Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How credit card rewards became a $9.2B wealth transfer

library.hbs.edu

Post reply on HN
Print view View original

441–450 of 473 posts

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

#441

Post by ianburrell »

GPerson wrote: post #408
liveoneggs wrote: post #407

Earlier quoted context omitted.

how much cash do you walk around with?

I just use debit cards and Venmo for everything. I’ve never understood why I’d use a credit card when I can just use the debit card and pay no fee. I’ll never afford a house anyways so the credit score argument is meaningless to me.

One big reason to use credit card is that it gives window to settle problems. You have month to charge back before have to pay bank. If hotel places hold, it comes out of the credit limit not your bank balance. If someone makes fraudulent transactions, it isn’t your money and you can still pay rent.

If you pay the balance on time, you are getting free liquidity from the bank. But they get if you don’t pay off the balance.

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

#442

Post by ramblurr »

xyzelement wrote: post #421
GPerson wrote: post #401

Earlier quoted context omitted.

“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.” I believe you, but this experience is totally alien to me and I don’t know of anybody who has done this. I wonder if it’s a generational thing.

Literally between posting the above and now, I went to a rural bike ride with my family. Didn't bother to bring cash. Ended up riding past an antique shop and bought my son an old school tractor toy via Google Wallet.

But with a debit or credit card?

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

#443

Post by Forgeties79 »

r3trohack3r wrote: post #27
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…

I was surprised by this number too - and I’m pretty sure it’s a clever wording trick to inflate the percentage: > equivalent of a 26% higher sales tax than premium credit card users shopping at the same store. I do not think the sale price is increased by 26% - which doesn’t square with a 1% to 3% fee - I think they pay approximately 26% more in “sales tax” so you’re paying 26% more than the 7% tax.

I wasn’t questioning the number so much as saying I hadn’t considered the mechanics of what was happening

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

#444

Post by sandmn »

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.

The cost of accepting cash is not necessarily lower - you have take into account higher theft risk, miscounts and cost of delivering it to the bank. Also there is no incentive for businesses to pass saved fees to customers.

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

#445

Post by dcrazy »

HeyLaughingBoy wrote: post #433
GPerson wrote: post #401

Earlier quoted context omitted.

“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.” I believe you, but this experience is totally alien to me and I don’t know of anybody who has done this. I wonder if it’s a generational thing.

I was confused by this (because I rarely carry cash) until I saw your response below. I think OP might be using credit/debit card interchangeably? I don't use my credit cards unless I have to, but my debit card is used daily.

Are you in the U.S.? As an American I use a credit card for nearly 100% of my purchases, on a daily basis. I pay my bill in full each month. I might pay a 2–3% surcharge on a subset of those purchases, but I am reasonably sure I get more than that back in rebates. My Amex offers 2% back on groceries and the grocery store doesn’t charge extra for credit card purchases.

I basically never use my debit card for anything but ATM transactions, and the only time I have any cash in my wallet is when I have recently gone to a cash-only bar or to Las Vegas.

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

#446

Post by porkpieshoe »

HeyLaughingBoy wrote: post #433
GPerson wrote: post #401

Earlier quoted context omitted.

“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.” I believe you, but this experience is totally alien to me and I don’t know of anybody who has done this. I wonder if it’s a generational thing.

I was confused by this (because I rarely carry cash) until I saw your response below. I think OP might be using credit/debit card interchangeably? I don't use my credit cards unless I have to, but my debit card is used daily.

I default to credit/charge cards over debit cards because, in my country, debit cards offer far less consumer protection than credit cards.

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

#447

Post by porkpieshoe »

pjc50 wrote: post #367
59percentmore wrote: post #87

Earlier quoted context omitted.

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, wh…

If it was this simple, then high costs would be limited to the labor-driven portion of the bills.

This is not the case.

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

#448

Post by Xirdus »

IAmBroom wrote: post #271
Xirdus wrote: post #236

Earlier quoted context omitted.

Based on the downvote and your reaction, I assume I misread something. We're talking about why Americans sometimes prefer paying with cash over credit card, no?

I think it was the "immigrants" comment. To me, it's like claiming "black people like chocolate!". They do. So do most people. Why single out black people?

I'm the immigrant in question. I pay with card for literally everything online and offline, except two things - my haircuts and my wife's nails. Both of which accept credit cards. I go out of my way to withdraw cash (10 minute drive) just for these two things. Both the barber and the beautician appreciate it, for obvious reasons. My cousin with housecleaning business also gets paid mostly in cash, also for obvious reasons. It's just a thing we do. I don't know if natural born citizens do it too or not. Personally haven't seen it.

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

#449

Post by xyzelement »

ramblurr wrote: post #442
xyzelement wrote: post #421

Earlier quoted context omitted.

Literally between posting the above and now, I went to a rural bike ride with my family. Didn't bother to bring cash. Ended up riding past an antique shop and bought my son an old school tractor toy via Google Wallet.

But with a debit or credit card?

Credit card. I never understood the point of debit cards. It's like for people who don't want points? :)

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

#450

Post by Brian_K_White »

rkuodys wrote: post #419
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.

But something can be valuable to somebody without hurting you. For example if you participate in study as a member of control group. There is no impact to your life and huge benefit to whoever is producing the research. Similarly waste collection businesses take something that has no value to you and generate profit by modifying your waste into something valuable. That is to say - the fact that somebody gains value d…

A scientific discovéy is innately valuable.

THIS data has no value to the people collecting it except for the power it gives them to predict and/or manipulate you.

Post reply on HN