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How credit cards make money

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Re: How credit cards make money

#251

Post by jkhdigital »

mindslight wrote: post #147
stefan_ wrote: post #53

Earlier quoted context omitted.

The intersection between the people that have random overdrafts and those that just pay off their credit card debt in full every time is the empty set. Why make up excuses for a few rent seekers that tax the entire economy?

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…

I’m not sure I’d still call it an overdraft if the cash is just sitting in an adjacent savings account and gets pulled automatically.

Re: How credit cards make money

#252

Post by mjh2539 »

drfuchs wrote: post #217
drfuchs wrote: post #99

Earlier quoted context omitted.

The card issuer doesn’t pay the merchant for a while, so it’s the merchant who is essentially paying the actual debt interest for a few months. Ask the owner of any small business where you use your card how long it takes for them to actually see the money.

Evidently, my dry-cleaner lied to me.

They were probably just trying to get you to pay with cash/debit card.

Re: How credit cards make money

#253

Post by lotsofpulp »

toomuchtodo wrote: post #246
jedberg wrote: post #133

Earlier quoted context omitted.

Zelle has a few thousand dollar per day/week/month limit, which, at least in the Bay Area, is too low for rent.

I can send $5k per day to seasoned Zelle contacts who I’ve sent funds to previously (Chase).

I see $20k in 30 days, $10k in 7 days, and $3.5k in 24 hours in my BoA account:

https://i.imgur.com/he9PXTn.png

I can see $3.5k/day would be a problem for paying rent easily in some places. I guess this is the best we have for instant online payments until FedNow goes live.

Re: How credit cards make money

#254

Post by voidfunc »

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…

Cash is wonderful too for tax evasion. Hence cash only businesses.

Re: How credit cards make money

#255

Post by hnburnsy »

Merchants may get charged a lot for credit card fees but cash handling come with significant costs too such as banks charging for deposits, having to travel to the bank, counterfeiting, security, and leakage.

This article says the cost to handle cash is 5 to 15%, more than credit cards.

https://www.palmerretailsolutions.com/blog/cash-handling

Re: How credit cards make money

#256

Post by throwawaycities »

airstrike wrote: post #244
treyfitty wrote: post #234

One of the under appreciated legal precedents set a couple years ago was the Ohio V AmEx anti trust case. The case predicated against AmEx’s merchant contract forbidding merchants to steer customers away from using their Amex card. This was a common practice for many years, especially at restaurants since AmEx charged restaurants 6%. The Supreme Court ruled that amex was able to keep the anti-steering provision in me…

I suppose you can multiply that effect by some unknown but really large number and you'll arrive at the total impact caused by favoring Common Law over Civil Law

What does that even mean? Credit card companies exist (and make money) in both common law and civil law countries.

Or you could even look within the US and examine the singular state that is a civil law jurisdiction and there is no real impact vs the other 49 states. In fact I’d wager a guess very few people even know 1 of the states is a civil law jurisdiction because it has very little impact in practice.

Re: How credit cards make money

#258

Post by Jensson »

perl4ever wrote: post #237
adev_ wrote: post #223

Earlier quoted context omitted.

> 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 c…

There are a number of credit card issuers in the US offering 1.5% cash back. Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due. In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money. The latter interpretation makes it seem irresistible to…

And you pay 3% on every transaction to get 1.5% back. Seems like a pretty bad deal. Or do you really think businesses just gives you 3% for free on every purchase rather than raising prices on everything to make up for that 3% loss? A raw 3% of revenue is huge, there is no way businesses can take that without raising prices as consumer sales is pretty efficient and has small margins already. So they raise prices for everyone or they raise prices for people paying for cards, but either way you are paying more than you get back for that 1.5%.

Re: How credit cards make money

#259

Post by ollien »

jedberg wrote: post #61
ollien wrote: post #44

Earlier quoted context omitted.

> You are no longer obsessing over "early payday" features or ACH speeds. Timing ACH payments _sucks_. Tangential, but I'm in a renting situation where my landlord demands rent land in their account on the first of the month. Receiving rent on the 26th (i.e. 5 days early, not 26 days late) was deemed "too confusing" for them. I now have to play this awful game of timing ACH transfers to land on their account as close…

What state are you in? What they are doing may be illegal. In California the rent is on time as long as you pay in advance of the deadline. If you send in six months rent all at once, then you are on time for the next six months. Also your bank may be able to do this for you. If you add your landlord as a bill pay recipient and set the due date as the 1st, the bank will mail the check on the appropriate day, and if i…

Oh, they've not declared it as a lease violation, they've just asked me to do it this way and I've compiled, despite being annoyed by it. I haven't checked local laws (MA), but I've tried to be a good tenant.

Also, no, my bank will not do this for me. My landlord actually is overseas (permanently), so mailing a check is not feasible.

Re: How credit cards make money

#260

Post by ollien »

lotsofpulp wrote: post #116
jedberg wrote: post #92

Earlier quoted context omitted.

Given that you are sending pounds instead of dollars, I'm guessing you live in a civilized place with modern banking and not a backwoods like the USA. The problem is not technology, it's the USA banking system. We have no way to instantly send money to someone over a few thousand dollars without huge fees. Oftentimes rent exceeds that limit in urban areas.

You can send money via Zelle instantly, but I would stick to check or ACH purposes for legal dispute reasons in the case of conducting business, especially paying rent.

Zelle is actually not supposed to be used for anything other than personal payments, despite that rule not being followed by many, many people. My bank told me that Zelle will ban people for it

Also, the "instant" limit on Zelle is too low for any reasonable rent in an urban area. It's $1000/day for my bank

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