Who is hurt by those credit card perks?

[konapoppy]

Thought folks might find this interesting. Nothing is ever really free. When I worked in banking, the term “fee based income” made me cringe - I knew who was paying it.

The interchange fees going up hurts everyone, as it increases prices, which disproportionately hurts the poor. I think there is more to this than the article covers, but I am glad it is being discussed.

www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html?unlocked_article_code=A0h7SaACXzjOVuldUgLPjcnY1m8Aef1hKAqJVbYk26LT6joMCjLs-iy7EAIlKHjseSEJtxXgUx4jv3poYytZNVvwq8bktbbqdVsh95k8FjIYQRdPZBWY5432O58PfXaIhknKgjC0lSJrZRuGV6nXI8GBCm-nT98CZIfmYvcarC0InyqFwwRTEgPeuuNTB4VS0kXtxdUngTSJIRTkB7BXnzhNjRRL3lZEiCDNhdX6B9vHlRpkrKv03SMigUe9eQjRY1zZvTl7rAKGdsJWXnN5NMNa4u0Pvs7YZ1OSbNUgr4PtQoAg5W6wehbXiEiMRXlTkm9Qb7d0Pr4mezpXbiuwNEDn8iIRZrCz0Ko_B9pZc8O_8fddhBihi6Im&smid=nytcore-ios-share&referringSource=articleShare

[Velar Fricative]

I bowed out of the CC rewards-chasing game a while back because of course it's not free. We're all paying for it in the long run, like the piece mentioned - the difference is I can afford to pay for the consequences while others cannot.

Not to mention I got out of this game because, surprise surprise, after years of paying everything off each month, we ended up falling into CC debt that we had to crawl our way out of. Despite a HHI. After that, I was like fuck it, we're not entitled to travel. If and when we want to travel, we stick to a budget and save up for it and that usually means staying closer to home. BUT, in the age of social media that becomes increasingly hard to do when it causes such serious FOMO. Not to mention the pandemic made people itch to travel again and now it's very much a YOLO thing to do more than ever and chasing rewards is often the way to do it. So I understand how difficult it is to back away.

But man I also hate paying for shit in cash or with a debit card.

[ssmjlm]

I remember this was a big thing when companies were going to start charging a cash price and a cc price because of the fees. Same why some places wouldn't take Amex or Discover.

We actually just stopped using our Amazon prime visa and went to a capital one venture x. We are doing a 15th anniversary cruise in November and can pay for a huge chunk of it by turning in miles because capital one just wipes purchases instead of chase's transfer system.

But it's definitely only worth it if you pay off your cc.

[breezy8407]

My company recently switched from corporate issued credit cards for our travel, to having individuals pay and then get reimbursed. On the surface, sounds great and for me personally since I benefit from the extra miles and card spend I get. I was quick to point out that not everyone on our team can or wants to pay for this travel on a high interest card. I absolutely see how the "rich get richer" plays out with benefits and miles bonuses when you start spending more and more.

[sent]

I've been in the miles and points game since 2007, long before Instagram and the blogs blew everything up. Initially I earned my miles by actually flying them. Now I fly much less so I earn by spending. It was a niche and fun hobby. It still is but it became annoying to have more and more bloggers bragging step by step on how to use the miles. Part of the fun of the hobby was figuring out the travel hacks yourself without visuals. Now travel blogging is no longer a hobby but rather its own entire industry now so the CC companies are just as complicit trying to entice more people to get their cards.

They mentioned that Visa/MC offers more security. As a small business owner, PCI compliance for this security protection has cost me thousands to figure out how to be compliant so Visa/MC can maintain that security.

I have been using cash way more since last year when small businesses started putting up the CC surcharges. I do wonder if we are going to see the CC companies play new games to stay relevant in our lifetimes as banks push instant money transfers like Zelle more.

The worst are the HSA/FSA credit cards. Those have the highest fees of all the credit cards swiped in my office and no one is getting rewards from those except the CC companies. We always ask patients if they know how to use the online portal to send us a check instead of swiping the card, but if they look at us like deer caught in headlights then we just take the card and swipe it.

[gretchenindisguise]

Mar 6, 2023 11:12:46 GMT -5 sent said:

.

The worst are the HSA/FSA credit cards. Those have the highest fees of all the credit cards swiped in my office and no one is getting rewards from those except the CC companies. We always ask patients if they know how to use the online portal to send us a check instead of swiping the card, but if they look at us like deer caught in headlights then we just take the card and swipe it.

Huh. I didn’t know this.

I also hadn’t thought about the impact of these cards, but it makes sense the way they’ve laid it out here.

[Velar Fricative]

Mar 6, 2023 11:35:33 GMT -5 gretchenindisguise said:

Mar 6, 2023 11:12:46 GMT -5 sent said:

.

The worst are the HSA/FSA credit cards. Those have the highest fees of all the credit cards swiped in my office and no one is getting rewards from those except the CC companies. We always ask patients if they know how to use the online portal to send us a check instead of swiping the card, but if they look at us like deer caught in headlights then we just take the card and swipe it.

Huh. I didn’t know this.

I also hadn’t thought about the impact of these cards, but it makes sense the way they’ve laid it out here.

I was just about to reply with the same comment! We switched from DH's company HSA/FSA because it was so tedious so now we're under mine and it comes with a CC. I used it a couple of times and then realized that especially with co-payments, many more medical offices are adding CC surcharges anyway so this was another reminder to just not bother using the CC and sending in receipts the old fashioned way. 

[quesyrah]

Thank you for sharing this article.

DH and I were just discussing the benefits of a credit card with rewards.

We recently vacationed in Hawaii, a trip we were only able to afford thanks to my recent inheritance from my parents dying. On the flight home, Hawaiian Airlines was offering a special deal for their credit card- 70,000 miles after your first purchase with no minimum purchase amount required.

That sparked a discussion about how many miles it takes to get free plane tickets and how to best benefit form a travel reward card.

Ultimately for us, I don’t think we would ever spend enough to really earn any rewards and it would be too easy to end up in debt chasing rewards points. Even if we could put every dollar of our monthly spending on the CC, it’s less than $3,000 a month.

[pixy0stix]

This is something I've been biting my tongue on ever since the credit card churning discussion on ML. Someone is paying for all that "free" stuff, and it sure as shit isn't the cc companies.

[fortnightlily]

Why do the credit card companies feel so incentivized to offer these rewards programs to attract affluent customers if those customers aren't the ones actually making them money?

[Velar Fricative]

Mar 6, 2023 12:08:38 GMT -5 fortnightlily said:

Why do the credit card companies feel so incentivized to offer these rewards programs to attract affluent customers if those customers aren't the ones actually making them money?

Because everyone else is paying for it. Well, technically we all are too because of the CC surcharges. Not to mention these richer people on social media are great for promoting these cards and getting them more cardholders.

[goldengirlz]

Mar 6, 2023 12:08:38 GMT -5 fortnightlily said:

Why do the credit card companies feel so incentivized to offer these rewards programs to attract affluent customers if those customers aren't the ones actually making them money?

They do make money from affluent consumers through interchange fees, which is the cost merchants pay when they swipe the cards. I actually did know that the CSR card has very high interchange fees, so I never use it when I shop small.

The problem (or one of the problems) is that businesses pass on the costs of those high fees by raising prices for everyone. Which makes complete sense, but I appreciate this article for highlighting these issues.

[lilac05]

Mar 6, 2023 12:20:14 GMT -5 Velar Fricative said:

Mar 6, 2023 12:08:38 GMT -5 fortnightlily said:

Why do the credit card companies feel so incentivized to offer these rewards programs to attract affluent customers if those customers aren't the ones actually making them money?

Because everyone else is paying for it. Well, technically we all are too because of the CC surcharges. Not to mention these richer people on social media are great for promoting these cards and getting them more cardholders.

Yep! And in addition to that, they’re the one living and promoting the lifestyles of consumerism. And that gives other people FOMO and a desire to Keep Up with the Joneses. So they spend money they don’t have, and the CCs make the money off of those people. One influencer buys a $200 pair of tennis shoes they can afford, tells everyone else about it. Suddenly all of their followers NEED those shoes…but only a portion will pay for them completely that month. The rest will pay extra to the CC co.

[wanderingback]

Mar 6, 2023 12:00:51 GMT -5 pixy0stix said:

This is something I've been biting my tongue on ever since the credit card churning discussion on ML. Someone is paying for all that "free" stuff, and it sure as shit isn't the cc companies.

I literally had no idea that rewards programs increased the fees for everyone! I thought the cc companies made Money from interest from people who don’t pay off every month.
How do you all learn these tidbits of info?! Lol.
You def should’ve mentioned something in the ML post I started as I would’ve loved to know this. Def will reconsider!

[Velar Fricative]

Also, I been leery about carrying too much cash for a long time now, even when crime rates were really low. I have had my wallet stolen (tourist trap, didn't know it happened until dude was long gone with my wallet) so it's hard for me to condition myself to carry more cash even though I really don't want to pay for a $3 cup of coffee with a card anymore for all the reasons mentioned, which is why I agree with the poster that mentioned card companies focusing more on Zelle and stuff.

I bring that up because I am pretty sure robbery rates are up basically everywhere in this country so even if society is still safe, generally speaking, everyone is aware that there's more crime and so it's a big ask to suddenly tell everyone to carry more cash on them even if they understand what's going on and really want to.

[kadams767]

This is interesting. I didn't realize CC fees in the US are so much higher than in other countries. But now it completely makes sense, because other places don't offer these kinds of rewards either. I knew they weren't "free", but I didn't think of how much less costly they could be, either. It's a hard trap. I don't churn or chase rewards, but I do use a rewards card and pay by CC as much as I can just for convenience purposes. I've been notified of so many data breaches in the past, I really don't like to leave much money in the account linked to my debit card because it's much easier to deal with fraudulent charges on a CC than debit. Is going back to cash really the answer here?

[quesyrah]

Mar 6, 2023 13:09:26 GMT -5 Velar Fricative said:

Also, I been leery about carrying too much cash for a long time now, even when crime rates were really low. I have had my wallet stolen (tourist trap, didn't know it happened until dude was long gone with my wallet) so it's hard for me to condition myself to carry more cash even though I really don't want to pay for a $3 cup of coffee with a card anymore for all the reasons mentioned, which is why I agree with the poster that mentioned card companies focusing more on Zelle and stuff.

I bring that up because I am pretty sure robbery rates are up basically everywhere in this country so even if society is still safe, generally speaking, everyone is aware that there's more crime and so it's a big ask to suddenly tell everyone to carry more cash on them even if they understand what's going on and really want to.

I have been wanting to switch to cash for our “fun money” to keep our spending under control but a lot of places around here are still cashless, which started during the pandemic.


How do I find out the disadvantages to using my debit card? If it matters, it’s a MasterCard branded debit from capital one.

[pixy0stix]

Mar 6, 2023 13:08:34 GMT -5 wanderingback said:

Mar 6, 2023 12:00:51 GMT -5 pixy0stix said:

This is something I've been biting my tongue on ever since the credit card churning discussion on ML. Someone is paying for all that "free" stuff, and it sure as shit isn't the cc companies.

I literally had no idea that rewards programs increased the fees for everyone! I thought the cc companies made Money from interest from people who don’t pay off every month.
How do you all learn these tidbits of info?! Lol.
You def should’ve mentioned something in the ML post I started as I would’ve loved to know this. Def will reconsider!

At one point in my life I watched a lot of financial literacy shows, and all things credit card are mentioned pretty frequently in them. 

The problem with mentioning things like this to people is because I'm fairly debbie downer about a lot of shit, and I think people generally tune me out. LOL! I'm not going to convince the people who were die hard "we have spreadsheets!" that what they're doing is bad not only for other people, but for themselves. They've ran the numbers (literally) and don't care. It's real hard to get people to turn away from "free" money. AKA, look at how many people still fall for MLM schemes.

[Velar Fricative]

Mar 6, 2023 13:47:42 GMT -5 pixy0stix said:

Mar 6, 2023 13:08:34 GMT -5 wanderingback said:

I literally had no idea that rewards programs increased the fees for everyone! I thought the cc companies made Money from interest from people who don’t pay off every month.
How do you all learn these tidbits of info?! Lol.
You def should’ve mentioned something in the ML post I started as I would’ve loved to know this. Def will reconsider!

At one point in my life I watched a lot of financial literacy shows, and all things credit card are mentioned pretty frequently in them. 

The problem with mentioning things like this to people is because I'm fairly debbie downer about a lot of shit, and I think people generally tune me out. LOL! I'm not going to convince the people who were die hard "we have spreadsheets!" that what they're doing is bad not only for other people, but for themselves. They've ran the numbers (literally) and don't care. It's real hard to get people to turn away from "free" money. AKA, look at how many people still fall for MLM schemes.

I just went to search and the spreadsheets thing...more power to anyone who can keep track but man, I can't even plan dinner for tonight. Makes me feel like I'm better off just paying for vacations myself because time is money too lol. 

[pixy0stix]

Mar 6, 2023 13:50:32 GMT -5 Velar Fricative said:

Mar 6, 2023 13:47:42 GMT -5 pixy0stix said:

At one point in my life I watched a lot of financial literacy shows, and all things credit card are mentioned pretty frequently in them. 

The problem with mentioning things like this to people is because I'm fairly debbie downer about a lot of shit, and I think people generally tune me out. LOL! I'm not going to convince the people who were die hard "we have spreadsheets!" that what they're doing is bad not only for other people, but for themselves. They've ran the numbers (literally) and don't care. It's real hard to get people to turn away from "free" money. AKA, look at how many people still fall for MLM schemes.

I just went to search and the spreadsheets thing...more power to anyone who can keep track but man, I can't even plan dinner for tonight. Makes me feel like I'm better off just paying for vacations myself because time is money too lol. 

SAME.

But again, it ties into "free stuff isn't free" because if you fall behind, or you don't track, then everything is for naught. Very few people can keep up with all the work that needs to be done to get ahead. I'm going to wager that most of the people that think they're getting a deal are actually being taken advantage of when you factor in all the work and planning that goes into it.

[Jalapeñomel]

I use a cc, but I didn't realize I'd have a fee associated with paying every month for certain transactions. However, it's still cheaper for me to use the cc with the fee than to have to pay out of pocket for the entire vacation.

However, I'm under no false pretenses that I am getting a "free vacation" from my credit card miles; I'm definitely still paying for quite a bit of it. I also realize that I'm incredibly privileged to be able to do this.

[goldengirlz]

For those of you talking about cash, did you see this article?

www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2

There are actually fewer ATMs because the need for cash has decreased.

I find it hard to believe that we’ll ever move back to cash unless we’re talking about Venmo/Zelle. Using Venmo for tips has become popular among hair stylists, I’ve noticed, as one example. But actual, physical cash? I don’t think that’s what the data is showing. If anything, it might be increasingly hard to find businesses that even accept cash.

[fortnightlily]

Feels like a "Congress should regulate predatory companies and industries" problem more than a "deflect the blame to consumers who are taking advantage of resources without being aware of the externalities" issue. As with all things in Capitalism

[pixy0stix]

Mar 6, 2023 14:17:31 GMT -5 fortnightlily said:

Feels like a "Congress should regulate predatory companies and industries" problem more than a "deflect the blame to consumers who are taking advantage of resources without being aware of the externalities" issue. As with all things in Capitalism

I have a lot of issues with this. Your (general) actions have a lot of impact on how our society functions. Global climate change? Directly related to the United States and our over-consumerism and general lifestyle. Child laborers being drafted into US based warehouses - directly related to our inability to accept that our food shelves will be empty because we don't have enough people to handle our consumption anymore. We can blame capitalism, but we are the ones that are keeping capitalism alive and kicking.

[Velar Fricative]

Mar 6, 2023 14:15:52 GMT -5 goldengirlz said:

For those of you talking about cash, did you see this article?

www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2

There are actually fewer ATMs because the need for cash has decreased.

I find it hard to believe that we’ll ever move back to cash unless we’re talking about Venmo/Zelle. Using Venmo for tips has become popular among hair stylists, I’ve noticed, as one example. But actual, physical cash? I don’t think that’s what the data is showing. If anything, it might be increasingly hard to find businesses that even accept cash.

Several states/localities already have a cashless business ban.

www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2021/05/11/paying-with-cash-retailers-must-take-your-dollars-in-these-states

But yeah, that's why I think Venmo/Zelle is the workaround for that. But I am sure plenty of unbanked people don't use those apps either.

[kadams767]

Mar 6, 2023 14:15:52 GMT -5 goldengirlz said:

For those of you talking about cash, did you see this article?

www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2

There are actually fewer ATMs because the need for cash has decreased.

I find it hard to believe that we’ll ever move back to cash unless we’re talking about Venmo/Zelle. Using Venmo for tips has become popular among hair stylists, I’ve noticed, as one example. But actual, physical cash? I don’t think that’s what the data is showing. If anything, it might be increasingly hard to find businesses that even accept cash.

Absolutely have noticed this, it goes hand in hand with a decrease in the number of actual bank branches, IME.  The increased use of online banking/banking apps have caused a lot of branch consolidations and closures, taking with them the ATMs.  I wonder if that has also increased the use of those generic ATMs that are unaffiliated with a bank but charge a ton of fees also, like the ones in convenience stores or bodegas?

[kadams767]

Mar 6, 2023 14:25:04 GMT -5 Velar Fricative said:

Mar 6, 2023 14:15:52 GMT -5 goldengirlz said:

For those of you talking about cash, did you see this article?

www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2

There are actually fewer ATMs because the need for cash has decreased.

I find it hard to believe that we’ll ever move back to cash unless we’re talking about Venmo/Zelle. Using Venmo for tips has become popular among hair stylists, I’ve noticed, as one example. But actual, physical cash? I don’t think that’s what the data is showing. If anything, it might be increasingly hard to find businesses that even accept cash.

Several states/localities already have a cashless business ban.

www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2021/05/11/paying-with-cash-retailers-must-take-your-dollars-in-these-states

But yeah, that's why I think Venmo/Zelle is the workaround for that. But I am sure plenty of unbanked people don't use those apps either.

I think those apps are difficult for a lot of reasons.  Like you said, unbanked people can't/don't use them.  They are also predatory, though.  Zelle offers basically no consumer protection and the onus is on the consumer to not get scammed somewhere.  Venmo is a little better, because at least you can link to your CC for payment and you have options for some sort of protection.  

[konapoppy]

Mar 6, 2023 14:22:53 GMT -5 pixy0stix said:

Mar 6, 2023 14:17:31 GMT -5 fortnightlily said:

Feels like a "Congress should regulate predatory companies and industries" problem more than a "deflect the blame to consumers who are taking advantage of resources without being aware of the externalities" issue. As with all things in Capitalism

I have a lot of issues with this. Your (general) actions have a lot of impact on how our society functions. Global climate change? Directly related to the United States and our over-consumerism and general lifestyle. Child laborers being drafted into US based warehouses - directly related to our inability to accept that our food shelves will be empty because we don't have enough people to handle our consumption anymore. We can blame capitalism, but we are the ones that are keeping capitalism alive and kicking.

I was going to post something similar. This is a both/and situation - government should take action and we as individuals can choose not to support behavior that we deem unethical.

[pixy0stix]

(Full disclosure: I only have cash on hand when I go to a dispensary, and it usually involves a bank trip before I go to withdraw cash.)

[goldengirlz]

Mar 6, 2023 14:25:04 GMT -5 Velar Fricative said:

Mar 6, 2023 14:15:52 GMT -5 goldengirlz said:

For those of you talking about cash, did you see this article?

www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2

There are actually fewer ATMs because the need for cash has decreased.

I find it hard to believe that we’ll ever move back to cash unless we’re talking about Venmo/Zelle. Using Venmo for tips has become popular among hair stylists, I’ve noticed, as one example. But actual, physical cash? I don’t think that’s what the data is showing. If anything, it might be increasingly hard to find businesses that even accept cash.

Several states/localities already have a cashless business ban.

www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2021/05/11/paying-with-cash-retailers-must-take-your-dollars-in-these-states

But yeah, that's why I think Venmo/Zelle is the workaround for that. But I am sure plenty of unbanked people don't use those apps either.

Thanks for sharing this. They even mentioned my city but I must have missed it. I wonder if my local boba shop (which has gone all in on contactless payments) knows about this!

You do need a bank account for Venmo and Zelle as far as I know or at least a credit card. So, yeah, not a solution for people who truly don’t have access to traditional financial institutions.