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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

#171

Post by bluGill »

oldsklgdfth wrote: post #77

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…

> Merchants pay the transaction cost.

This applies to cash as well. It takes a lot of time to count change for everyone. Plus all the ways there are to steal cash.

Your fun fact is wrong. Credit cards were always profitable. They were not in the beginning because scale is what makes them profitable. Anyone who uses their cards for a couple meals a month (which is what it was first started for) is going to cost money because of all the overhead to have you as a customer. In those days that was a stamp to send the bill, someone to open the payment and cash the check - now that everybody works electronically the overhead is lower, plus people are using it for more and so there is enough left over to pay for it.

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

#172

Post by gruez »

alex43578 wrote: post #158

One factor that never seems to come up in these discussions is that while businesses might not like credit card fees, they also don’t like all the issues with cash: managing it, transporting it, losing it to employee theft, etc. The cost of cash transactions isn’t 0. Same argument for people: managing cash is a pain, swiping a card is easy. Contesting a transaction or fraud is way easier (infinitely easier?) with a c…

>Is all this worth $9.2B across the economy? Maybe not, but again, certainly worth more than 0.

Nobody's arguing that credit card companies are proving zero value, only that they're charging more than what can be "justified" (whatever that means). That's why in europe the interchange rates are capped at some amount to reflect that.

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

#173

Post by skinfaxi »

paxys wrote: post #78
dougdude3339 wrote: post #54

Earlier quoted context omitted.

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.

It's a world of difference if one of them gets stolen vs the other.

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

#174

Post by soco »

nerdjon wrote: post #155
nsedlet wrote: post #31

Credit cards also transfer wealth from people who pay interest to people who don’t. It’s a silly system, where everyone has to invest their time (optimizing for rewards, avoiding interest) in an ultimately negative sum game. I hate it so much.

I gave up long ago trying to optimize any rewards, it just ended up being stressful and not really worth it ultimately. Now I just use my apple card everywhere, pay it off every month and get whatever rewards I get. It feels like a weird situation, those that stand to gain the most from credit cards are also the ones that should feel a difference of under $100 in rewards the least. The one exception I see is bonus si…

I don't bother with rewards either, be it cards or memberships or whatnot - too much hassle if you're also working full time. BUT: one thing I use the credit card for and that is for the pay and travel insurance attached to it. Could I get it otherwise? Maybe, no idea. But if you don't carry debt (and I never do) there's no downside.

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

#175

Post by tialaramex »

Lucasoato wrote: post #137
ramijames wrote: post #121

Earlier quoted context omitted.

I'm 46. I've never had a credit card. I have a bank account and a debit card. If I can't afford something, I don't buy it. You can just opt out of using credit cards.

I’ll never understand this credit card debt thing... and why should businesses eat the credit card commission cost? Is it 5%? You pay for it, why should I?

The reason for a business to want to accept cards is that some fraction of your customers would choose not to buy whatever it is you sell if not for the convenience. Whether that's a guy who decides not to buy donuts because then he won't have even to buy more scratch-offs or the woman who doesn't get those bald tires replaced because if she did the family will be leaving on cheese sandwiches until payday.

For the consumer the reason is that this is revolving credit. If you pay next month you can have stuff today. That's a small relief, unless it turns into a carried balance and then it's an ongoing burden, but you don't think about that burden at first because you're naturally optimistic.

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

#176

Post by rowls66 »

gcr wrote: post #34
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.

In NYC, most independent shops give a debit card discount / credit card surcharge.

Card network rules in the US prohibit merchants from adding a surcharge for payment with a debit card. Most merchants are either unaware, or prefer not to care. If you are using a debit card at a business that assesses a card surcharge, point out that your card is a debit card when paying and refuse to pay the surcharge. If that does not help, there are online forms available from both Mastercard and Visa where you can submit a merchant complaint.

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

#177

Post by dboreham »

Lucasoato wrote: post #137
ramijames wrote: post #121

Earlier quoted context omitted.

I'm 46. I've never had a credit card. I have a bank account and a debit card. If I can't afford something, I don't buy it. You can just opt out of using credit cards.

I’ll never understand this credit card debt thing... and why should businesses eat the credit card commission cost? Is it 5%? You pay for it, why should I?

Vampire Squid. But this is only in one country. Go other places (e.g. New Zealand) and reality is different. There every single transaction has the credit card fee added explicitly.

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

#178

Post by stetrain »

ramijames wrote: post #121
nsedlet wrote: post #31

Credit cards also transfer wealth from people who pay interest to people who don’t. It’s a silly system, where everyone has to invest their time (optimizing for rewards, avoiding interest) in an ultimately negative sum game. I hate it so much.

I'm 46. I've never had a credit card. I have a bank account and a debit card. If I can't afford something, I don't buy it. You can just opt out of using credit cards.

If you shop at places where many customers user credit cards, and those places don't change an extra credit card processing fee to customers, then you are effectively paying for those credit card fees whether or not you use one.

Opting out doesn't save you from those costs.

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

#179

Post by jazdw »

pathikrit wrote: post #145
nsedlet wrote: post #31

Credit cards also transfer wealth from people who pay interest to people who don’t. It’s a silly system, where everyone has to invest their time (optimizing for rewards, avoiding interest) in an ultimately negative sum game. I hate it so much.

Why is it so hard lol? I have the Bank of America Rewards card for 25+ years. 2.62% cashback on everything, 3.5% on dining/travel. Maybe there are better ones out there but this is good. I have auto-pay setup so I don't have to worry. I have not spent a second of my time optimizing anything in last 15 years

Lol because in order to get 2.625% cashback at BoA you need to have $1,000,000 in your BoA accounts, maybe that's why it's hard?

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

#180

Post by sokoloff »

Lucasoato wrote: post #137
ramijames wrote: post #121

Earlier quoted context omitted.

I'm 46. I've never had a credit card. I have a bank account and a debit card. If I can't afford something, I don't buy it. You can just opt out of using credit cards.

I’ll never understand this credit card debt thing... and why should businesses eat the credit card commission cost? Is it 5%? You pay for it, why should I?

I’ve literally never bought anything with a debit card. I’ve definitely spent over a million dollars on credit cards in the last 3 decades and maybe over 2 million if you include personal and business card transactions.

That’s why businesses eat the credit card fees.

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