Jonquilyn Hill

Citibank relocates to South Dakota and then is able to charge whatever interest rate they want.

Delaware enacts a law that enables the same thing.

So most big banks actually move their credit card operations to Delaware.

And that in turn leads to things that we recognize where it's really hard to get a card with a decent interest rate and banks have the freedom to change those rates as they will.

I'm curious, when I don't pay my credit card in full and I gotta pay that interest, where does that interest go?

What's it spent on?

It goes to the banks.

So the first thing is that credit card lending is consistently one of the highest profit areas for banks.

And you see that banks that specialize in credit cards make much more money than banks that don't.

So part of it is just like profits to stockholders.

And then there's all sorts of things like credit card points, which help the most affluent people just get further rewards for spending money they were already going to spend.

A lot of it goes to advertising.

So a lot of the interest that you're paying as a consumer just goes back into a system that advertises to you again,

the credit cards that you're using to go into debt, right?

So there's this kind of circuitry to it where you are paying for advertising to encourage you to do the thing that you probably don't want to do.

But the banks would say, if people who have lower credit scores, if we're going to grant them credit, they're riskier.

And for the most people to have access to credit, we need to charge them higher rates.

What you see if you look at U.S.

history over the last 70, 80 years is the economy runs on household borrowing, right?

Mortgages, car loans, credit cards, now, buy now, pay later.