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Are these cashbacks truly gifted to you though, or is the price of another product or service from the provider simply adjusted to compensate? Like Black Friday

Are these cashbacks truly gifted to you though, or is the price of another product or service from the provider simply adjusted to compensate? Like Black Friday discounts, where product prices are raised so that the "discount" only drives sales volume, rather than offer a truly marked-down/discounted price to the consumer.

mdorazio 6y ago
It’s even worse. A significant portion of cash back/rewards are financed from fees and interest payments charged to other credit card holders. So in effect, you’re getting money from poorer and/or less responsible people who carry balances and use their cards to get cash advances.
- jjoonathan 6y ago
  What? No. Cash back is a cut of the fees the CC company charges to the merchant.
  - toomuchtodo 6y ago
    Where do you think those fees come from? You! Rebates are your own money you have to optimize to get back, and those who are less well off are usually the ones who are disproportionally impacted by the aggregate costs of reward cards (because they're paying with cash, debit cards, or other mechanisms where they don't receive a rebate). Rewards for payments and unregulated interchange fees need to die. They are a financial transaction tax on everyone.
    - jjoonathan 6y ago
      Yes, exactly. "Your reward points come from interest charged to poor people" is both gross (in that some people are placated by it) and incorrect.
  - disgruntledphd2 6y ago
    Which are paid for by increasing prices for cash buyers. It's just another regressive tax on poor Americans, sadly.
  - paulryanrogers 6y ago
    Merchants pass these fees on as higher prices. No such thing as a free lunch. (Rewards cards similarly offer insignificant benefits or are paid for by increases elsewhere.)
  - mdorazio 6y ago
    No, they are partially a cut of the fees the CC company charges. Show me proof that they're 100% from fees and I'll believe you. Otherwise a quick google search shows that you're not correct here.
ozi 6y ago
Aside from the cost of the cards themselves, the rewards are free so long as you don't carry a balance. If you pay your balance off each month, these cards are great. I enjoy thousands/year in benefits after fees.
wil421 6y ago
6% back on groceries with a $6,000 cap for the Amex, $95 fee, cap met in July, gas is 3% back. Chase visa has 5% back on groceries with a 12k cap, no fee. Bank of America visa has 3% back online orders, no fee. Delta Amex with 100,000+ miles is used for automated bills, $95 fee. Pre-covid I made back the $95 fee by saving on checked bags etc. Will be cancelled in January due to covid.
- jdeibele 6y ago
  I have United-branded Visa. I was going to cancel it but the rep said that I could pay the annual fee of $95 with miles. I have it to avoid paying bag fees. Haven't traveled with United for more than a year. I guess I'll keep it until the miles run out. I don't know if you can do the same with your Delta Amex but FYI.

mdorazio 6y ago

It’s even worse. A significant portion of cash back/rewards are financed from fees and interest payments charged to other credit card holders. So in effect, you’re getting money from poorer and/or less responsible people who carry balances and use their cards to get cash advances.

jjoonathan 6y ago
What? No. Cash back is a cut of the fees the CC company charges to the merchant.
- toomuchtodo 6y ago
  Where do you think those fees come from? You! Rebates are your own money you have to optimize to get back, and those who are less well off are usually the ones who are disproportionally impacted by the aggregate costs of reward cards (because they're paying with cash, debit cards, or other mechanisms where they don't receive a rebate). Rewards for payments and unregulated interchange fees need to die. They are a financial transaction tax on everyone.
  - jjoonathan 6y ago
    Yes, exactly. "Your reward points come from interest charged to poor people" is both gross (in that some people are placated by it) and incorrect.
- disgruntledphd2 6y ago
  Which are paid for by increasing prices for cash buyers. It's just another regressive tax on poor Americans, sadly.
- paulryanrogers 6y ago
  Merchants pass these fees on as higher prices. No such thing as a free lunch. (Rewards cards similarly offer insignificant benefits or are paid for by increases elsewhere.)
- mdorazio 6y ago
  No, they are partially a cut of the fees the CC company charges. Show me proof that they're 100% from fees and I'll believe you. Otherwise a quick google search shows that you're not correct here.

ozi 6y ago

Aside from the cost of the cards themselves, the rewards are free so long as you don't carry a balance. If you pay your balance off each month, these cards are great. I enjoy thousands/year in benefits after fees.

wil421 6y ago

6% back on groceries with a $6,000 cap for the Amex, $95 fee, cap met in July, gas is 3% back. Chase visa has 5% back on groceries with a 12k cap, no fee. Bank of America visa has 3% back online orders, no fee. Delta Amex with 100,000+ miles is used for automated bills, $95 fee. Pre-covid I made back the $95 fee by saving on checked bags etc. Will be cancelled in January due to covid.

jdeibele 6y ago
I have United-branded Visa. I was going to cancel it but the rep said that I could pay the annual fee of $95 with miles. I have it to avoid paying bag fees. Haven't traveled with United for more than a year. I guess I'll keep it until the miles run out. I don't know if you can do the same with your Delta Amex but FYI.