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A comment on Cities Experiment with Remedy for Poverty: Cash, No Strings Attached. Parent comment

Re:Cities Experiment with Remedy for Poverty: Cash, No Strin... by chii on Tuesday September 29, 2020 @09:22PM (#24634909)
And this is where credit is useful - if you can't afford the $120 lump sum, but you _could_ afford the $165 spread out, then it should be possible for somebody to profit off this arbitrage.

They lend you $120, and ask for slightly less than $165 back - let's say $145. So you save up the money you normally would have spent on tickets daily and at the end of the month, you pay back the $145, and you have saved yourself $20, while the lender made a return on investment of about 20% (a very respectable amount, given it's unsecured).

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Re:Cities Experiment with Remedy for Poverty: Cash, No Strin... by throwaway98797 on Tuesday September 29, 2020 @09:52PM (#24635029)
Lender only makes money when the loan is repaid.
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Re:Cities Experiment with Remedy for Poverty: Cash, No Strin... by chii on Wednesday September 30, 2020 @01:15AM (#24635895)
yes, i think that's pretty obvious.

For taking on the risk of an unsecured lender, they get a very high interest rate - ~20% a month! That's almost illegal!

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Re:Cities Experiment with Remedy for Poverty: Cash, No Strin... by throwaway98797 on Wednesday September 30, 2020 @11:03AM (#24639447)
That’s the tricky part with interest rates. They have to make sense in gross dollar terms as well as percentages.

That’s why merchant credit card fees are painful for small shops. Ie 3% + 35 cents isn’t so much until your average ticket size is $5 and all of the sudden 10% of your revenue is going to intermediary.

There’s fixed cost associated with moving cash around so that 20% return is likely negative under current infrastructure.

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Re:Cities Experiment with Remedy for Poverty: Cash, No Strin... by benjaminjosephw on Wednesday September 30, 2020 @03:32AM (#24636440)
So credit in this case would just be a way for a third party to benefit from the disparity without altering the situation much. That doesn't sound very useful to me.
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