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

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

#361

Post by Brian_K_White » Wed, Aug 26, 2026, 11:29 AM UTC

rkuodys wrote: post #355

CircuitSeuss wrote: post #318

This ignores the aspect of consumer data. Credit issuers generate profit through issuing rewards programs in part due to the sale of their customer’s behavioral spending data. Cash and debit users largely retain their data privacy here. It’s hard to put a real world number on what the cost to the consumer is for losing this data ownership, but it is not zero: these data are increasingly used for targeted pricing prac…

Is't the fact that data is valuable for somebody, does not mean that it has a cost (price) for me? Spending data is definitely valuable for seller / corporation to know what to produce. I, on the other hand, cannot get money by saving information. It's not zero sum game, that either I have it or seller have value out of it. Just like with garbage - for me old broken furniture might be a garbage, while for other it's…

The only reason it's valuable is because of it's utility to extract value from you. Not just money either but for instance the power to manipulate.

It's not a scientific discovery.

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

#362

Post by Symbiote » Wed, Aug 26, 2026, 11:31 AM UTC

stefanfisk wrote: post #241

alistairSH wrote: post #216

Earlier quoted context omitted.

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.

I’m in Stockholm, and our condo HOA (BRF) includes 1Gbps per unit in the fee for all units because billing individually would cost more in admin than the service itself. We have FTTP and then cat6 to each unit.

In Copenhagen mine is billed individually, and is 75kr for 1Gb/s. About $10.

Otherwise the same system.

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

#363

Post by goalieca » Wed, Aug 26, 2026, 11:34 AM UTC

InsideOutSanta wrote: post #338

joenot443 wrote: post #188

Earlier quoted context omitted.

Bit for bit, internet access is cheaper in America than it is in Canada or Australia. Canadians like myself have ~40% of our provincial taxes spent on healthcare, so in my case about ~8% of my gross income. Somewhere in the tune of $20k/yr. While I was living in Seattle and filing American, quite a bit less of my gross income went to healthcare. Just food for thought.

> Canadians like myself have ~40% of our provincial taxes spent on healthcare Worth noting that taxes in the US are a lot lower than they should be because a large portion of government expenses are financed with debt. Canada owns over 400B in US debt, so that's Canada "subsidizing" US taxes. Also, yes, that's how healthcare works: when you're young and less sick, you tend to pay more than you get out of it, and then…

Canada has a huge debt problem at the provincial and federal level. The provincial level even covers for the cities spending problems.

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

#364

Post by Symbiote » Wed, Aug 26, 2026, 11:37 AM UTC

gorgolo wrote: post #359

Steve44 wrote: post #330

Earlier quoted context omitted.

> That's why many EU banks still offer corporate credit cards with huge cashback et We're a business in the UK and the charges for accepting Business credit cards is much higher. I don't have current charges to hand, but in 2023 Personal Credit Cards were 1.97% whilst for Business Credit Cards we were charged 3.43%. That's probably how they afford such high cashback/loyalty schemes. I think we're paying about half th…

Never heard about this before but it sounds crazy. Are you able to control this somehow, like reject business cards?

In Denmark many retailers pass on the charge for business cards. For example it's often printed on the bottom of a restaurant menu.

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

#365

Post by xyzelement » Wed, Aug 26, 2026, 11:49 AM UTC

Credit cards and cash have their place but the story being told doesn't track with experience.

First, businesses are increasingly differentiating pricing between cash and credit card - this is most obvious in gas stations where the price you see on the big sign is the cash price and not what you practically end up paying. Or the various restaurants and other businesses that offer cash discounts. While this is relatively new, the earlier manifestation of this is the credit card fee - eg try paying your tuition or utilities using a CC and you'll immediately find this option costs more.

Interestingly all the above usually hover around 3% so it's tellingly the rate the merchants themselves perceived CC use and infrastructure cost them.

Second, credit cards are clearly good for business volume. Most people have had the experience of wanting to buy something unplanned and not having the cash on them, but buying it anyway via credit card. On a larger scale, hard to imagine on-line shopping without a credit card.

Third, I don't find cash-only businesses cheaper. In my town there's a cash-only barber, pizza place, and ice cream shop and they cost just as much as the credit card taking ones. In every case the dynamic is there are long running businesses with sufficient clientele that they never bothered, but they don't use absence off CC fees/infrastructure to generate a consumer savings.

Fourth, poor people can play the point game too. As a broke college student I was very fond of my Exxon Mobil card that gave me cheaper gas. Now I don't really care about an extra ten cents on a gallon as much.

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

#366

Post by nickjj » Wed, Aug 26, 2026, 11:54 AM UTC

sjhatfield wrote: post #347

nickjj wrote: post #162

Earlier quoted context omitted.

> It's generally a time-vs-money thing though in that to maximize airline/hotel programs Credit card hotel booking portals are often much worse than what's available too. For example, you might end up paying 30-100% more for a hotel booked through Chase Travel. At the very least you'll have way less selection. Even if price matching exists, you could still end up paying more. I am traveling to Mexico next month and I…

Have the same card solely for the rental car cover. And to be fair it works, had an issue and they refunded the full expense without too many hoops to jump through.

That is good to hear.

Supposedly the free Chase cards have comparable rental insurance. The main difference is Sapphire is always primary insurance, but Flex and Unlimited become primary when traveling internationally and if you happen to live in a place that requires no car in the US and you don't have insurance, it becomes primary in the US too.

Not sure what the differences are when filing claims though.

I will say this, it seems like more and more countries are starting to require Third-Party Liability (TPL) insurance and the Chase cards don't cover that so you still end up having to pay out of pocket for partial coverage (Chase for CDW, TPL from the rental agency). Some rental places don't make it easy to split these out.

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

#367

Post by pjc50 » Wed, Aug 26, 2026, 12:04 PM UTC

59percentmore wrote: post #87

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.

Things that are more expensive in the US for no reason: Healthcare Internet access College sighs and adds "The very act of making a purchase" At least we have cheap gas? farts

Healthcare and college are "Baumol cost disease": because they depend on skilled workers, much of that is the same as "American salaries are higher than in the rest of the world", and unlike manufacturing or software (+) you can't outsource it to lower-wage countries.

(+) there still seems to be a massive wage premium for "being physically in a San Francisco office" even if most of the work is being done by an AI, which cannot be sustainable

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

#368

Post by rozenmd » Wed, Aug 26, 2026, 12:15 PM UTC

CircuitSeuss wrote: post #324

phyzix5761 wrote: post #323

Earlier quoted context omitted.

Debit card usage is also used for data brokering.

Yes, but typically only on the retailer/ Point of Sales side. Your bank is not selling that information. Of course, things get weird when you have additional intermediaries like Apple or Google pay. In principle at least, there should be some measurable difference vs credit. Would be very curious to see studies on this if anyone finds one!

> Your bank is not selling that information

Oh it very much is, (at least in Australia the major 4 banks have agreements with data brokers)

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

#369

Post by gblargg » Wed, Aug 26, 2026, 12:26 PM UTC

wookmaster wrote: post #274

Im really surprised the number of comments here who think the rewards are free money they're getting. The stores are paying 3-5% transaction fees for you to use credit cards then they give you 2-3% back and force you to spend it on things they deem can be redeemed. You're paying for that 2-3% back in higher prices for everything. The whole thing is a giant scam and should be shut down.

At an individual level it is. I could use cash or debit card and get 0% back, or use a rewards card and get 5% back. Easy choice.

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

#370

Post by wat10000 » Wed, Aug 26, 2026, 12:28 PM UTC

Ridiculous. I suppose I’m also making a wealth transfer when I buy in bulk while poor people can’t afford to, or I drive to a discount store while people with bad transportation options have to shop at an expensive local place, or I use a loyalty card.

The store still makes a profit on my purchase. My rewards are my own money coming back to me. I’m not sticking my hand in a poor person’s pocket just because I use a fancy card.