And this is where credit is useful - if you can't afford the $120 lump sum, but you _could_ afford the $165 spread out, then it should be possible for somebody to profit off this arbitrage.

They lend you $120, and ask for slightly less than $165 back - let's say $145. So you save up the money you normally would have spent on tickets daily and at the end of the month, you pay back the $145, and you have saved yourself $20, while the lender made a return on investment of about 20% (a very respectable amount, given it's unsecured).

Lender only makes money when the loan is repaid.

yes, i think that's pretty obvious.

For taking on the risk of an unsecured lender, they get a very high interest rate - ~20% a month! That's almost illegal!

That’s the tricky part with interest rates. They have to make sense in gross dollar terms as well as percentages.

That’s why merchant credit card fees are painful for small shops. Ie 3% + 35 cents isn’t so much until your average ticket size is $5 and all of the sudden 10% of your revenue is going to intermediary.

There’s fixed cost associated with moving cash around so that 20% return is likely negative under current infrastructure.

So credit in this case would just be a way for a third party to benefit from the disparity without altering the situation much. That doesn't sound very useful to me.

Except there are closer to 20 working days per month for month for most people, and it's kind of a wash at that point.

What you do get though is freedom from thinking about the cost of rides, which is pretty great.

Not for people who can't get better than part-time hours at either of their jobs.

Work adds an artificial limit to the number of times the subway is used. The point is, if you go out once a day using the subway, it’s costs you more if you can’t bare the upfront cost.