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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

#261

Post by Forgeties79 »

tialaramex wrote: post #64
Forgeties79 wrote: post #2

> Because merchants charge everyone the same price regardless of how they pay, those fee costs are factored into prices for all shoppers. However, credit card users get that money back and then some through rewards, while cash and debit users get little or nothing. >The result: People paying cash face the equivalent of a 26% higher sales tax than premium credit card users shopping at the same store. I am surprised th…

It also means stratifying card users, even if you actually make all the card users pay more than those with cash. The people who can just barely qualify for a card are paying to fund the "rewards" for the wealthy who pick the best options. "It's expensive to be poor" is a more or less universal experience under capitalism and it's amazing how many novel ways we've come up with to make it more expensive for poor peopl…

Then they get angry when the other side of the coin is discussed - they can’t get certain benefits because they’re above the threshold too, but they’re different of course.

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

#262

Post by cmurf »

tylerhou wrote: post #229
buran77 wrote: post #224

Earlier quoted context omitted.

What does that graph tell you? Because I think patio11 wanted to send one message and people accidentally misunderstand the graph. That's the interchange income corresponding to wealthy people. Interchange is paid by the card-accepting business, not by the buyer. The buyer pays interest and other fees and that graph looks very different. From that original study the full picture table says in % of ADB that the "poore…

Businesses raise prices to account for interchange fees. So they are essentially is paid by the consumer. If we outlawed rewards credit cards (by capping interchange fees), everything would likely be slightly cheaper.

Outlaw rewards credit cards? Or make it compulsory that the true cost of a specific credit card is revealed to the merchant who has the right to absorb or pass on, in a line item, that cost to that specific consumer?

If I know I'm paying for my own rewards, I'd choose a card that keeps more money in my pocket. I'd go as low as the PITA factor of cash.

It's not clear to me what the net benefit is of a credit card over a debit card.

But for sure the confusion ensuing from allowing debit cards to be charged as credit cards should be illegal. The merchant account providers are probably the ones reaping the free money on the racket.

Credit is the POS default, for whatever reason. Not all POS are the same. e.g. US Post Office consistently knows if I am using a debit card, and it prompts for a PIN when I do. Every restaurant, bar, service does not ask for PIN, and the handful of merchants I've inquired with say their debit card fees changed by the merchant account providers are the same as credit. Scammy.

At least in Colorado it's legal for businesses regardless of the TOS contract with a merchant account supplier to pass on the transaction and processing fees of credit cards. It's not legal to pass on cost/fees for debit cards, ACH, or cash.

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

#263

Post by hnburnsy »

From the study...

>When merchants raise prices for all consumers in response to these costs, users of low-cost payment methods (e.g., cash and debit) cross-subsidize high-reward credit card users who shop at the same merchant"

Cash handling is not a low-cost payment method, Cash handling can cost businesses between 4% and 15% of each transaction, when factoring in labor, security, bank fees, and risks like theft and counterfeit bills.

One could argue that credit card users have been lowering prices for cash payers as business avoid cash handling pitfalls and get their funds safer and faster.

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

#264

Post by red-iron-pine »

aurareturn wrote: post #6

I 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 think there's a term inside credit card companies for people like me: leeches or something like that.

that's some odd classism there.

credit card companies love your data. they can package it, sell it, analyze it.

this is real data of actual behavior, not whatever people say or click -- money where the mouth is.

even if they never make a cent off of you from an interest perspective they 1) still get fees from the merchants, and 2) get all of that juicy juicy transaction info -- and that info alone might be worth the costs.

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

#265

Post by red-iron-pine »

dougdude3339 wrote: post #54
aurareturn wrote: post #6

I 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.

it's just as easy to check a debit balance as a CC balance.

and once debt is spent you cannot get it back. you get scammed you can dispute the credit card, and if the CC gets stolen you can fight any charges.

debit means the money is gone and that's it.

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

#266

Post by ChrisMarshallNY »

bluGill wrote: post #125
ChrisMarshallNY wrote: post #16

Earlier quoted context omitted.

I paid a lot of credit card interest, as a yute, but, since getting married, I have paid in full. Been over 30 years. Leeches rule! At one time, credit card companies forced vendors to charge the same, whether cash or credit, but that seems to have fallen by the wayside. The problem is, is that cash is becoming less and less acceptable. In a nearby town, you can't pay for parking, with cash. I have seen credit-card-o…

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.

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

#267

Post by amiga386 »

elmer2 wrote: post #252
gumby wrote: post #238

Earlier quoted context omitted.

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.

I used to have this same mentality (no credit cards) when I was younger, until my debit card was stolen and someone took $1000. The bank basically shrugged their shoulders and said there was nothing they could do. I always get my money back when this happens with a credit card purchase. I've also had to dispute things occasionally, and I almost always get refunded.

In an alternative universe, the government could require banks to refund victims of theft and fraud. It's entirely possible for banks to do this without requiring you use a credit card, they just don't want to.

https://commonslibrary.parliament.uk/research-briefings/cbp-...

> Industry body, UK Finance, estimates that criminals successfully stole £1.28 billion through banking fraud and scams in 2025. Of this, £703 million was unauthorised and £576 million was authorised.

> Unauthorised fraud is where the fraudulent transaction is carried out by a third party, not the victim. Authorised fraud involves the victim being tricked into paying money into another account that is controlled by a criminal. This is also known as Authorised Push Payment (APP) fraud.

https://www.psr.org.uk/news-and-updates/latest-news/news/pay...

> Frontier found that APP fraud losses have fallen by an estimated £73 million per year and the number of APP scams have fallen by nearly 35,000 due to the policy. Reimbursement rates for all claims have risen from 54% to 65%, and for claims in-scope of the policy, firms are now reimbursing 97%.

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

#268

Post by JKCalhoun »

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.

In Germany I saw they charged extra for using my credit card. A U.S. retailer told me the credit card companies won't allow that in the U.S.?

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

#269

Post by ryandrake »

elmer2 wrote: post #252
gumby wrote: post #238

Earlier quoted context omitted.

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.

I used to have this same mentality (no credit cards) when I was younger, until my debit card was stolen and someone took $1000. The bank basically shrugged their shoulders and said there was nothing they could do. I always get my money back when this happens with a credit card purchase. I've also had to dispute things occasionally, and I almost always get refunded.

Yea, we never, ever use debit cards. Credit cards only, for the heightened consumer protections. It sucks that most banks and credit unions give you one by default that doubles as an ATM card. I always push back and ask if they offer an ATM card that does NOT have debit capability.

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

#270

Post by IAmBroom »

Xirdus wrote: post #13
aurareturn wrote: post #6

I 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.

A lot of it is to enable the small business owners to hide their real income. At least that's how it works in immigrant communities.

That's how it works in established US communities, too. Contractors often give cash discounts (off the record).

My lawn mower asks me to write "gift" on checks when I can't pay in cash.

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