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I found it very odd that I received an offer today from PayPal on my PayPal Card issued by Synchrony Bank to double my "Cash Back" on all qualifying credit card purchases for the next 30 days. They did place a limit on it of $100 in additional "Cash Back" and it was for purchases from May 22nd through June 22, 2020. They also advise it could take up to "2 credit card billing cycles" for the cash back bonus to appear in the cards rewards account.

I have never carried a balance on the card and in fact, pay it off usually the week before the due date as I refuse to pay any interest or fees.

At a time when Credit Card companies are seeing some customers beginning to miss payments and even seeking some "accommodations" on their upcoming minimum payments, etc., I just found it very odd that the card company would want to increase the rewards they are offering to their card holders. I guess I am trying to understand their "business logic" in offering this at this time.

I have read that overall use of the cards was declining the first 30 days of the Covid-19 shut down, but now many people have started to use their cards credit limits to meet their obligations, for those who have seen their incomes dry up, etc. This must be an attempt to generate additional charging on the cards?

The offer explicitly describes the purchases are only for those made starting 24 hours after acceptance of the "offer" and are for the next 30 days only. Then it reverts back to the normal cash back rate.

I did contact PayPal to confirm the communication was valid as they sent an email, requesting you click on a link in the email to "activate" the "Double Rewards". I did confirm the offer came from them and is valid.

They claim it's their way "of helping during the Covid-19 crisis". Usually, the retailer accepting the card for payment is charged more for the card acceptance on the cards which pay their customers greater "rewards", so its not really the generous bank's money they are using to reward the cardholders, as those retailers accepting the cards pay for at least a portion of the related fees.......

Has anyone else received a similar offer from their Credit Card providers which provide the "Cash Back" bonuses?
 

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At a time when Credit Card companies are seeing some customers beginning to miss payments and even seeking some "accommodations" on their upcoming minimum payments, etc., I just found it very odd that the card company would want to increase the rewards they are offering to their card holders. I guess I am trying to understand their "business logic" in offering this at this time.
I suspect that the offer is only to "select" card holders, not all of their card holders.

Some of the credit card issuers who have made accommodations for people who lost jobs, etc... have frozen those accounts. You may not have to make payments right now but you can't use the card to run up any more charges either. The card issuers are making absolutely nothing off of those card holders right now.

So they are shopping for card holders that they think might be convinced to use their cards more but can still make payments. They are hoping that customers that are on the bench (i.e. have the card but don't use it or don't use it often...) will be incentivized to use their cards more. If a percentage of those card holders DO use their card more, some of them will begin to carry a balance from month to month instead of paying in full.

They have done their math and think the percentage of card holders they can convert to carrying a monthly balance will be enough to offset any additional rewards paid out.
 

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I do not have a PayPal credit card (I don't like their view on firearms) so I would not get any offers, other than I constantly get offers I am preapproved for a PayPal credit card.
I have limited the number of cards I have. There are many tempting offers to get more cards. So far I have ignored the offers.
At one time (many years ago) I had a "GM card" They sent me a notice I HAD 30 days to redeem my GM $$$ (buy or lease a new GM vehicle) or I would only get pennies on the dollar later. I did not buy a vehicle or new the card.
 

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I found it very odd that I received an offer today from PayPal on my PayPal Card issued by Synchrony Bank to double my "Cash Back" on all qualifying credit card purchases for the next 30 days. They did place a limit on it of $100 in additional "Cash Back" and it was for purchases from May 22nd through June 22, 2020. They also advise it could take up to "2 credit card billing cycles" for the cash back bonus to appear in the cards rewards account.

I have never carried a balance on the card and in fact, pay it off usually the week before the due date as I refuse to pay any interest or fees.

At a time when Credit Card companies are seeing some customers beginning to miss payments and even seeking some "accommodations" on their upcoming minimum payments, etc., I just found it very odd that the card company would want to increase the rewards they are offering to their card holders. I guess I am trying to understand their "business logic" in offering this at this time.

I have read that overall use of the cards was declining the first 30 days of the Covid-19 shut down, but now many people have started to use their cards credit limits to meet their obligations, for those who have seen their incomes dry up, etc. This must be an attempt to generate additional charging on the cards?

The offer explicitly describes the purchases are only for those made starting 24 hours after acceptance of the "offer" and are for the next 30 days only. Then it reverts back to the normal cash back rate.

I did contact PayPal to confirm the communication was valid as they sent an email, requesting you click on a link in the email to "activate" the "Double Rewards". I did confirm the offer came from them and is valid.

They claim it's their way "of helping during the Covid-19 crisis". Usually, the retailer accepting the card for payment is charged more for the card acceptance on the cards which pay their customers greater "rewards", so its not really the generous bank's money they are using to reward the cardholders, as those retailers accepting the cards pay for at least a portion of the related fees.......

Has anyone else received a similar offer from their Credit Card providers which provide the "Cash Back" bonuses?
I wonder if they are just trying to increase consumer spending. I’ve been getting offers in the mail, and credit karma is sending me notices that my credit score is going up a few points on almost a daily basis; for no apparent reason that I can tell.
I definitely don’t want any credit card debt right now.
 

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I guess I am trying to understand their "business logic" in offering this at this time.
Call me cynical but I suspect promotions like these are an attempt to get users to add enough to their card that they end up carrying a balance and thus paying those ridiculous interest rates. I think of it more like baiting a trap vs offering a bonus. Of course, the mouse that knows how to steal the cheese loves a freshly baited trap.

Then again, as you mentioned, the vendor has to pay a fee for each transaction so they're not losing anything by making you this "offer".

Out of curiosity, you said the offer is for an additional $100 cash back. Did it indicate how much you had to spend to get that $100?
 

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Credit card companies are not in it for the fun - they plan to make money. And like everyone else, any way they can and constantly devising new ways to make more money. I agree with Sully that they are squeezing someone to get it.

We have one credit card that we use and it gets paid in full when the notice comes in. We have operated that way for years. I quit using my bank card for fear of it being compromised and I loose all my money. Using the credit card as a buffer is safer. I rarely use the cash back for purchases, every so often I roll the cash into the house account. I am sure the CC company hates us.
 

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I got an email from PayPal (maybe a scam?) wanting me to send $0.01 to people without a PayPal account. If they sign up and spend/pay with PayPal at least $5.00 we both get $10. Limit is $50.
Not something I will do.
 

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Discussion Starter #9
Call me cynical but I suspect promotions like these are an attempt to get users to add enough to their card that they end up carrying a balance and thus paying those ridiculous interest rates. I think of it more like baiting a trap vs offering a bonus. Of course, the mouse that knows how to steal the cheese loves a freshly baited trap.

Then again, as you mentioned, the vendor has to pay a fee for each transaction so they're not losing anything by making you this "offer".

Out of curiosity, you said the offer is for an additional $100 cash back. Did it indicate how much you had to spend to get that $100?
I would have to spend $5,000 to get the additional $100, as the bonus is an additional 2% up to the $100 limit.

I refuse to use a "Debit Card" for anything other than the issuing bank's ATM to obtain cash withdrawals from my own account. I won't even go to a "participating bank" or a "NetWork Bank" on the Debit Cards list of No fee, no expense ATM access opportunities. I stay with just the bank that issued the Debit card.

I have a Debit Card which I don't even carry. Its in the safe. There have been far too many gas stations who get a hold of the Debit Card and through a myriad of scams and fraud, get a hold of the customers money. As most people know, trying to "Challenge or Fight" an unauthorized charge or expense on a Debit card is a process which begins after the other party already has your money from YOUR BANK ACCOUNT.

Unlike a credit card, the Debit card is an immediate payment of the obligation from your collected funds on deposit at the bank. Once the wrong party has the money, its a fight to get it back or so I hear as I have never had it happen personally and don't plan to.

I send a check in a number 10 envelope, with the computer printed name and address and processing information on it a few times a month, to make sure there is no balance to incur any fees and expenses.

We have always paid with either checks or cash for most things. But in the last couple of years, even paying with a check is becoming more "troublesome" at some retailers and it reached a point where I got tired of the clerks running the paper checks through their scanners and ending up having to wait for managers to show the clerks how to handle a paper check because they don't see them very often. Plus, I don't want to delay anyone waiting behind me in line and I don't like watching the clerks struggle to handle the checks.

Now the majority of the everyday purchases are with the PayPal card. In fact, during this Covid-19 time, the "No touch Payment Methods" have become a requirement for many purchases. Several places and businesses wouldn't take cash including Schwaan Foods, Domino's Pizza, the local Pharmacy (that one surprised me the most....) and there are others including physicians offices......This has made having the PayPal card for these purchases handy and more efficient.

Our cash back bonuses have been average about $85 a month since February. Irnonically, we ordered a new bed a few weeks ago and its to be delivered next week so that will help cover a chunk of the spending necessary to get the "bonus", especially with the bonus rate doubled for the month.

There are several things I know which I do that PayPal isn't crazy about, but I am going to do business on my terms or I am going to do it with another institution. For example;

  • I never carry a balance on the card. I have never paid a penny of interest or any fees and don't plan to.
  • I refuse to link the account to my bank account, which they are constantly "reminding me" of....I don't want to authorize anyone to take any funds on an "automated basis" from the bank account.
  • I sweep the cash back money into my PayPal cash account and use it to pay for some regular monthly expenses such as my subscription to the Epoch Times*.
  • I have refused credit limit increases when offered as I have no need for them. The current limit is adequate to cover all regular purchases and since the balance is paid off nearly constantly, should I have a purchase which exceeds the credit limit, I would just send the money in to deposit into the PayPal cash account and pay the card credit limit down, if needed. Those funds would serve as another form of "Credit Limit increase", because of the combined account balance. This hasn't happened, but done correctly, would still get me the "Cash back" offer on the purchases.
I have no doubt this offer from PayPal, and likely other credit card companies as well, as was stated by one of the GTT members who replied, the offers are being selectively made to customers who they feel meet their criteria to pay the balance. There will be those who it bumps into the "carry over balance" status and that is the bread and butter of the entire C.C. industry. I am sure they have this statistically nailed down, with probabilities and all factored into their decisions.

Main thing is to not let it snare anyone into incurring expenses they can't pay off. The last thing you want to do is carry a balance over and fall into the interest and fees game they have so carefully designed and orchestrated.

If one can be the mouse who loves to snatch the new cheese bait from their trap and not get snapped in the process, its' akin to "beating the house". I just hope people are careful with their spending and make sure to stay out of the traps which are being laid for them by many different sources / retailers.

. * for those of you who haven't tried the Epoch times, you should give them a look, as its a very good news source. ,
 

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I'm cut from the same cloth as you SB, the only time I've carried a balance forward on a credit card is when I've taken advantage of a 0% interest offer. Of course, with those, you need to be darn sure you have it paid on time or the interest jacks up to 20+% all the way back to the original purchase date. Time is money and I've saved money utilizing those promo rates by keeping my funds working for me.

I use my Discover card nearly 100% and have been for near 30 years. This was to take advantage of their cashback. In fact, I don't have any cards that don't have a cashback feature. I typically run $3000/month on my cards, so the cashback does add up.

Discover offer doubles rewards (5%) every quarter on certain merchant categories, such as gasoline, home improvement, big box stores and even Amazon. They send you an email alert and all I have to do is click yes and it's done--simple.

The other thing I really like about Discover is they're easy to do business with. Their call centers are in the USA, they speak fluent -- easily understandable english, their phone personnel are knowledgeable and given the authority to make decisions without being transferred, waiting on hold, or other annoyances.
 

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In the mouse snatching the cheese category...

There are so many tricks to banking and credit cards these days. My bank offers free online bill pay so I stopped writing checks for most things years ago. Notable exception is property taxes. I prefer having that canceled check as another layer of proof of payment. Even if the bill I have the bank pay doesn't accept electronic payment they'll print a check and send it without charging me postage. That alone makes it worth using.

Like you, I don't carry a balance on my credit card but I have noticed an interesting discrepancy in how I pay it. If I use my bank's bill pay the money disappears from my account on the day of payment but doesn't get applied to the CC balance until a couple days later. On the other hand, if I go to the CC web site and initiate a payment from there that draws from my checking, it applies the payment to the card immediately but the funds don't get pulled from the bank until a couple days later. Thus giving me a few extra days to collect interest on the money. Not that it amounts to much these days but as Gallagher said, "Wherever you leak, the world hangs a bucket." As long as it's not breaking any laws if I find a leak in the banking system darn sure I'm hanging a bucket.
 

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I was reading a story last night written by a "Buy Here / Pay Here" car lot owner / lender in Northern Indiana. He was talking about how the extension of the stay at home orders was crushing their company. Plus, the entire matter fell at their single busiest time of year, which is during tax refund season.

In the story, the owner of the car lot, which apparently has two locations in Northern Indiana said a few things which were really interesting, but sadly, not at all surprising. First, he said that during the tax refund season, normally they would sell about 250 cars during the "tax season". He said as of the end of March, which was very early in this Covid -19 process, his business was down "About 200 new cars that they should have sold, which they haven't." I once worked at a new car dealer and it was really surprising how many cars they sold each month. A bad month was selling only a 100 cars a month.......

The second thing he said in the story which was really interesting was that the day the "Shut Down" was announced, they had 585 cars on "Higher Frequency Payment Schedules". It sounded like some people were required to make their payments every two weeks while others were required to pay the auto sales company weekly payments.

He said in the first week, 88 cars fell into "Late Payment Status". Apparently, even more fell behind at the end of the 2nd week. He said within an hour of the announcement by the state that the restaurants and bars would be closed, his phone began to ring with customers concerned they wouldn't be able to make their payments if this went on more than a "week or two". Now, here we are in Michigan, with the order extended yet again late on Friday after the holiday weekend began. Right now, it is extended to the 3rd week of June. However, we have seen a growing trend where local businesses are simply ignoring the extension and have begun to open. That's covered in another thread in the political section.

By the end of the first month, over 300 of the cars (more than half) were behind in payments, but they decided to not pull the cars except in the most extreme examples. Basically if customers contacted them and tried to make some payment arrangements, they continued to work with the customers and didn't activate the "auto shut down" mechanisms on the vehicles ignition systems.

In today's world, they don't have to "Repo" the cars on the Buy Here Pay Here plans. They are equipped with GPS trackers and when the cars reach certain destinations deemed "safe" and where it is unlikely to strand the customer dangerously, the GPS system shuts the car down and won't allow it to run. Then the car lot picks up the vehicle, which reactivates the electronic controls and allows them to drive the car back to their lot, where they immediately put it back up for sale.

I understand the need to serve these customers. I also understand how people end up with serious credit problems. I don't like that there is a entire segment of the economy which is designed to keep people with bad credit, stuck in high interest rate loans, in vehicles which are often high mileage and very tired.

On the other hand, many of these customers simply make one bad decision after another, after another. Rolling negative equity so that the car payments are far more than the vehicle is worth. Recently, I was talking to a guy who just bought a "Buy Here / Pay Here 2015 GMC Denali quad cab truck, he is paying $190 per week on the truck loan and the loan duration is 66 months. The truck has 170,000 miles on it, so he will be paying a total of $54,340 for the truck. From KBB, the truck likely actually has a current value of about 40% of what he will be paying for it, assuming all payments are made. I have to think the likelyhood of this guy continuing the $190 per week payments for the truck to loan maturity is less than 10%.

Of course, we all know the reality is he will not make it the duration of the loan making the payments as scheduled. He just had to have the truck. I should mention he has failed to complete the loan agreement on 4 previous Buy Here / Pay Here vehicles, including 2 others from this same seller. That's clearly a factor in the "weekly payment".

In a nut shell, they didn't want to end up with 500 cars back on their lots, so they have been working with people. Since they are the finance company, they have as much "flexibility" as they agree to with their customers deals, within the limits of the law. The owner indicated they were "doing the best they could to work with people", but also stated that there were situations where the cars had already been turned back in by customers or they had been taken back by the Used car seller.

Interestingly, I happened to stumble across the "Google Reviews" for CarMax's Home Office Auto Loan Facility in Georgia, which is where all of the CarMax used car financing loans are handled for their nationwide chain of car lots. I was surprised to see that they had 2.2 Google Rating (out of a possible 5 rating) with 88 reviews. Apparently, Car Max excels at selling "No Haggle Used Cars", but they really suck at financing them.

The reviews raise the same problems over and over. People who are current on their loans who called Car Max finance to "discuss" what they can do if they continue to remain unemployed, etc. found out that their file was noted as unemployed and their credit scores were dinged significantly. Others reported that their loan interest rates increased because of simply asking about possibly delaying or modifying their payment schedules.

A couple of other interesting things were;

  1. CarMax does not permit any of their loans to be "refinanced". If you want to refinance, take the business elsewhere.
  2. While CarMax advertises they will "buy high quality used cars", apparently, not from their own finance customers who are trying to proactively head off a loan default, etc.
As of May 18th, a reported 8.1% of all auto loans are in forbearance. That means that these loans are not making any payments currently under an agreement to permit the payments be deferred for a limited time period. That's actually higher than it was under the 2008 financial meltdown which took place.

Used car prices have dropped considerably in the last 90 days. Now, many 3 year old higher end SUV's and Luxury cars are selling for around 40% to 50% of their new sales price and these are cars with low mileage. Those with higher mileage, such as 25,000 miles a year of more of driving the first 3 years, will be selling down in the 30% to 35% of their new sales price. The only vehicles which seem to be holding their resale value are Pickup trucks. Even they are down some in value, but its common for a 3 year old truck to be selling at 60% to 70% or more of it's new sales price.

I have been thinking about a new vehicle and depending upon how things go, I might just pull the trigger. I would buy a low mile used car as I just can't handle the depreciation on a brand new vehicle. Never say never, as I sure have bought my share of new vehicles over the years.
 

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I have been watching used truck prices for 3-5 year old trucks. They have not dropped enough for me to buy.
My current truck is 9 years old and very low miles. My worry is rust, once it starts, it spreads very quickly here.
 

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I have been watching used truck prices for 3-5 year old trucks. They have not dropped enough for me to buy.
My current truck is 9 years old and very low miles. My worry is rust, once it starts, it spreads very quickly here.
I had planned to keep my last truck forever - bought it new on 2009 and went all out with packages and options. It was 9 years old at the time.

Then one spring I was doing my spring detail and noticed something.....this is what it looked when just standing next to the truck.

740379


But when I looked underneath....

740380


I was heartbroken! But like you I know what happens when this starts so went and traded it in within a month. I bought an aluminum body truck - am sick and tired of the rust!
 

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I had planned to keep my last truck forever - bought it new on 2009 and went all out with packages and options. It was 9 years old at the time.

Then one spring I was doing my spring detail and noticed something.....this is what it looked when just standing next to the truck.

View attachment 740379

But when I looked underneath....

View attachment 740380

I was heartbroken! But like you I know what happens when this starts so went and traded it in within a month. I bought an aluminum body truck - am sick and tired of the rust!
You did the right thing, my next one might be aluminum too
 

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My main card is the Citi Doublecash card. It's 2% cash back unlimited (1% when you charge and 1% when you pay). I use it to pay all of my utility bills and a bunch of other expenses. I get the cash back as a direct deposit into my checking account. I pay it off every month, so I don't pay interest.

I actually have several cards that I use to maximize cash back and isolate expenses. For example, I have an Amex that I use for business travel and a Lowe's business card that I got when I built the barn that gives me 5% back and gets you $20 deliveries. I gladly paid the $20 to have them drop off the 10x10' 6x6 posts and 10 bags of concrete recently.

Credit cards aren't bad if you are disciplined.
 

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Credit cards aren't bad if you are disciplined.
Exactly!

I only have one major credit card - a Visa through my credit union. It’s a flat 2% reward for eveything. Like you I use it for all my utility bills etc. The reward is credited the first of the following month. All I have to do is transfer the money to my account when I want to use it.

I have a couple store cards like Lowe‘s and Amazon. The only time I use them is when I take advantage of the 12 month 0% interest for larger purchases. I usually pay it off within 6 months anyway.

Also with the Lowe’s card it gives me free shipping on anything large or small. I actually ordered 2 pieces of hand rail last year - 12’ long. Free shipping - came via FedEx. Lowe’s is a 3 hour round trip for me and we only go to that city once or twice a year so this is very convienent.
 

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Discussion Starter #18
My main card is the Citi Doublecash card. It's 2% cash back unlimited (1% when you charge and 1% when you pay). I use it to pay all of my utility bills and a bunch of other expenses. I get the cash back as a direct deposit into my checking account. I pay it off every month, so I don't pay interest.

I actually have several cards that I use to maximize cash back and isolate expenses. For example, I have an Amex that I use for business travel and a Lowe's business card that I got when I built the barn that gives me 5% back and gets you $20 deliveries. I gladly paid the $20 to have them drop off the 10x10' 6x6 posts and 10 bags of concrete recently.

Credit cards aren't bad if you are disciplined.
The reality is they are designed for and marketed primarily to those who are not disciplined. Last time I had checked, it was in the 80's percentile that carried some balances. In fact, some of the economic statistics I carefully follow to measure the overall state of the economy related to consumer financial health includes;

  • Credit card delinquency rates
  • Credit card minimum payment rates
  • Percentage of credit card balance outstanding when measured against credit limit.
  • Auto loan delinquency and forbearance rates.
  • Home Mortgage Delinquency rates
We have always had a very consumer driven economy. When the consumer, as a majority, start to get their backs against the wall, serious widespread financial trouble is coming quickly. And it is amazing how quickly the trouble escalates. That's why this "Shut Down" is so destructive and will be very damaging long term.

In 2007, it was so obvious that the financial meltdown was coming. When home equity lenders were marketing that they would make home equity loans without any "income verification" and without "personal financial statements", its only a matter of time till the nations housing market collapses. After all, only those who wouldn't normally qualify for a loan would seek a loan with such.............liberal................financial attitudes.........and there is no way for it to end well.

One of the interesting things I have found is how most consumers deal with their John Deere Financing. John Deere's consumer finance default rate is a fraction of the normal loan delinquency rates. I don't think its because John Deere does anything special in their underwriting of their loans, its because for many, their John Deere tractors holds a very special place in their hearts. Many apparently would make other sacrifices before having to give up their tractors.

John Deere reports their financial results in consolidated categories and its actually quite difficult and time consuming to split down the actual consumer loans from the Agricultural loans as they are usually reported together. It takes some time to dig through the detailed financial reports which Deere is required to provide to the SEC in order to split the agricultural business away from the consumer business, but it can be done. Deere reports their financial results as "Turf and Agricultural" and then the "Construction and Forestry" results.

Another thing which is interesting is how many times Deere Financial finances the same equipment. First, Deere financial is financing the equipment on a floor plan loan to most dealers. The dealers rely in Deere Finance to loan them the money to buy the equipment to have in their dealerships, to sell to the consumer or farmer or other end user. Then, often, the buyer of the equipment is seeking finance from Deere to help them buy the equipment from the dealer.

The dealer is also involved in the loan process as the local dealer is financially on the hook to recover any equipment which is defaulted upon to Deere finance and performing any reconditioning necessary to the equipment to resell the equipment to hopefully, settle the debt with Deere finance. Any profit which the equipment is sold at, in relation to the outstanding debt owed Deere finance, is the dealers to offset the cost of recovery and reconditioning and reselling the equipment. From what I have been told, this doesn't happen very often in our area, but that could change with the looming financial situation facing many.

Even the default rates in the agricultural loans are low, usually lower than other commercial loans. I think this is largely because farmers are very conservative and also, they are usually very astute operators and know their costs and inputs pretty well. Not all, but most.

John Deere's consumer loan defaults, year over year, are less than 1% of their outstanding loans. Its going to be interesting to see what happens to this with this current financial situation facing many Americans.

For example in 2018, the outstanding retail notes were $29,263* and the delinquent loans were $211* and the net losses on loans were $103*.

*(reported in Millions)
 
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