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How credit cards make money

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Re: How credit cards make money

#221

Post by flaviu1 »

blacksmith_tb wrote: post #89
vel0city wrote: post #85

Earlier quoted context omitted.

Can you further explain that cash deposit to credit card payment process through an ATM? I've only ever used ATMs to withdraw funds, never to make deposits, so I don't know what that process would look like or which banks would let me do that.

I had no idea that was an option, but I see BofA[1] supports it. Seems broadly less convenient than online, but I suppose better than needing to wait in line for a human teller. 1: https://www.bankofamerica.com/banking-information/assistance...

I don't have a deposit banking relationship with any brick-and-mortar banks, so for me it's very convenient: I have a way to turn my paper money into electronic money.

Re: How credit cards make money

#222

Post by ClumsyPilot »

clairity wrote: post #148
ed_elliott_asc wrote: post #131

Earlier quoted context omitted.

I haven’t had anything this bad but always use credit cards online and maybe even in real life and pay off the balance as the protections are so much better - it is stupid really.

yes, never use your debit card and use only credit cards online, but cash is better for non-major in-person purchases as it's inherently private and anonymous. it's also better for the payee (hopefully a local retailer not a mega-corp), since they don't have to pay the fees. for major in-person purchases, the extra (fraud, warranty, etc.) protections provided by the credit card may be worth the privacy/anonymity trad…

"non-major in-person purchases as it's inherently private and anonymous"

Most of the time that's an anti-feature - there is no point of hiding transactions of you buying bread, it could provide you an alibi in case you are accused of a crime, but there is no conceivable way it could be used against you.. (people don't stop to buy bread on the way to the crime scene)

Re: How credit cards make money

#223

Post by adev_ »

emodendroket wrote: post #216
nostromo wrote: post #91

Earlier quoted context omitted.

I got burned by Aliexpress and now I highly recommend people use credit cards for all purchases. I had a debit card saved on Aliexpress. The account was compromised by unknown means (maybe public wifi). Someone bought several $1,000+ phones from China that shipped to me in the US. I presume the sellers were in on it and were selling me unwanted inventory at inflated prices. Because they had tracking information, my b…

Right, it's hard to see what the advantage of debit would ever be. The guy at the bank always looks at me like I'm crazy for wanting just an ATM card and not a debit card, but between credit, cash, and checks, I cannot think of any situation at all where I'd want to use debit instead.

> Right, it's hard to see what the advantage of debit would ever be.

Not being able to indebt yourself is THE major advantage of debit card. Not everybody in this world is reasonable when it is about spending and finance management.

In some European countries with a more conservative mindset related to debts (Germany, France, ...), people will tend to have the exact opposite stance :

"Why would I ever need a credit card ? It is dangerous. My debit card is accepted everywhere"

Re: How credit cards make money

#224

Post by sydthrowaway »

rconti wrote: post #187
amichal wrote: post #134

Earlier quoted context omitted.

Our local small town cafe did this up until COVID... via a big three ring binder. You could run either a credit or debt as long as it was close and a couple of families i know would do this so their kids could stop and get snacks without cash.

I went with a girlfriend to her small-town-CA home, about 15 years ago. Went to get groceries and she just gave their name and a 3-digit number and the groceries went on the family account. I'm 40, but I had never before seen that in my life.

Eureka CA?

Re: How credit cards make money

#225

Post by xtracto »

thefunnyman wrote: post #212
zeusk wrote: post #197

Earlier quoted context omitted.

It seems like they're better integrating now, recently Bank of America started listing connected institutions via Plaid with an option to disconnect them.

This depends highly on the bank. From what I’ve read, an overwhelming majority of banks don’t offer any kind of API for transaction data so Plaid is just storing your password, impersonating you, and web scraping your transaction data. This is almost certainly a violation of your banks TOS and I wouldn’t expect any help from them in the event your credentials are leaked and your accounts liquidated. https://support-m…

Right, I know that there are just a handful of banks that are porviding conncetion flows.

I had experience with Capital One I think, their connection flow was horrible and broke the UI of your app: Basically your user had to go into a Capital One webpage (which was pretty ugly, specially in mobile) and then there were several checkboxes that they had to click through to allow specific accounts to be "seen" by the Plaid like services. Then they took you back to your application and if the user selected not to share any account, your application would basically crash.

I cannot imagine the UI hell that Plaid will be when every bank implements their own propriertary flow for approving account visilibility.

Re: How credit cards make money

#226

Post by perl4ever »

lotsofpulp wrote: post #101
revolvingocelot wrote: post #98

Earlier quoted context omitted.

>It is very clear that most merchants earn more from people using credit cards more often, otherwise there is no reason they would try to dissuade or offset it by adding a premium for using credit cards. Can you elaborate? IME merchants do NOT want people to use credit cards; transaction fees eat into the sale price. I remember a time when some electronics stores would explicitly advertise a cash discount, so as to a…

> How is it very clear that most merchants earn more? Because they do not offer discounts for cash/debit, and they also do not charge a fee for using credit card. As I showed in my post, legally, merchants are clear to advertise higher prices for credit card users. The fact that they do not means they do not want to dissuade credit card use. From there, it follows that since businesses are interested in earning more…

>Obviously, some merchants do benefit from dissuading credit card use

Or they just prefer to deal in cash so they don't have to pay as much in taxes.

Re: How credit cards make money

#227

Post by perl4ever »

secabeen wrote: post #202
mindslight wrote: post #147

Earlier quoted context omitted.

Everybody finds different local maximums. I autopay credit cards in full every statement, while most charges that hit my checking account are overdrafts - it autopulls from the companion savings account with a better rate. Credit cards coalescing many small charges into one allows me to easily stay within 6 transactions per month (Reg D). Although I look forward to returning to using cash wherever possible after the…

Yep. I'm the same way. The only thing to be careful about (in the US) is that banks can force convert a savings account to a checking account if you make more than 6 withdrawals a month. It hasn't ever happened to me, but they warn me regularly about it.

Wasn't there a suspension of the rule related to the pandemic?

Re: How credit cards make money

#228

Post by perl4ever »

TeMPOraL wrote: post #195
morpheuskafka wrote: post #37

> Debit cards are a very similar product with enough under-the-hood differences that they deserve their own moment in the sun. In particular, due to a quirk of U.S. interchange regulation, they basically fund most of the fintech industry Basically, the Durbin Amendment caps interchange on debit cards at a far, far lower rate than credit cards; they also have different networks (not MC or Visa) that can be run at leas…

> At the end of the day, credit cards are still significant better for customers. (...) Yeah, I don't know. Thing is, I don't like the stress involved. I prefer to deal with the money I have, not with the money I hope I'll have in one month's time. Not to mention, the cognitive burden of constantly keeping in mind the various balances and expected money flows, and having to manually push money around. It all feels li…

Yes, but what happens when someone does make fraudulent charges with it?

"The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair."

I'm especially leery of anything that someone powerful and/or authoritative says can't go wrong, because when it does go wrong, that's what they'll say, again.

Re: How credit cards make money

#229

Post by vmception »

quickthrowman wrote: post #109
vmception wrote: post #65

Earlier quoted context omitted.

They just keep extending credit until they're right. It cost them nothing to extend you credit and pretty much one interest payment makes up for it. The perks that offset the annual fees on their fee cards are just an accounting gimmick on their end. "Oh cool Audible gets to print awesome revenue numbers while we just pay back the customer that paid who feels like it makes their annual fee worth it" and who knows wha…

> And if you actually are spending, as you suggest, they make enough from the merchants who are eating the 3% transaction fee. You mean, the customer eating the 3% fee? The merchant isn’t going to take the hit to their margins, the interchange fee is built into the price of what you are buying.

Many merchants take a hit to their margins, many dont. It doesnt really matter to the credit card company but what you said is useful to point out, my point was only that percent is going to the credit card company

Re: How credit cards make money

#230

Post by djbusby »

magicalhippo wrote: post #219
nostromo wrote: post #91

Earlier quoted context omitted.

I got burned by Aliexpress and now I highly recommend people use credit cards for all purchases. I had a debit card saved on Aliexpress. The account was compromised by unknown means (maybe public wifi). Someone bought several $1,000+ phones from China that shipped to me in the US. I presume the sellers were in on it and were selling me unwanted inventory at inflated prices. Because they had tracking information, my b…

> Moral of the story: don't use debit cards I use a debit card for groceries and such. However, just to be sure, my paycheck goes to an account with no cards attached. I then transfer small amounts ($100 or so) every now and then to the debit card account. This limits my exposure to card fraud, and also has the nice side benefit of giving me back some of that "spending feeling" that cash has. If I have to transfer sa…

What if you overdraft and then get hit with fees? Or even NSF fees?
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