How so? The financially illiterate love Klarna. I know several people who use it.
> Economic security leads to better choices, not the other way around.
> Financial literacy training doesn't do anything if you're only offered bad deals.
If my assumption is correct that companies like Klarna are more commonly used by lower income people and we agree that poor people generally face a lot of exploitation, then it's super harsh to just write the users of these services off as "stupid people" or "finanically illiterate".
I can agree with the former but not the latter. I know someone who lives in a mobile home, does not have a high income, yet felt the need to drive a Mercedes because he can "afford $800 a month". We all know people like this; just swap Mercedes for a F-250 Tremor or whatever.
I mean, I guess you could call it exploitation for some loose definition of the term, but that removes a lot of agency from such people. It's a supremely bad financial decision, perhaps facilitated by car salesmen seeking commissions, but at the end of the day nobody held a gun to their heads to sign on the dotted line.
As an immigrant, one thing that really struck me about the broader American culture was that so many people had no interest in saving and frugality. I don't think it's accurate to say that "society" somehow "exploits" people into spending money they don't have in cases like Klarna or buy-here-pay-here car lots.
I mean, if someone lives in a coal town where the only job is to mine coal and the employer doesn't even provide PPE, then you could call that exploitative. People using credit to buy things they don't need and can't afford, that's something else.
> Economic security leads to better choices, not the other way around.
I can pull up a bunch of examples of exploitation from the book if you're curious to hear more. The other one that comes to mind is overdraft fees of banks. They don't need to be as high as they currently are and they might not even need to exist at all. Other countries already cap them at much more reasonable percentages.
> People using credit to buy things they don't need and can't afford, that's something else.
You're making a lot of assumptions here. Here's a simple counterexample using the concert ticket example that someone else mentioned. A poor person buys concert tickets. They get behind on payments and it damages their credit score. Unnecessary purchase? Maybe. Maybe not. What if it was a single mom who had bought the concert tickets for her teenage boy's birthday to distract him from the shooting that he had witnessed on his street? Might sound like an extreme example, but if you can consider for a moment that it's not, then you can see how it changes the whole discussion significantly. I can say for a fact that my mom never splurged on herself during the years she raised my brother and me on her own, but she racked up major credit card debt by buying us Christmas presents, because she felt guilty about having to work all the time and wanted us to have amazing Christmas experiences.
Not credit cards. If you have a minimum wage job, you can easily get a Visa with a $600 credit limit to start. If you use it and pay the bill on time, they will double your credit limit in 6 months. Another 6 months with the same track record and you'll have a credit limit of many thousands of dollars.
And that's where a lot of people get trapped: they buy more than they can pay off 100% each month. Credit card companies love that because they collect interest.
But if you can manage your desires and wants, you won't get shut out of credit even with a minimum-wage job.
It's also nice when you buy from a new store that you might not really trust yet. The fact that a store offers Klarna is somewhat of a quality stamp as well, so that in itself probably suffices and you don't really need to use their credit line when ordering.
They also remind you when your bill is due so you don't end up paying any unnecessary fees.
You answered your own question.