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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

#211

Post by hvb2 »

ricardobayes wrote: post #167
tomaskafka wrote: post #129

Earlier quoted context omitted.

Whole Europe does this. I never understood why whole nation wants to live in debt just to have one extra month of cash flow (which they’ll probably squander soon).

Yet many European countries have high household debt. Switzerland, Sweden, Netherlands, Denmark, some of the highest in the world. I guess it has to be mortgages, since it's true they are not that "big" on credit cards. Although Klarna is a Swedish company. https://en.wikipedia.org/wiki/List_of_countries_by_household...

Speaking for NL, yes it's mortgages. And those come with monthly payments towards the principal in pretty much all cases. Also, those being mortgages the rates are like 5% or so, not over 20%. Soll

After 30 years, people generally speaking own their home and that's their biggest chunk of wealth. So basically, yes a high debt to income ratio, but it's building towards wealth and its not high interest debt either.

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

#212

Post by Brendinooo »

djoldman wrote: post #196
delish wrote: post #115

Earlier quoted context omitted.

Patrick McKenzie rebuts this here: (podcast) https://open.spotify.com/episode/2E2KRPcDvh1LcRw5bIsBms or here (article): https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... The intuition being: people who carry balances and pay interest don't actually spend very much; they are not wealthy.

Credit card companies make 3/4 of their revenue from interest. From Capital One's 10k, Net Interest Income vs. Total Net Revenue: 2023: 79.5% 2024: 79.8% 2025: 80.2% https://www.sec.gov/ix?doc=/Archives/edgar/data/0000927628/0...

I don't really know my way around corporate filings, but...is that just for credit cards?

Capital One also is supposedly huge on car loans; I'd imagine the interest from those would comprise a big chunk of that revenue.

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

#213

Post by [deleted] »

gruez wrote: post #172
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.

[deleted]

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

#214

Post by StrauXX »

rowls66 wrote: post #176
gcr wrote: post #34

Earlier quoted context omitted.

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 c…

The card processors policies are anti-competetive (albeit legal) abuses of their oligopoly. Reporting small vendors to them does not seem right to me.

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

#215

Post by oefrha »

timcobb wrote: post #203
oefrha wrote: post #192

Earlier quoted context omitted.

Try to pay for SaaS online. Tons of them accept nothing but credit cards; and then some of them accept direct withdrawals from bank account but it takes days to verify. Services using Stripe seems to be the worst at this. (I’ve never carried a credit card balance my whole life.)

Debit cards charge as credit cards no problem. That said not having a credit card is tough on your credit history. You could just have one and pay the balance but then they still have all your data, it sucks

I’ve specifically had debit card with Visa mark declined online where credit card was expected. Don’t know how common that is because one stops doing that once it happens a couple times.

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

#216

Post by alistairSH »

joenot443 wrote: post #189
alistairSH wrote: post #169

Earlier quoted context omitted.

That might explain internet pricing in North Dakota, but it doesn't explain it in NYC or DC or LA.

I pay $40/mo for 500mbps in my Bushwick apartment - is that considered expensive?

By US standards? No, probably not.

But, a quick search indicates you can get similar broadband in Glasgow, Scotland for ~15 GBP/month. And Rome, Italy looks like ~25EUR/month.

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

#217

Post by [deleted] »

caminante wrote: post #200
paxys wrote: post #78

Earlier quoted context omitted.

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.

The parent isn't explaining it well, largely because it's not rational. I think of it like alcoholics who can't be near alcohol. It's some deep seated degeneracy or fear.

[deleted]

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

#218

Post by Brendinooo »

They mention "premium credit cards" in the article, is there a general understanding of which cards are premium? I clicked through to the study and the only example they cited in there was Chase Sapphire Reserve but I didn't see, like, a list or something.

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

#219

Post by rsynnott »

Symbiote wrote: post #105
edent wrote: post #67

Earlier quoted context omitted.

In the UK (which broadly follows the same rules), I get 0.25% with a Visa and 1.25% with Amex. Sometimes there are introductory offers for a few months.

And as a result of that, Amex is often not accepted.

And is largely dying out as far as I can see; it’s only even still issued in a couple of European countries.

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

#220

Post by lotsofpulp »

vitus wrote: post #159
twoodfin wrote: post #98

Earlier quoted context omitted.

Why do you think it’s a negative sum game? I don’t have any data, but my intuition is that overall high-fee, high-reward cards increase propensity for consumer spending by at least a few % beyond the fees/rewards. The merchants think so, too, or they wouldn’t accept the processors that let their banks hand out these cards.

> The merchants think so, too, or they wouldn’t accept the processors that let their banks hand out these cards. Visa / Mastercard / American Express all have lines of premium credit cards (Visa Infinite, World Elite Mastercard, Amex Platinum), and they're very much too big to ban. You'd just be left with one processor in the US (Discover, now owned by Capital One).

This is wrong. Merchants can elect to only accept debit cards.

In recent years, all of my utilities have added 3%+ credit card surcharges, so I pay most of my household expenses with debit cards/ACH now.

Tmobile, Comcast, Verizon, ATT, Target, grocery store, electric utility and water utility (government), annual vehicle tax (government), auto body shop, daycare, and any home repair contractors all charge 3%+ (or give a discount, same thing), so I basically only use credit cards for other retail stores and travel and restaurants.

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