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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

#391

Post by ValentineC »

cpburns2009 wrote: post #160
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.

I agree with dougdude. I like debit cards better because you see the balance change immediately. The thing I dislike about credit cards is payment is deferred by a month.

> The thing I dislike about credit cards is payment is deferred by a month.

I like this. It means that I can earn a bit more bank interest on what I've spent.

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

#392

Post by hedora »

Brian_K_White wrote: post #361
rkuodys wrote: post #355

Earlier quoted context omitted.

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.

In the UK, google extracts one average lifetime retirement savings per person in revenue, on average. You could argue that Google’s customers, like advertisers, propaganda firms, etc, all overpay for the data.

That seems unlikely, since I don’t see how many of them could be profitable if they were paying Google more than their own revenue.

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

#393

Post by hedora »

ragnese wrote: post #379
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…

Why wouldn't a bank sell debit data just the same as credit data? For that matter, I would expect them to be selling everything they can: credit, debit, written checks, ACH transfers, etc. What incentive is there for them to not do that? Laws? I'm asking sincerely, not rhetorically.

There are laws, even for credit card data. They used to be enforced and largely obeyed.

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

#394

Post by hedora »

NooneAtAll3 wrote: post #351
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…

I think one factor missing in such discussions is that consumer data can be used for political means And I don't mean "politicians can use it" - but instead, as corporations are more and more involved in the politics, you get targetted and directed based on their needs

It can also be weaponized. Israel uses these sorts of datasets to systematically murder the families and neighbors of their targets. The operation name is something like “Where’s daddy?” They use commercial datasets to figure out where the kids are, then wait for the parent (generally a civilian) to return home, then level the apartment block when it is most likely their are children and neighbors present.

Presumably, the same is being done in Ukraine and Russia too.

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

#395

Post by ValentineC »

gumby wrote: post #238
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.

In the US you have several legal safeguards that are not provided by debit cards. Fraud liability limitations, chargebacks, and so on. You can still implement “if I can’t afford something, I don’t buy it” with a cc. I pay mine off every month so it’s financially the same s a debit card but use a premium card for its purchase benefits.

> In the US you have several legal safeguards that are not provided by debit cards. Fraud liability limitations, chargebacks, and so on.

These are available to Visa and Mastercard debit cards too.

But yeah, the UK has section 75 of the Consumer Credit Act.

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

#396

Post by ValentineC »

twoodfin wrote: post #187
vitus wrote: post #159

Earlier quoted context omitted.

> 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).

So why don’t the Visa and Mastercard banks up fees across their entire card lineup? If they’re truly too big to give up no matter the fees they charge, they’re leaving money on the table. Of course, they can’t. If Chase started handing college students a 3% card, the merchants would riot.

From what I understand, the card-issuing banks get a cut of the merchant fees, but they're required to provide premium benefits like lounge access.

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

#397

Post by sfn42 »

kevin_thibedeau wrote: post #377
rkuodys wrote: post #355

Earlier quoted context omitted.

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…

That data is used in some alarmingly manipulative ways that directly affect your life.

I personally don't really see the problem. I'm not going to buy something I don't want/need. If they use the data to show me ads for something I want that then leads me to making a purchase, to me that seems like a win/win.

I'm generally a pretty frugal person, I have a good handle on my personal finances and I don't really buy much stuff at all. Maybe for someone else, shopping can be similar to an addiction where they see an ad and they know they shouldn't buy it but they can't resist. Women with a closet full of shoes come to mind. For those people I can see how this might be problematic but personally I largely ignore ads altogether. If I need a small thing I just go to the nearest store and buy the first best thing I find, if I'm making a more significant purchase I generally do some research and look at tests, user reviews etc. Sure there's some opportunity for manipulating me with fake/biased tests and reviews etc but I'm not really seeing how my spending info helps with that.

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

#398

Post by kevin_thibedeau »

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.

I stuck to a debit card for decades but got tired of the discrimination after it was rejected by the IRS as validation for COVID stimulus. Gas stations could be problematic. Canada could be problematic. Everything works with a credit card. If you are a responsible spender you may as well reap the benefit of the wealth transfer.

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

#399

Post by lurk2 »

hedora wrote: post #392
Brian_K_White wrote: post #361

Earlier quoted context omitted.

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.

In the UK, google extracts one average lifetime retirement savings per person in revenue, on average. You could argue that Google’s customers, like advertisers, propaganda firms, etc, all overpay for the data. That seems unlikely, since I don’t see how many of them could be profitable if they were paying Google more than their own revenue.

> In the UK, google extracts one average lifetime retirement savings per person in revenue, on average.

Those numbers don’t make any sense. Alphabet had 403 billion in revenue in 2025. The UK’s population is around 69,000,000. This amounts to $5,840.57 per person, which is nowhere near a lifetime of retirement savings.

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

#400

Post by the__alchemist »

tiffanyh wrote: post #53
Torkel wrote: post #49

Earlier quoted context omitted.

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?

Issuing banks typically add an FX fee to the cardholder for cross border transactions. Not always, but many times they do.

I think this is generally mitigated: When traveling, people use the card that doesn't have this fee. You have cards A and B. Has a fee; B doesn't. At home you use either. When traveling, you use B.
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