How credit card rewards became a $9.2B wealth transfer • Hacker News Board

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

#71

Post by esseph » Tue, Aug 25, 2026, 12:25 PM UTC

Xirdus wrote: post #13

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.

Huh?

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

#72

Post by LastTrain » Tue, Aug 25, 2026, 12:25 PM UTC

Torkel wrote: post #49

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.

How does it work if I have a US credit card and use it abroad? Do I still get the kickback even though the merchant fee is capped? This feels like a potential arbitrage opportunity... I live in Sweden, but if I can use a US credit card I can get high rewards?

Yes, you have outsmarted the entire US credit card industry and all of their actuaries!

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

#73

Post by dml2135 » Tue, Aug 25, 2026, 12:26 PM UTC

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.

Well, one reason is the one described in TFA —- credit card rewards amount to a regressive wealth transfer, and if you think that is bad, you may not want to participate in it.

Another reason is that credit card companies sell your purchase data to aggregators and advertisers, and cash affords more privacy.

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

#74

Post by sokoloff » Tue, Aug 25, 2026, 12:26 PM UTC

hvb2 wrote: post #11

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

If you have Amazon Prime, I recommend getting the no-fee Chase Amazon card. 5% on Amazon and Whole Foods; 6% on some Amazon “no rush” deliveries.

No affiliation; just a happy user.

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

#75

Post by 59percentmore » Tue, Aug 25, 2026, 12:27 PM UTC

How hard is it for the wealthy to not smack everyone else around at every possible opportunity? What happened to noblesse oblige?

(This is not a rhetorical question, I would love to hear others' take on the psychology and history of the subject. Really, how hard is it?)

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

#76

Post by iso1631 » Tue, Aug 25, 2026, 12:27 PM UTC

turkey99 wrote: post #62

vasco wrote: post #58

Earlier quoted context omitted.

It has no relation to paying interest, only to making transactions with the credit card.

If you use a credit card, but can’t pay it immediately then you pay interest. It’s a trap the less wealthy fall into.

Or you could simply not pay on the credit card, and avoid the trap?

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

#77

Post by oldsklgdfth » Tue, Aug 25, 2026, 12:28 PM UTC

Merchants pay the transaction cost. In my parents business in the early 2000s customers would ask in advance if they could use a CC. Some places installed ATMs in the corner (still a thing in some places), but quite unpopular. Rather than lose a customer the merchant will accept payment with credit card and pay the fee.

One consequence of this system is the large merchants have more bargaining power and can negotiate lower fees. So large retailers, gas station chains, etc. are able to reduce the overhead of accepting CC payment. While smaller merchants have the same higher cost.

From a capitalism perspective, this is the most egregious example of "you have capital, so you can make more capital". Banks holding the capital in this case.

Fun fact: when credit cards were first introduced only to people with good credit, which paid the balance in full. this was not profitable. Only after opening the pool to other credit levels did CC start printing money for banks.

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

#78

Post by paxys » Tue, Aug 25, 2026, 12:29 PM UTC

dougdude3339 wrote: post #54

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 prefer my debit card because I'm more aware of how much I'm spending. Money taken out of my account is immediate and feels real. Ultimately, I spend less.

One isn’t more real than the other. They are both numbers in an online database. In one case your assets are going down, in the other your liabilities are going up. The net result is the same.

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

#79

Post by iso1631 » Tue, Aug 25, 2026, 12:29 PM UTC

post-it wrote: post #23

tiffanyh wrote: post #19

Earlier quoted context omitted.

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.

That's what makes it a wealth transfer, from debit card users to you.

In my country card fees are less than cash fees, so I guess that's a wealth transfer from card payers to cash payers?

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

#80

Post by Mamut3 » Tue, Aug 25, 2026, 12:29 PM UTC

Credit card systems are a Ponzi scheme that favors those who already hold a lot of capital, at the expense of those who weren't lucky enough to be born heirs.

This is even more true of the American brands that are getting Trump to attack modern, open, cost-free systems from other countries—like Brazil's PIX, maintained by the Central Bank of Brazil.

I call it 21st-century American usury.