a stretch to say that gambling defines a large portion of our economy.

>For me, the "free" service of a credit card is not worth my neighbors being saddled with debt.

Fine. But that means you'll pay an average of 2-3% more for items.

>Instead of large chunks of their income going to credit card companies (via interest), it could instead be spread out among more stores.

Yes. They would gain under a new system. People who are responsible now would lose under that system. It's a transfer , with credit card companies taking a cut.

People go under on credit cards because they can't stomach the ascetic lifestyles their (newly worsened) financial situations demand, and credit lets them hold on to their standard of living a little while longer.

I don't think better education about how badly it harms them would help much. We see present upside much more strongly than long-term future downside (see: procrastination), even if we are familiar with the nature of that downside.

Emergency funds probably would.

I still think they make enough cash on me through the credit card processing fees to make me a profitable customer.

No, not really. People who pay in full every month are called "deadbeats".

At a 2% processing fee if you spend 40k a year that's already $800 in revenue for the issuing bank. I don't think that's trivial for a single person.

You don't get any rewards (1% is standard, plenty already give 2% back)?

You also need to take into account the bank's cost of funds, the cost of administering the account, the cost of fraud, cost of disputes (do you ever do a chargeback?)

I thought the cash equivalent of the rewards are charged to merchants ontop of the fee? Square etc shelter that from their merchants (which partially explains their losses quarter to quarter).

The marginal cost of servicing another person when they already have a consumer base of people with debt is very small (close to zero). I'm trying to say it's still profitable, but not where they make the bulk of the revenue.

Merchants pay a bit more in fees than banks give in rewards, but definitely not 2% more.

I think AMEX makes about 65% of its revenue on interchange fees?

Amex charges higher fees (many of their cards charge the consumer directly, and their merchant fees are higher) and don't charge interest on many cards (charge cards). Their business model is different.

Knowing how interest works probably won't stop people from racking it up.

Also I remember spending around a month learning about interest and finance-related math somewhere around 8th grade, so at least in some us schools it was being taught over a decade ago.