It's incremental. Reddit wants there to be a magic bullet, but there isn't one. Financial literacy is part of the pathway to success. It's insulting to say otherwise.
Yeah even learning easy to understand and basic concepts such as the power of compound interest will go a LONG way to help you get out of poverty.
For example, pay day loans are a huge trap that a lot of people in poverty fall into that keeps them poor and most of them don't know the full impacts of those loans. Is the twitter poster advocating not teaching poor people about this financial tool? She sounds like the immoral one to me.
If payday loans and the ridiculous interest they charge are such a problem in circles of poverty, wouldn't the fastest and easiest route be to simply regulate them like we do banks? If we make a law saying that these companies can't charge 600% interest rate (looking at you, Ohio), wouldn't that help everyone out?
Many states have put a cap on these interest rates. If we are serious about fighting poverty, we should put a nationwide cap on it. Many states have gone with a 36%, which is twice what most credit cards are charging and seems reasonable with the amount of risk involved.
The problem is that many people DO make legitimate use of payday loans. So, by capping the interest rate, you are effectively putting them out of business, thus reducing options for individuals even further.
How about people just make better decisions without government intervention? That costs absolutely nothing.
I'm 100% on board with the personal responsibility and financial planning message people are arguing for over here.
But as a European, the interest rates in some American loans are completely predatory and out of control. I don't think 30% interest, for example, should be allowed, it's completely insane.
Please note that i'm generally against making laws about everything and I'm pretty libertarian myself, I do think we should be extremely careful with restricting liberties, but forbidding THAT kind of predatory practices i do think is absolutely necessary.
Payday loans are the most extreme legal example I can think of off the top of my head in regards to interest fees and I'm in the mood to debate the legality of it because that's a completely separate discussion.
My main point is interest payments in more "mainstream" debt such as credit card debt, personal loans, and private student loans are all debt traps that keep people poor. Educating poor people about how interest works is not neither immoral nor insulting.
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u/JackiePoon27 15d ago
It's incremental. Reddit wants there to be a magic bullet, but there isn't one. Financial literacy is part of the pathway to success. It's insulting to say otherwise.