"We do not charge any activation, service, dormancy or inactivity fees in connection with your Starbucks Card. Your Starbucks Card has no expiration date nor does the value on your Starbucks Card ever expire."
It is revenue, because Starbucks received the money already. It's not profit, because they have no idea how much will they spend on whatever the customers will buy with those gift cards
That's not how accounting works. Revenues are not recognized until they are earned. It doesn't count as revenue until it's either used (someone buys a coffee) or it's deemed likely to never be redeemed.
The latter calculation is likely an aggregate across all cards, not based on a per-card level prediction.
Breakage refers to the portion of gift card balances that remains unspent by customers, which is eventually recognized as revenue by the issuing company. It is calculated based on historical redemption patterns and the probability that a gift card will never be used. The recognition of breakage revenue, however, doesn't affect a customer's ability to use an unexpired gift card. The card's value remains intact and can still be redeemed for goods or services, regardless of the breakage revenue recognition by the company.
> That's not how accounting works. Revenues are not recognized until they are earned.
You've described accrual accounting. I believe publicly traded companies (including Starbucks specifically) are held to GAAP which includes accrual accounting; but private businesses can choose between accrual accounting and cash accounting (but, afaik, you can't switch willy-nilly).
> It is revenue, because Starbucks received the money already.
I initially upvoted your besieged comment because that seemed to make sense, and well, it was the actual title of the piece (Starbucks Claims $181M in Revenue From Unused Gift Cards and Loyalty Credits) and appeared to be quite unambiguous in the article ("Starbucks reportedly claimed $181 million in revenue from money on gift cards and loyalty accounts that customers didn’t spend in fiscal year 2021 — a figure that amounted to about 1% of its sales and 4.3% of its net income during the year.").
However, following a twinge of remorse and uncertainty after downvoting rahimnathwani's reply, a quick search revealed that he is correct:
How to Properly Recognize Gift Card Revenue[1]: "Companies cannot recognize revenue upon the initial sale of a gift card because of a key revenue recognition principle that states that revenue is recognized when or as an entity satisfies a performance obligation by transferring a promised good or service to a customer."
Balancing act: how to account for your restaurant gift cards[2]: "Gift card purchases are generally classified as a deferred revenue liability. The cash received from the sale is paid upfront but does not qualify for revenue recognition as no goods or services have been exchanged. Gift card purchases are recorded as deferred revenue and subsequently recognized as revenue as the gift card is redeemed in the future."
Happily the window was still open to undown, but the experience was a great lesson in not racing to judgement or downvoting.
Companies bet on something like 2-5% of "breakage". That is the main profit motive behind gift cards. There are various claims of using them as marketing and a system to refund people without letting them out of your loop, but the major reason anyone pays what they do to a certain company to sell gift cards (almost nobody does it themselves anymore) is to get that breakage profit.
Gift cards are a subsidy from forgetful people to a business. Industry research also shows that people prefer to receive cash as a gift, but prefer to GIVE gift cards, because they are marketed as a "more thoughtful" gift, as if putting a brand name on some cash is thoughtful. Gift cards are an exclusively selfish gift.
> prefer to GIVE gift cards, because they are marketed as a "more thoughtful" gift
That's actually fascinating. I would never give a gift card as an actual gift to people, because that strikes me as being lazier and less thoughtful than just giving them cash.
I want to expand on this. Companies use gift cards for all sorts of strange things. We once had a company that treated gift cards as tickets to their events. You bought a set price "gift card" on their website, and redeemed it at the event, but there was no other use of it.
Our sales pitch to companies is also about treating gift cards as a marketing tool, mainly by giving away gift cards for certain purchases during sales. For example, IKEA once had a promotion where they would give you a ten dollar giftcard for every one hundred dollars of gift cards you bought. Unlike most companies pushing one of these promotions, they chose not to set an upper limit. The result was hilarious and predictable.
The problem is if someone gives me cash I just put it in to my bank account with all my other cash and it just gets spent on typical living expenses. Nothing I can label as a gift comes out of it.
I'm sort of offended by this because I do actually think about gift cards when I give them. I deeply consider the value and likelihood that the recipient will patronize the business and appreciate the card. If I do not know their preferences, then I will instead obtain a Visa gift card that spends anywhere, like cash.
I don't think it's a crime to give a gas-station card to someone who drives a lot, or a popular restaurant to someone who enjoys eating out, or a Google Play card to someone who owns an Android phone.
The balance is a liability. When some portion of that liability balance is deemed to be unlikely to ever be realized, you debit the liability account, and credit the revenue account.
The interest free loan is more like $1B dollars. This $181M is the breakage, the left over gift card balances that are unlikely to be redeemed and they are recognizing as revenue. e.g. The $2 left on a $20 gift card that someone doesn't bother redeeming.
They also get another $1B of deposits from people loading money onto their app to pay for drinks. Starbucks is basically sitting on the equivalent of a small banks deposits at any given time.
Right, I guess it's really "nice little effortless profit!"
This is why gift cards / loyalty balances are just crazy to me.
For a little convenience, you turn money into feudal coinage that only ever goes down in value: you see no interest, no adjustment for inflation. $100 on a gift card today is $97 (and probably less!) a year from now, ignoring completely the benefit the financial upside to the company for it.
In one of my businesses, hotel booking, i also sell gift cards and market them agressively in festive seasons.1 year validity. 45% goes unclaimed, its now 20% of total profit (all legal here, expiry date in a large font)
In many states that is the explicit requirement yes. They are considered unclaimed property and must be handed over to the state to return to the individual.
Is it really illegal that for a discounted fee you get access to a hotel room during the next year? If that's the agreement you make? If I could pay $100 now to get my whole family into Disney land any weekday in 2024, I'd pay for that.
That's not the same as putting $100 on a hotel gift card which you can use anywhere anytime at the hotels many properties, maybe to cover a pet fee or cleaning fee or parking, or to reduce the cost of a room during a peak cost period like 4th of july.
I’m not really clear on what you’re saying, but it seems like you may have misunderstood the original post. In any case, the illegal part, at least in CA, is having an expiry date on most types of gift certificates/gift cards.
Sleazy, unethical, and probably illegal. As an example: Kansas for instance, among other states, has unclaimed property law and these things must be turned over to the state.
It's one of those things that consumer protection laws should fix. By law, most gift cards cannot expire in my province in Canada.
> Gift cards purchased in Alberta are not subject to expiry dates and fees that lower their value over time. This includes cards purchased in Alberta on the internet.
Starbucks gift cards don't expire. It's standard account practice to recognize a percentage of your unused gift card balance as revenue as no company ever sees 100% redemption rates of gift cards. They call this "breakage".
I think that's also true in most of the US for first-party gift cards like Starbucks.
The typical offenders for expiration dates and/or fees are bank-issued gift cards that run via a credit card network. Does the Alberta regulation cover those?
Every so often, companies I've worked for have given me Starbucks or Amazon cards as rewards. I have no use for either of them, though, so typically I give them to someone else. Amazon cards are easy -- they go to my (adult) children.
Starbucks are more difficult, though. I sometimes have trouble giving them away, then they get lost or accidentally thrown away. I bet Starbucks has made more money off me from that than from me purchasing their products.
There are various websites that let you sell basically any gift card for like 80% of face value, such as cardcash.com. That's what I do with nearly every gift card I am ever given.
Gift cards from work always go in the trash, they are a hassle to remember you have one, tote it around or redeem it at a place I probably don't frequent enough.
I hope you can take a step back and understand how wild it is that carrying a plastic card in your pocket for 2 minutes while you exit your building and hand it to pretty much anyone is too "inconvenient" and you'd rather throw away the $$.
"Lug them around" they're not lead bricks. Put them in your wallet. When you pay at a restaurant or coffee shop, they're right there next to your cash or credit card, ready to be used.
Throwing out literal money is just absurd elitism and waste.
My wallet has spots for a total of 5 cards. Between ID, bank card, credit, medical and building I literally dont have space for it. (Im not buying a new wallet to lug around gift cards). But even historically when I had a bigger wallet that could carry more card I would never remember the off chance I went to one of these stores that I had a card. I go to starbucks maybe once a year (its just not my coffee place).
> Throwing out literal money is just absurd elitism and waste.
Its not wasted, Starbucks still gets the money, I just don't get anything in return.
Gift cards are just thoughtless and pointless in my personal opinion. Give people money.
If you really think gift cards are pointless, stop accepting them. Tell people it's a personal policy. They will respect that.
I don't know how you figure it isn't wasted money. Not only did you not receive the good or service that they spent their hard-earned money on - which is fine, you don't have to use it for yourself - you didn't even pass on the gift card and receive some smaller benefit. That's thoughtless and disrespectful - not the act of someone giving you a gift card, but you accepting and throwing it out.
I don't have space in my wallet for them, personally. By design. It improved my daily life more than I expected when I stopped using my wallet to carry more than the absolute essentials.
I've given Starbucks gift cards to homeless folks, who were always happy to receive them. And in California, businesses must give you cash for a gift card if it's less than $10 in value.
I mean, they do have food there. A $10 gift card would buy a decent breakfast sandwich and a basic coffee, I'm sure a homeless person would appreciate that. Not to mention an excuse to spend a while indoors.
I agree that the image is funny, but it's not the _worst _ way to give someone in need $10.
Yeah, for a homeless person, the advantage to having a little bit of cash to drop in a restaurant or coffeehouse means that they get to rent that table for, oh, perhaps a couple of hours. They get access to a well-maintained restroom. There is climate control.
Motels > restaurants > libraries > buses, in terms of comfortable hangouts.
When I was living on the streets, St. Vincent de Paul continually finagled for me some gift certificates to a 24-hour burger joint. That was a GODSEND, because the worst part of living on the streets is wondering what to do with yourself all night. It was absolutely Heaven for me if I could slip into the burger joint and doodle in my journal, or sip coffee in an IHOP and read a book.
It's also a way for them to save on credit card processing fees by trading the fees of multiple (relatively) small drink purchases for one fee for the gift card purchase.
An often overlooked innovation of iTunes was delayed billing, which converted multiple separate song transactions into one bundled transaction to save on credit card transaction fees.
>delayed billing, which converted multiple separate song transactions into one bundled transaction to save on credit card transaction fees.
Uber and Lyft do it now. It ought to be illegal, or opt-in (with a discount to the customer). Delayed billing wreaks havoc on the majority of Americans who live paycheck to paycheck
I'm not confused how credit cards how work. If someone was checking their balance so that they can properly budget a company delaying the charge would deprive them of that insight.
Stuff like this reminds me of the bubble tech lives in.
There are a lot of people who aren't on top of their finances at all.
For them, a delayed transaction wreaks plenty of havoc because they're not keeping track of how much "ghost transactions" are affecting the account balance they see.
Now you could argue it's on them for not being on top of their finances, but Uber makes a lot of money from these people. The largest demographics are 18-24 yr olds, ie people who honestly can't afford overpriced delivery but do it anyways.
I think you live in a bubble if you feel it necessary to exaggerate the effects and coddle people who aren't on top of their finances.
It's all a fairly pointless discussion because the simple solution is to suggest Uber, etc. just make this method of charging an optional feature that is easily toggled by their customers. Beyond that, it's an uninteresting discussion, and I don't care to hear people browbeat each other about how Uber is bad and wrong for rolling transactions into one because they didn't consider that their customers are mouthbreathing idiots whose entire financial world will come collapsing down on them if they can't get check their credit card balance for 100% accurate realtime information about their current financial state. Somehow if someone didn't think of this possibility, they are an inconsiderate jerk who "lives" in a "bubble."
If instead of taking uninformed pot shots you took just a moment to check, you'd see overdrafts come from a tiny slice of customers who get hit by overdrafts over and over again.
No one made any excuses for anyone, it was a simple statement of fact that batched transactions save a marginal cost for the good in question and affect the age group that's using them the most.
—
It might even be profitable for them to eat the processing fee and call out the fact there are already X dollars pending to users who have had at least one NSF in the past year as they check out. Why give the bank $20 out of your most captive customers pockets, to save .03 cents on payment processing?
There seems to be this weird idea that it can't be profitable to do things that help your users.
If you can pause for reflection to go check your past history of purchases to determine if you should make another purchase, then you could probably just remember if you’ve been on a recent spending spree.
Huh? I'm saying Uber should surface when an order is about to compound a pending transaction, precisely so they don't need to go and find that.
You're also again, showing how completely out of touch you are with how millions of people live: it has nothing to do with a recent spending spree, there are a lot of people who just live in a state where they're always near $0.
The middle class version of living paycheck to paycheck is not having a properly sized savings, there are people who live below that. Some random bill or fee landed the same day as their order is enough to get hit with an NSF, or multiple.
People in a certain bubble take this very black and white view of it. "Why do they have random bills?? Why would they have Netflix and be ordering Uber Eats??". You think that's idiotic, so by implying there are people living like that, I'm coddling idiots.
The truth is life is short and then you die. If people feel a certain level of hopelessness and lack of control over the larger picture, it can be hard to get excited about essentially balancing their checkbook before ordering dinner. I'm not going to sit on some high horse and act like they don't get to make "bad" decisions for comfort.
How many people in tech are still shackling themselves to 7 figure homes after the rate hikes and the layoffs to satisfy their FOMO instead of taking a more rational approach?
Most people being hit repeatedly by overdraft fees and the like aren't on spending sprees. They're people who have little to no money, and earn little to nothing. They get hit by overdraft fees whenever any bill is larger than expected, or they get a parking fine, etc.
I really don't think people understand that if you're commenting on HN you are unlikely to be in the same financial ballpark as someone who is actually poor.
There's so much self-indulgent angst oozing out of this comment that it's hard to pick out the intended signal but I'll try:
- It's not about credit cards, it's mostly debit. It's a large driver of the 15 billion dollars in NSF fees banks pick up yearly.
- Having 100% up to date information on your money makes it easier to not overdraft, the emotional smokescreen deployed doesn't change that.
- I don't know anyone with any level of financial literacy who would prefer less accurate data on their money: so your suggestion for a switch that makes your transaction history less accurate is questionable to say the least.
Overall you sound insecure about living in a bubble. I didn't paint people as jerks for being in a bubble, but I rightfully pointed out that you're clearly unfamiliar with a challenge in some people's lives.
If self-loathing makes you feel like a jerk for being in a bubble I can see how you could misconstrue that.
I never learned how to balance a checkbook. At this point, it's moot, because the bank does that tracking for me.
But it's still difficult to stay on top of finances when you run dry every month. You need to account for all the different ways a transaction could come in: a check you wrote; a recurring payment that you send out, a recurring payment via ACH, debit, whatever; your own card purchases while out and about.
So it easily becomes overwhelming and then you're in NSF territory.
I used to donate $3 at a time via check to some religious sisters. They were very appreciative and sent me nice tokens and letters, but they waited long intervals to deposit those checks, so there were unfortunate times when the checks bounced, and they rightly objected, because their fees already outstripped the amounts I was donating to them. I just felt kind of helpless at that, and sad that a good relationship was soured over $3.
I will also add that I vehemently disagree with authorizing recurring debits on my account, (AutoPay), and I will avoid that wherever possible, in favor of doing my own automated Bill Pay from the bank interface.
I think it is unprecedented in history, and absurd, that a company can just reach in and scoop out as much funds as they want on a regular basis. I mean, many things I set up AutoPay have a variable billing amount. They can just increase the bill and they're still hunkydory to remove that amount in the coming months! Please keep consumers in the loop and in control here, folks.
Bill Pay from the bank is, unfortunately, sometimes perilous and difficult to manage, and you may wish for AutoPay after you've had a few mishaps. I recently received a PAST DUE LATE FEES APPLY notice because of a penny. If Bill Pay can't generate an electronic transfer, then it cuts a paper check to mail out (at no charge, which is great) but with all the pitfalls of floating checks (for a poor person who lives close to $0 balance, you don't want a lot of float!)
Not a bubble thing. Many people living paycheck to paycheck watch their accounts. They often know everything that’s hitting and on what day, for several days in advance, and what they need to do, or will try to do, to keep it positive. Transportation costs especially.
It’s the same mental power you have, but for a variety of reasons they’re having to apply it to stave off problems instead of to grow their assets as is more typical among software engineers.
This thread is confusing to me. I am in the US and I use Uber. I’ve never had this experience. Every time I use Uber, I see one transaction per ride, and depending on when I remember (or see the prompt) to tip, that may or may not be another single transaction.
be careful I disabled overdraft protection and my bank had an additional layer "courtesy pay" that also changed an overdraft and they didn't tell me about it. I found out the hard way.
Yep, same here - there is no escaping the predatory fees. Also, vendors go nuts if your purchase is declined for any reason now. They will cut you off. So you can't win for trying.
Most of the processing fees are capped by law in Europe. They are far lower (and I mean far - something like six times lower) than in the US and the cap is a percentage of the transaction so there is little point in bundling.
I found myself in an interesting predicament. I got given a £100 gift card to spend in a well known department store for my birthday.
I got this card 3 years ago and I have not used it yet, because I found that there is nothing really in that store that is worth below £100 that would compel me to go there or order online and items that interest me but are far more expensive, even considering the voucher I could buy cheaper elsewhere or even find such item used in as new condition.
So while I appreciate such gift, probably if someone scribbled £100 on a piece of paper it would have the same effect to me, but they wouldn't have to spend any money.
Think about it this way: many people derive peace-of-mind from giving a gift whose purpose is known. Now, I can hand someone $20 and hope they don't spend it on booze, drugs, or prostitutes. Or I can hand someone a gift card, knowing they will spend it on Starbucks (not that expensive coffee isn't on a spectrum of vices anyway.)
I can't put my finger on it, but as someone who has wholeheartedly embraced a "cashless society" vision, I feel better about gifting people with gift cards instead of cash. I don't know if it's any safer to send them through the mail, but it seems customary to tuck one into a greeting card, so that's how I treat my relatives on special days. I often keep a gas station card on hand, because I don't drive, and it can be real useful to offer a fill-up to someone who gives me a much-needed ride.
I didn't say that I can't drive. And I don't think that you can show me a human being who is not interdependent on others for something. Do you grow all your own food?
Apologies, not sure why I made that comment. Drive, don’t drive, whatever, do what you want. Not sure why I thought it would be a good idea to pass judgement on such things.
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[ 2.8 ms ] story [ 186 ms ] thread"We do not charge any activation, service, dormancy or inactivity fees in connection with your Starbucks Card. Your Starbucks Card has no expiration date nor does the value on your Starbucks Card ever expire."
The latter calculation is likely an aggregate across all cards, not based on a per-card level prediction.
Breakage refers to the portion of gift card balances that remains unspent by customers, which is eventually recognized as revenue by the issuing company. It is calculated based on historical redemption patterns and the probability that a gift card will never be used. The recognition of breakage revenue, however, doesn't affect a customer's ability to use an unexpired gift card. The card's value remains intact and can still be redeemed for goods or services, regardless of the breakage revenue recognition by the company.
You've described accrual accounting. I believe publicly traded companies (including Starbucks specifically) are held to GAAP which includes accrual accounting; but private businesses can choose between accrual accounting and cash accounting (but, afaik, you can't switch willy-nilly).
I initially upvoted your besieged comment because that seemed to make sense, and well, it was the actual title of the piece (Starbucks Claims $181M in Revenue From Unused Gift Cards and Loyalty Credits) and appeared to be quite unambiguous in the article ("Starbucks reportedly claimed $181 million in revenue from money on gift cards and loyalty accounts that customers didn’t spend in fiscal year 2021 — a figure that amounted to about 1% of its sales and 4.3% of its net income during the year.").
However, following a twinge of remorse and uncertainty after downvoting rahimnathwani's reply, a quick search revealed that he is correct:
How to Properly Recognize Gift Card Revenue[1]: "Companies cannot recognize revenue upon the initial sale of a gift card because of a key revenue recognition principle that states that revenue is recognized when or as an entity satisfies a performance obligation by transferring a promised good or service to a customer."
Balancing act: how to account for your restaurant gift cards[2]: "Gift card purchases are generally classified as a deferred revenue liability. The cash received from the sale is paid upfront but does not qualify for revenue recognition as no goods or services have been exchanged. Gift card purchases are recorded as deferred revenue and subsequently recognized as revenue as the gift card is redeemed in the future."
Happily the window was still open to undown, but the experience was a great lesson in not racing to judgement or downvoting.
[1] https://www.leapfin.com/blog/how-to-properly-recognize-gift-...
[2] https://www.bakertilly.com/insights/balancing-act-how-accoun...
Gift cards are a subsidy from forgetful people to a business. Industry research also shows that people prefer to receive cash as a gift, but prefer to GIVE gift cards, because they are marketed as a "more thoughtful" gift, as if putting a brand name on some cash is thoughtful. Gift cards are an exclusively selfish gift.
That's actually fascinating. I would never give a gift card as an actual gift to people, because that strikes me as being lazier and less thoughtful than just giving them cash.
Our sales pitch to companies is also about treating gift cards as a marketing tool, mainly by giving away gift cards for certain purchases during sales. For example, IKEA once had a promotion where they would give you a ten dollar giftcard for every one hundred dollars of gift cards you bought. Unlike most companies pushing one of these promotions, they chose not to set an upper limit. The result was hilarious and predictable.
I don't think it's a crime to give a gas-station card to someone who drives a lot, or a popular restaurant to someone who enjoys eating out, or a Google Play card to someone who owns an Android phone.
They also get another $1B of deposits from people loading money onto their app to pay for drinks. Starbucks is basically sitting on the equivalent of a small banks deposits at any given time.
This is why gift cards / loyalty balances are just crazy to me.
For a little convenience, you turn money into feudal coinage that only ever goes down in value: you see no interest, no adjustment for inflation. $100 on a gift card today is $97 (and probably less!) a year from now, ignoring completely the benefit the financial upside to the company for it.
Now I'm all worked up …
That's not the same as putting $100 on a hotel gift card which you can use anywhere anytime at the hotels many properties, maybe to cover a pet fee or cleaning fee or parking, or to reduce the cost of a room during a peak cost period like 4th of july.
There's almost always a consequence for not providing value, and if 45% is unclaimed, that's not valuable to anyone but you.
I'd also wonder why so little goes claimed. I'd be worried about my product or service if people didn't want it, even if it was gifted to them.
> Gift cards purchased in Alberta are not subject to expiry dates and fees that lower their value over time. This includes cards purchased in Alberta on the internet.
https://www.alberta.ca/information-about-gift-cards.aspx
The typical offenders for expiration dates and/or fees are bank-issued gift cards that run via a credit card network. Does the Alberta regulation cover those?
Starbucks are more difficult, though. I sometimes have trouble giving them away, then they get lost or accidentally thrown away. I bet Starbucks has made more money off me from that than from me purchasing their products.
Throwing out literal money is just absurd elitism and waste.
> Throwing out literal money is just absurd elitism and waste.
Its not wasted, Starbucks still gets the money, I just don't get anything in return.
Gift cards are just thoughtless and pointless in my personal opinion. Give people money.
That counts as "wasted" to me.
I don't know how you figure it isn't wasted money. Not only did you not receive the good or service that they spent their hard-earned money on - which is fine, you don't have to use it for yourself - you didn't even pass on the gift card and receive some smaller benefit. That's thoughtless and disrespectful - not the act of someone giving you a gift card, but you accepting and throwing it out.
I don't have space in my wallet for them, personally. By design. It improved my daily life more than I expected when I stopped using my wallet to carry more than the absolute essentials.
https://www.giftcardgranny.com/blog/5-important-facts-about-...
I agree that the image is funny, but it's not the _worst _ way to give someone in need $10.
Motels > restaurants > libraries > buses, in terms of comfortable hangouts.
When I was living on the streets, St. Vincent de Paul continually finagled for me some gift certificates to a 24-hour burger joint. That was a GODSEND, because the worst part of living on the streets is wondering what to do with yourself all night. It was absolutely Heaven for me if I could slip into the burger joint and doodle in my journal, or sip coffee in an IHOP and read a book.
An often overlooked innovation of iTunes was delayed billing, which converted multiple separate song transactions into one bundled transaction to save on credit card transaction fees.
Uber and Lyft do it now. It ought to be illegal, or opt-in (with a discount to the customer). Delayed billing wreaks havoc on the majority of Americans who live paycheck to paycheck
There are a lot of people who aren't on top of their finances at all.
For them, a delayed transaction wreaks plenty of havoc because they're not keeping track of how much "ghost transactions" are affecting the account balance they see.
Now you could argue it's on them for not being on top of their finances, but Uber makes a lot of money from these people. The largest demographics are 18-24 yr olds, ie people who honestly can't afford overpriced delivery but do it anyways.
It's all a fairly pointless discussion because the simple solution is to suggest Uber, etc. just make this method of charging an optional feature that is easily toggled by their customers. Beyond that, it's an uninteresting discussion, and I don't care to hear people browbeat each other about how Uber is bad and wrong for rolling transactions into one because they didn't consider that their customers are mouthbreathing idiots whose entire financial world will come collapsing down on them if they can't get check their credit card balance for 100% accurate realtime information about their current financial state. Somehow if someone didn't think of this possibility, they are an inconsiderate jerk who "lives" in a "bubble."
Perhaps seeing a big bill dropped on them all at once for their past purchases is the exact wake-up call some people need to track their finances.
No one made any excuses for anyone, it was a simple statement of fact that batched transactions save a marginal cost for the good in question and affect the age group that's using them the most.
—
It might even be profitable for them to eat the processing fee and call out the fact there are already X dollars pending to users who have had at least one NSF in the past year as they check out. Why give the bank $20 out of your most captive customers pockets, to save .03 cents on payment processing?
There seems to be this weird idea that it can't be profitable to do things that help your users.
You're also again, showing how completely out of touch you are with how millions of people live: it has nothing to do with a recent spending spree, there are a lot of people who just live in a state where they're always near $0.
The middle class version of living paycheck to paycheck is not having a properly sized savings, there are people who live below that. Some random bill or fee landed the same day as their order is enough to get hit with an NSF, or multiple.
People in a certain bubble take this very black and white view of it. "Why do they have random bills?? Why would they have Netflix and be ordering Uber Eats??". You think that's idiotic, so by implying there are people living like that, I'm coddling idiots.
The truth is life is short and then you die. If people feel a certain level of hopelessness and lack of control over the larger picture, it can be hard to get excited about essentially balancing their checkbook before ordering dinner. I'm not going to sit on some high horse and act like they don't get to make "bad" decisions for comfort.
How many people in tech are still shackling themselves to 7 figure homes after the rate hikes and the layoffs to satisfy their FOMO instead of taking a more rational approach?
I really don't think people understand that if you're commenting on HN you are unlikely to be in the same financial ballpark as someone who is actually poor.
- It's not about credit cards, it's mostly debit. It's a large driver of the 15 billion dollars in NSF fees banks pick up yearly.
- Having 100% up to date information on your money makes it easier to not overdraft, the emotional smokescreen deployed doesn't change that.
- I don't know anyone with any level of financial literacy who would prefer less accurate data on their money: so your suggestion for a switch that makes your transaction history less accurate is questionable to say the least.
Overall you sound insecure about living in a bubble. I didn't paint people as jerks for being in a bubble, but I rightfully pointed out that you're clearly unfamiliar with a challenge in some people's lives.
If self-loathing makes you feel like a jerk for being in a bubble I can see how you could misconstrue that.
But it's still difficult to stay on top of finances when you run dry every month. You need to account for all the different ways a transaction could come in: a check you wrote; a recurring payment that you send out, a recurring payment via ACH, debit, whatever; your own card purchases while out and about.
So it easily becomes overwhelming and then you're in NSF territory.
I used to donate $3 at a time via check to some religious sisters. They were very appreciative and sent me nice tokens and letters, but they waited long intervals to deposit those checks, so there were unfortunate times when the checks bounced, and they rightly objected, because their fees already outstripped the amounts I was donating to them. I just felt kind of helpless at that, and sad that a good relationship was soured over $3.
I think it is unprecedented in history, and absurd, that a company can just reach in and scoop out as much funds as they want on a regular basis. I mean, many things I set up AutoPay have a variable billing amount. They can just increase the bill and they're still hunkydory to remove that amount in the coming months! Please keep consumers in the loop and in control here, folks.
Bill Pay from the bank is, unfortunately, sometimes perilous and difficult to manage, and you may wish for AutoPay after you've had a few mishaps. I recently received a PAST DUE LATE FEES APPLY notice because of a penny. If Bill Pay can't generate an electronic transfer, then it cuts a paper check to mail out (at no charge, which is great) but with all the pitfalls of floating checks (for a poor person who lives close to $0 balance, you don't want a lot of float!)
It’s the same mental power you have, but for a variety of reasons they’re having to apply it to stave off problems instead of to grow their assets as is more typical among software engineers.
Edit: s/threat/thread
For debit cards, imagine your account has $0.01 in it and about to be overdrawn. Each transaction from here on out will net you a $35 overdraft fee.
Accounting for the fees, would you rather have 5 immediate charges of $1, or 1 delayed charge for $5?
For credit cards, there's no overdraft, just a hard cutoff.
Everyone using a debit card, especially if poor, should disable overdraft protection at the bank. The fees will eat you alive otherwise.
I got this card 3 years ago and I have not used it yet, because I found that there is nothing really in that store that is worth below £100 that would compel me to go there or order online and items that interest me but are far more expensive, even considering the voucher I could buy cheaper elsewhere or even find such item used in as new condition.
So while I appreciate such gift, probably if someone scribbled £100 on a piece of paper it would have the same effect to me, but they wouldn't have to spend any money.
I can't put my finger on it, but as someone who has wholeheartedly embraced a "cashless society" vision, I feel better about gifting people with gift cards instead of cash. I don't know if it's any safer to send them through the mail, but it seems customary to tuck one into a greeting card, so that's how I treat my relatives on special days. I often keep a gas station card on hand, because I don't drive, and it can be real useful to offer a fill-up to someone who gives me a much-needed ride.
Suggest learning how to drive if you can. Being dependent on others isn't great.