Why was the title changes from "How credit cards make money"??
How credit cards make money
81–90 of 445 posts
Re: How credit cards make money
#82Earlier 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…
Agreed, luckily RTP rollout is well under way, and it won't be long before ACH is a thing of the past. [1] [1] https://www.theclearinghouse.org/payment-systems/rtp
FedNow, the Fed’s instant payment system to replace ACH, it currently ahead of schedule for a 2023 GA. Beta testing between a handful of financial institutions is working as expected (from what I’ve heard). One way or another, instant payments will be here shortly.
Re: How credit cards make money
#83> 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…
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?
Merchants WANT people to use credit cards. There is nothing stopping merchants from offering a cash/debit price and a credit price since 10 years ago. The frank dodd legislation made illegal for card networks to ban offering discounts for debit card payments, and in Mar 2017, the Supreme Court said merchants cannot be barred from advertising higher prices for credit cards.
https://www.ftc.gov/tips-advice/business-center/guidance/new...
https://en.wikipedia.org/wiki/Expressions_Hair_Design_v._Sch...
It is very clear that most merchants earn more from people using credit cards more often, otherwise they would try to dissuade or offset it by adding a premium for using credit cards.
Target sort of does this by giving a 5% discount if you pay via ACH from your bank account (via a debit target redcard account), and in the western US, a grocery store company called Winco advertises it does not take credit cards at all in order to provide the lowest prices.
On the other hand, Aldi in the US used to only take debit cards, and they started taking credit cards 5 or so years ago, so they are obviously assuming they will earn more money by lifting prices a little and attracting credit card users.
Re: How credit cards make money
#84> 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…
I just have two bank accounts. One I use to pay online, that I put money into myself, and another where I receive my salary. The most anyone can surprise charge me is about 60 EUR, because I don't keep more money in the online purchases account. The upside is that I understand all parts of how this works. I never managed to grok all the details about credit cards and their endless features. I just pay the bank to mai…
> never managed to grok all the details about credit cards
You should look at getting a charge card. Basically a credit card where you can't keep a balance. Its basically a pay-after debit card where you can not pay a charge if its fraud.
Some have nice perks, but you can just ignore that if you want.
Re: How credit cards make money
#85> 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…
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.
Re: How credit cards make money
#86Earlier 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…
I just tried this, I opened my bank's app and it took me the whole of 2 minutes to set up a standing order to pay my friend £10 on the first of the month. It would be in his account on the 1st, or the next working day. I pay my cleaner via bank transfer when she leaves my place, and it's in her account by the time she's in the bus. My bank mailing cheques to my landlord is a concept that's just bizarre to me.
Re: How credit cards make money
#87> 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…
You missed the biggest advantage of credit cards - the limited liability of the card holder to fraudulent charges! From a financial website… “ CREDIT CARDS Credit cards offer consumers the widest fraud protection. By Federal law, a cardholder is only liable for the first $50 of an unauthorized transaction at most, with many issuers offering cards with zero liability. DEBIT CARDS Debit card holders are protected under…
I'm not sure if that distinction makes much of a difference since the vast majority of debit card theft is not via the physical card, but through skimming.
Debit cards do have the disadvantage of your money being gone until the bank makes you whole. But I'm not sure if the liability is really any different (unless physically stolen and not reported, I guess).
Re: How credit cards make money
#88> 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…
You missed the biggest advantage of credit cards - the limited liability of the card holder to fraudulent charges! From a financial website… “ CREDIT CARDS Credit cards offer consumers the widest fraud protection. By Federal law, a cardholder is only liable for the first $50 of an unauthorized transaction at most, with many issuers offering cards with zero liability. DEBIT CARDS Debit card holders are protected under…
This is one of the main reasons why I use credit cards over debit.
If there's a dispute over a charge, I believe with debit cards the money is still out of your account until it gets sorted out -- this could be days or weeks.
With credit cards, the money in dispute is not "owed" to the card company, and at worst it reduces your available credit by that amount, which is only an issue if you're spending enough to max your card out anyway.
Even though the end result is similar, there's a bad feeling about the debit card fraud: It's my money tied up, while with credit it's the card issuer's money.
Re: How credit cards make money
#89> 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…
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...
Re: How credit cards make money
#90Earlier quoted context omitted.
I find this ironic since now days it seems every store has its own credit card. I even have a card from pep boys (and was given a free oil change just to sign up.)
>it seems every store has its own credit card. Fyi, vast majority of those are co-branded cards which means they are underwritten by a bank. Examples: - Amazon VISA card is underwritten by Chase Bank - Costco VISA card is underwritten by Citi Bank If you look closely on the Pep Boys card, you'll see who the bank issuer is. It's different from the old days of mom&pop grocery stores running their own ledger of customer…
Another popular one people do not expect is Apple credit card’s bank is Goldman Sachs.