4 ms·

I don't even think of myself as using debt. I see credit cards as a way to get an extra $50-70 a month in rewards[1] and increase my credit score. I have never

by gtk40 11y ago

I don't even think of myself as using debt. I see credit cards as a way to get an extra $50-70 a month in rewards[1] and increase my credit score. I have never paid a cent of interest. [1] I have a card that gives me 5% cashback in gas, groceries, and books up to a limit that does not often surpass what I spend and some rotating 5% cash back cards, in addition to a 2% general spend. I do not pay any annual fees for using the cards.

zrail 11y ago
Interesting. What card is this?
- gtk40 11y ago
  Several different cards. Sallie Mae Rewards MC from MC (sadly discontinued recently for new signups), Discover It, Chase Freedom, and Double Cash from Citi.
- maxsilver 11y ago
  American Express has a card "Blue Cash Preferred". You get 6% back on Groceries (up to $6k/yr), 3% back on gas, and the card has a $75 annual fee. If you only use the card to spend $100/week on Groceries, you get $312 in cashback rewards. Subtract the $75/yr fee, and Amex paid you $237 to use their card that year. (Amex isn't the only card like this -- there's lots from MasterCard and Visa as well. This card in particular just happens to be one of the rewards cards that I know the details of.)
  - infinite8s 11y ago
    I don't understand these reward schemes. Surely they are being funded by higher merchant fees, which means merchants charge more, which just means that the rewards are a transfer scheme between people who pay by cash/unrewarded cards and those with rewards cards.
    - maxsilver 11y ago
      There's a lot of truth to that (cash paying customers pay the same, even though the cost to serve them is less). But unrewarded cards aren't really any different. Most merchants still have to pay the same high fee for them. Since the bank/processor is going to take the maximum amount of money they can regardless, and most merchants will have to pay that full fee regardless, you might as well use a rewards card over an unrewarded one.
      - aspratley 11y ago
        Handling cash isn't free for a merchant. It has to be stored, counted, transported, banked, insured and it's easily stolen. Even though the fees aren't the same cash still has a fee.
      - Symbiote 11y ago
        (In the UK) American Express cards offer the best rewards, but the cost to the merchant is much greater. Many shops or restaurants don't accept AmEx, and sometimes those that do will say they prefer you to use an alternative card. But within one network, I think it's correct that the cost is the same regardless of the card's promotion.
    - dagw 11y ago
      They're mostly being funded by the people who don't pay off their balance in full every month. Accidentally miss one or two payments and all of a sudden all your 'profits' from using the card have been wiped out.
    - dragonwriter 11y ago
      I think you are neglecting the fact that, even if some people don't carry a balance, most credit card users do, and the rewards scheme acts as an incentive (perhaps not a rational one, but people demonstrably don't behave rationally) to additional use of the card, all other things being equal. So, credit card issuers probably make up the additional costs of rewards cards in interest and fees from those cardholders, on average, even though perfectly disciplined use provides a net win to the cardholder.
    - 11y ago
  - jedmeyers 11y ago
    You can also get Amazon gift cards at grocery stores that provide gas points. For example, at Safeway $500 Amazon gift card purchase will give you $30 AMEX cashback + $25 discount on gas if you dont mind bringing a couple of gas cans with you to the station.

by gtk40 11y ago

zrail 11y ago

Interesting. What card is this?

gtk40 11y ago
Several different cards. Sallie Mae Rewards MC from MC (sadly discontinued recently for new signups), Discover It, Chase Freedom, and Double Cash from Citi.
maxsilver 11y ago
American Express has a card "Blue Cash Preferred". You get 6% back on Groceries (up to $6k/yr), 3% back on gas, and the card has a $75 annual fee. If you only use the card to spend $100/week on Groceries, you get $312 in cashback rewards. Subtract the $75/yr fee, and Amex paid you $237 to use their card that year. (Amex isn't the only card like this -- there's lots from MasterCard and Visa as well. This card in particular just happens to be one of the rewards cards that I know the details of.)
- infinite8s 11y ago
  I don't understand these reward schemes. Surely they are being funded by higher merchant fees, which means merchants charge more, which just means that the rewards are a transfer scheme between people who pay by cash/unrewarded cards and those with rewards cards.
  - maxsilver 11y ago
    There's a lot of truth to that (cash paying customers pay the same, even though the cost to serve them is less). But unrewarded cards aren't really any different. Most merchants still have to pay the same high fee for them. Since the bank/processor is going to take the maximum amount of money they can regardless, and most merchants will have to pay that full fee regardless, you might as well use a rewards card over an unrewarded one.
    - aspratley 11y ago
      Handling cash isn't free for a merchant. It has to be stored, counted, transported, banked, insured and it's easily stolen. Even though the fees aren't the same cash still has a fee.
    - Symbiote 11y ago
      (In the UK) American Express cards offer the best rewards, but the cost to the merchant is much greater. Many shops or restaurants don't accept AmEx, and sometimes those that do will say they prefer you to use an alternative card. But within one network, I think it's correct that the cost is the same regardless of the card's promotion.
  - dagw 11y ago
    They're mostly being funded by the people who don't pay off their balance in full every month. Accidentally miss one or two payments and all of a sudden all your 'profits' from using the card have been wiped out.
  - dragonwriter 11y ago
    I think you are neglecting the fact that, even if some people don't carry a balance, most credit card users do, and the rewards scheme acts as an incentive (perhaps not a rational one, but people demonstrably don't behave rationally) to additional use of the card, all other things being equal. So, credit card issuers probably make up the additional costs of rewards cards in interest and fees from those cardholders, on average, even though perfectly disciplined use provides a net win to the cardholder.
  - 11y ago
- jedmeyers 11y ago
  You can also get Amazon gift cards at grocery stores that provide gas points. For example, at Safeway $500 Amazon gift card purchase will give you $30 AMEX cashback + $25 discount on gas if you dont mind bringing a couple of gas cans with you to the station.