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> Do the people with free credit cards subsidize them? Depends on the card. Interchange fees are much lower for basic cards so if you get at least 2% cashback,
by NavinF 4y ago
> Do the people with free credit cards subsidize them?
Depends on the card. Interchange fees are much lower for basic cards so if you get at least 2% cashback, that's break-even. Of course cards with annual fees get a lot more rewards in the form of transferable airline points and have much higher interchange fees to cover that.
- iancarroll 4y agoThe interchange fee differences between credit card types are not very high, usually around 0.5%. You can see the public Visa interchange rates at https://usa.visa.com/content/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf https://usa.visa.com/content/dam/VCOM/download/merchants/vis.... Credit card companies play a lot of games with this too and will “upgrade” your card type if they think it’s worth it, even if you don’t make any changes. The biggest variances involve non-exempt (Durbin amendment) debit cards.
- NavinF 4y agoAh I thought the interchange rates would be 1% higher for the best cards, not 0.5% higher I guess the lowest tier cards really do subsidize the rest.