3 ms·

I always thought the free flights, etc. was like the casino comp'ing you free drinks.

• briansteffens 10y ago
  Can't put a price on a free drink!
• wyager 10y ago
  The way it works is that credit cards charge merchants ~3% per transaction. They don't allow merchants to charge proportionately more for CC transactions over cash transactions. Since it's business suicide not to take cards, everyone just charges a few percent more across the board. So basically everyone without a good card is getting fucked over, but if your card has a rewards program you can at least get some of that 3% back.
  • infinite8s 10y ago
    Exactly. Basically everybody without a cash back card is subsidizing cash back for those who do (ultimately in terms of higher prices).
  • cmurf 10y ago
    The way it REALLY works is that the merchant charge % varies per card. The higher paying cards have higher merchant fees. What this does is incentivize the card holder to get a card with even better payouts, which results in even higher merchant fees. Card holders with high perks are freeloading off those who use cards with fewer perks, or none like cash or debit card users. It's a huge externality. If it were the law that merchants had to make the card holder pay their own fees, this whole perverted system would go away. The only way it works the way it does is because EMV contractually requires merchants to obfuscate the true cost from the consumer.
  • deleted 10y ago
    [deleted]