4 ms·

This is also why rewards credit cards in Europe are much less common, yes? I feel like most "mid to high end" US cards are in the 1-3% range (or up to 5% in rot

This is also why rewards credit cards in Europe are much less common, yes? I feel like most "mid to high end" US cards are in the 1-3% range (or up to 5% in rotating categories), which are effectively funded by the merchant fees--so having a cap on them means no (or much lower) fees. Curious how US folks would react to a 90% reduction in the CC rewards, even if it meant a more efficient system.

snuxoll 6y ago
I think you overestimate how much an impact merchant fees have on rewards programs. Rewards programs are marketing, they exist to make people feel like they are getting something "back" on their purchases only to lose all of it the moment they are charged interest on their balance. Yes, there are people who pay in full every month and reap the rewards of the program - but don't kid yourself for a second thinking that's the majority of cardholders.
- asciimike 6y ago
  For sure. I never carry a balance on my CC because it's quite possibly the dumbest form of debt to have, I forget that that entire revenue stream exists. As a sibling comment here mentions, rewards programs are effectively the rich getting richer and the poor getting screwed :/
PaulDavisThe1st 6y ago
I benefit substantially from rewards cards. But I view them as just one more way for the rich to get (a little bit) richer. If they all just went away, I believe it would be a better world (or at least, a better USA). I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd.
- ac29 6y ago
  > I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd. For one, it requires a $120/yr Prime membership to get that rate - the non-prime rate is 3% (which is seen on many cards). I have an Amex with an annual fee that gives 6% back at all grocery stores (including Whole Foods), though I also wonder how that can be profitable for them. The break even point where you earn more on the 6% card after the annual fee compared to the no-annual fee 3% card is only a little over $3000/yr (~$60/week), which isnt much even for someone single.
- rjmunro 6y ago
  Whole foods is part of Amazon. They can afford to offer the discount because it's their own sales. Internally, Chase probably charge Whole Foods for the cashback.
mschuster91 6y ago
> Curious how US folks would react to a 90% reduction in the CC rewards, even if it meant a more efficient system. Probably the same they would feel when a national ID card scheme or a single-payer healthcare system like in literally all other Western countries would be introduced. For a society that takes pride in unrestricted capitalism to eliminate inefficiencies there seems to be a widespread acceptance of utter waste in these areas.
rjmunro 6y ago
I presume its why rewards cards are much less common, yes. There are some cards that earn "points" at much lower levels. There are also e.g. a Sainsbury's card that earns points in Sainsbury's and a Tesco card that earns points in Tesco. The Sainsbury's card earns "1 point for every £5 spent elsewhere", 1 point is 0.5p, so that's worth 0.1%, and can only be spent at Sainsbury's or certain other vendors.

snuxoll 6y ago

I think you overestimate how much an impact merchant fees have on rewards programs. Rewards programs are marketing, they exist to make people feel like they are getting something "back" on their purchases only to lose all of it the moment they are charged interest on their balance. Yes, there are people who pay in full every month and reap the rewards of the program - but don't kid yourself for a second thinking that's the majority of cardholders.

asciimike 6y ago
For sure. I never carry a balance on my CC because it's quite possibly the dumbest form of debt to have, I forget that that entire revenue stream exists. As a sibling comment here mentions, rewards programs are effectively the rich getting richer and the poor getting screwed :/

PaulDavisThe1st 6y ago

I benefit substantially from rewards cards. But I view them as just one more way for the rich to get (a little bit) richer. If they all just went away, I believe it would be a better world (or at least, a better USA). I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd.

ac29 6y ago
> I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd. For one, it requires a $120/yr Prime membership to get that rate - the non-prime rate is 3% (which is seen on many cards). I have an Amex with an annual fee that gives 6% back at all grocery stores (including Whole Foods), though I also wonder how that can be profitable for them. The break even point where you earn more on the 6% card after the annual fee compared to the no-annual fee 3% card is only a little over $3000/yr (~$60/week), which isnt much even for someone single.
rjmunro 6y ago
Whole foods is part of Amazon. They can afford to offer the discount because it's their own sales. Internally, Chase probably charge Whole Foods for the cashback.

mschuster91 6y ago

> Curious how US folks would react to a 90% reduction in the CC rewards, even if it meant a more efficient system. Probably the same they would feel when a national ID card scheme or a single-payer healthcare system like in literally all other Western countries would be introduced. For a society that takes pride in unrestricted capitalism to eliminate inefficiencies there seems to be a widespread acceptance of utter waste in these areas.

rjmunro 6y ago

I presume its why rewards cards are much less common, yes. There are some cards that earn "points" at much lower levels. There are also e.g. a Sainsbury's card that earns points in Sainsbury's and a Tesco card that earns points in Tesco. The Sainsbury's card earns "1 point for every £5 spent elsewhere", 1 point is 0.5p, so that's worth 0.1%, and can only be spent at Sainsbury's or certain other vendors.