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How credit card rewards became a $9.2B wealth transfer
291–300 of 473 posts
Re: How credit card rewards became a $9.2B wealth transfer
#292Credit 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…
> 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.
It’s expensive to be poor. Higher interest rates, no credit card rewards, higher unit prices at places like Dollar General, etc.
Re: How credit card rewards became a $9.2B wealth transfer
#293Earlier 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?
Businesses accept less money when someone pays with BNPL. They also accept less money when someone pays with a credit card.
The reason is rather obvious, people spend more money with credit than they would’ve with cash. Accepting 95 cents on the dollar to get a sale with credit that you wouldn’t have got with cash still earns the seller money, money they wouldn’t have earned without accepting credit.
Re: How credit card rewards became a $9.2B wealth transfer
#294Earlier quoted context omitted.
Credit cards are cheaper than cash for most merchants. Most people forget about all the costs of cash because they are hidden, but they add up to more than the couple % credit cards cost.
> Credit cards are cheaper than cash for most merchants. Huh. I always thought it was the opposite. I know several restaurants that refuse to accept credit cards. They are great places to eat, but I won't go there. I don't think they miss my custom, though. Refusing to accept credit seems to be a signal of excellence, around here.
If you don't do the accounting, it appears that the fees on a credit card are greater than the cost of cash and so restaurants that haven't done their accounting closely often think they're getting themselves something by not accepting credit cards.
The cost of a credit card is very obvious. The cost of cash is many small things that are very hard to see and thus very hard to account for correctly.
Re: How credit card rewards became a $9.2B wealth transfer
#295Earlier quoted context omitted.
That comes out of the merchant's pocket, who has priced it into the sale price you are paying. It is not, thus, free money, at all.
On a macro level, that's true. On an individual level, your avacados cost 3% more whether you use credit or debit, it's just your choice to recover 2.5% from that back in rewards or not.
It can also be your choice to lobby your government to shut down the rent-seeking behaviour of Visa and MasterCard.
It can be done. The UK and the EU capped fees at 0.3% for credit cards and 0.2% for debit cards
Re: How credit card rewards became a $9.2B wealth transfer
#296Earlier quoted context omitted.
>in particular the highest income consumers get the worst returns on their interchange payments That's not what the article says: >High-income consumers with high FICO scores benefit the most from reward credit cards compared to mid- and low-income consumers with high FICO scores. At the lower end of the FICO distribution, however, this pattern is reversed. On average, net rewards are far more negative for high-incom…
To be clear though, the higher FICO scores get hosed the most, see the graph earlier on. Your quotes are conditional on FICO so they don't take that into account. The only way I can put these things together is that at the high FICO end, both wealthier and poorer consumers get hosed a lot but wealthier consumers not quite as much. On the other hand, lower FICO band doesn't get as bad of a deal overall but it is worse…
>To be clear though, the higher FICO scores get hosed the most, see the graph earlier on. Your quotes are conditional on FICO so they don't take that into account.
Are you talking about "Consumption by income decile" graph? That doesn't show them being hosed, unless you think everyone should pay a flat rate to access the credit card system.
Re: How credit card rewards became a $9.2B wealth transfer
#297[dead]
Re: How credit card rewards became a $9.2B wealth transfer
#298Earlier quoted context omitted.
Credit cards are cheaper than cash for most merchants. Most people forget about all the costs of cash because they are hidden, but they add up to more than the couple % credit cards cost.
> Credit cards are cheaper than cash for most merchants. Huh. I always thought it was the opposite. I know several restaurants that refuse to accept credit cards. They are great places to eat, but I won't go there. I don't think they miss my custom, though. Refusing to accept credit seems to be a signal of excellence, around here.
In Belgium it is common knowledge that cash-only places don't report everything to the feds.
For the same reason those food establishments had to get a government approved White Cash Register, because there was so much money disappearing.
Re: How credit card rewards became a $9.2B wealth transfer
#299I 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.
Problem with a debit card is that if something goes wrong (product broken, or worse, debit card skimmed) it's my debit card, and thus my money.
Credit card? I file a charge-back which is a forcing mechanism for the vendor. Credit card skimmed? I get a new one, and I don't need to wait for my $ to be re-imbursed.
Re: How credit card rewards became a $9.2B wealth transfer
#300I 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.
confidence of sufficient funds when that auto payment hits