Max Levchin

The single most important objection I have to credit cards is that it is not designed to guide you as a customer directly.

towards good financial outcomes.

It's actually designed to guide you to not so good financial outcomes.

The most important feature of credit cards is this idea of revolving where you swipe now and you just kind of pay forever.

And the user interface is built around this idea that, hey, just pay the minimum payment.

It's like 3% of your total outstanding balance.

It's all good.

You're in good standing.

Keep going.

And so most people either are transactors, which is probably like you and me, where we use credit card same way via debit card, where you paid off at the end of the month, you never pay a penny of interest.

You, you know, that is true for like a relatively small number of people.

Most people carry a balance when they carry a balance.

Typically when you start, you basically don't stop.

Most Americans revolve at about $10,000 and that's roughly dangerously close to their total spending power that the credit cards can actually give them.

And so they're constantly just paying interest.

Credit cards are also what's called compounding interest.

So it's interest on interest.

So every time, every month you get a little bit more interest that adds to your total debt.

And next month, if you haven't paid it off, it's just going to keep compounding and compounding.

And so your true cost of ownership, whenever you buy a thing, swipe your card, a thousand dollar TV, very nice for Superbowl.