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How credit card rewards became a $9.2B wealth transfer

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Re: How credit card rewards became a $9.2B wealth transfer

#11

Post by hvb2 »

aurareturn wrote: post #6

I always wondered why people in America would ever pay by cash or credit card - unless they are laundering that cash. Otherwise, you're giving up 1-3% discount. Set auto-pay on your credit card to pay in full every month. I've never once paid for credit card interest. I think there's a term inside credit card companies for people like me: leeches or something like that.

> Otherwise, you're giving up 1-3% discount.

I would be curious what percentage of people actually qualifies for a card with over 2% cashback especially without a monthly fee. My guess is that that percentage is very low.

High earner/spender, sure but that's not most people

Re: How credit card rewards became a $9.2B wealth transfer

#12

Post by strix_varius »

aurareturn wrote: post #6

I always wondered why people in America would ever pay by cash or credit card - unless they are laundering that cash. Otherwise, you're giving up 1-3% discount. Set auto-pay on your credit card to pay in full every month. I've never once paid for credit card interest. I think there's a term inside credit card companies for people like me: leeches or something like that.

This presupposes the ability to get a credit card and the confidence of sufficient funds when that auto payment hits.

Re: How credit card rewards became a $9.2B wealth transfer

#13

Post by Xirdus »

aurareturn wrote: post #6

I always wondered why people in America would ever pay by cash or credit card - unless they are laundering that cash. Otherwise, you're giving up 1-3% discount. Set auto-pay on your credit card to pay in full every month. I've never once paid for credit card interest. I think there's a term inside credit card companies for people like me: leeches or something like that.

A lot of it is to enable the small business owners to hide their real income. At least that's how it works in immigrant communities.

Re: How credit card rewards became a $9.2B wealth transfer

#15

Post by roland35 »

Patrick McKenzie (patio11 fame) had a great blog post in credit card rewards

There is a lot that goes into it, and it is interesting how customers like me who literally never have carried interest and have to made thousands of $ in rewards over the years still make the banks money....

https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car...

Re: How credit card rewards became a $9.2B wealth transfer

#16

Post by ChrisMarshallNY »

aurareturn wrote: post #6

I always wondered why people in America would ever pay by cash or credit card - unless they are laundering that cash. Otherwise, you're giving up 1-3% discount. Set auto-pay on your credit card to pay in full every month. I've never once paid for credit card interest. I think there's a term inside credit card companies for people like me: leeches or something like that.

I paid a lot of credit card interest, as a yute, but, since getting married, I have paid in full. Been over 30 years. Leeches rule!

At one time, credit card companies forced vendors to charge the same, whether cash or credit, but that seems to have fallen by the wayside.

The problem is, is that cash is becoming less and less acceptable.

In a nearby town, you can't pay for parking, with cash. I have seen credit-card-only vending machines. A lot of restaurants have iPads at the table, and you never see anyone but the bus[boy|girl|whatever], bringing you your food.

Re: How credit card rewards became a $9.2B wealth transfer

#17

Post by sokoloff »

strix_varius wrote: post #12
aurareturn wrote: post #6

I always wondered why people in America would ever pay by cash or credit card - unless they are laundering that cash. Otherwise, you're giving up 1-3% discount. Set auto-pay on your credit card to pay in full every month. I've never once paid for credit card interest. I think there's a term inside credit card companies for people like me: leeches or something like that.

This presupposes the ability to get a credit card and the confidence of sufficient funds when that auto payment hits.

If the alternative was paying cash, cash has an even more demanding level of confidence of sufficient funds required and it applies earlier with no flexibility.

Re: How credit card rewards became a $9.2B wealth transfer

#18

Post by cge »

pistoriusp wrote: post #4
Forgeties79 wrote: post #2

> Because merchants charge everyone the same price regardless of how they pay, those fee costs are factored into prices for all shoppers. However, credit card users get that money back and then some through rewards, while cash and debit users get little or nothing. >The result: People paying cash face the equivalent of a 26% higher sales tax than premium credit card users shopping at the same store. I am surprised th…

Same, that percentage seems absurd though.

The only way I can interpret the percentage is that they are stating the increased cost as a percentage of sales tax rather than a percentage of the sale, such that "26% higher sales tax" in a state changing 10% sales tax would mean paying 2.4% more in total. That choice seems misleading, but does make the percentage make sense.

Re: How credit card rewards became a $9.2B wealth transfer

#19

Post by tiffanyh »

SXX wrote: post #7

Important context: this is US thing. EU capped interchange fees at 0.2% for debit and 0.3% for credit cards. So in US card processing is x5-x10 more expensive.

To be more specific, this is a US credit card topic.

Debit card fees are capped in the US, yet I’ve never received a discount from a merchant for paying with debit instead of credit.

As such, I just pay with credit and have never understood this argument.

Re: How credit card rewards became a $9.2B wealth transfer

#20

Post by account42 »

SXX wrote: post #7

Important context: this is US thing. EU capped interchange fees at 0.2% for debit and 0.3% for credit cards. So in US card processing is x5-x10 more expensive.

Still affects us as sticker prices are not set independently. Even if you exclusively buy locally, $ = € is extremely common for MSRP.
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