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> We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing

> We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities. This is why I stay away from credit cards that offer rewards. Did you really think that big corporations give you pennies out of the goodness of their hearts? They might be people (according to Citizens United), but they have no heart.

abdullahkhalids 4y ago
The reforms needed everywhere in the world: 1. Fees related to mode of transaction (credit, debit, cash) are separate from price of product. 2. Cash-backs need to be banned altogether to prevent this pseudo-regressive tax.
- toomuchtodo 4y ago
  FedNow instant payments go live this year. This will allow bifurcation: if you need immediate settlement for commerce, you’ll be able to get it for a few cents per transaction. If you want to charge the customer who wants credit card float, you can pass along a credit card surcharge and let them pay for the feature. This should shrink this vacuum of value from those of less means to those with the means to efficiently use rewards cards. Due to US politics and the financial services lobby, it’s unlikely we’ll see interchange caps like Europe enacted, killing most rewards programs, so you’ll have to rely on merchant economics to drive the change.
Kirby64 4y ago
Using a credit card that doesn't offer rewards doesn't mean the corporation offering it is any less greedy... it just means they aren't cutting you in on the greed. If anything, using a credit card that doesn't offer rewards is even worse for redistribution... since it's redistributing credit card fees straight into the pocket of the big corporations. At least if you use a rewards CC properly, a portion of it is given back to you.
barnbuilder 4y ago
I don't feel bad about extensively using these rewards cards. If you are a net recipient in this distribution, your participation doesn't directly correlate with any higher participation by any of the victim groups. We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards. However I do withhold recommending these cards to others because they only make sense for people who don't carry debt or spend recklessly, and I usually cannot be certain that others meet those criteria.
- klyrs 4y ago
  > We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards. No, you aren't making it more costly for the bank. Banks would be stupid to offer such a setup. The banks pass that cost on to the merchants, who have no choice in the matter.
  - anamexis 4y ago
    The percentage that the bank charges merchants is fixed (for e.g. all Visa credit cards.) If you have a non-rewards Visa credit card, the bank just pockets the entire processing fee. With a rewards credit card, you get some of that fee back.
    - Kirby64 4y ago
      That's actually not quite true. Depending on the Visa card 'tier' (non-branded, Signature, or Infinite), there are fees that go up. If you have an 'Infinite' card, you're costing a merchant more than if you have a regular unbranded Visa. The difference is really small, like 0.2-0.3% between base and top tier, I think, but there is a difference.
    - dahinds 4y ago
      This is not true, interchange fees depend on the credit card type and rewards offered. https://merchantcostconsulting.com/lower-credit-card-processing-fees/the-complete-guide-to-interchange-fees-and-rates/ https://merchantcostconsulting.com/lower-credit-card-process...
scarface74 4y ago
By you staying away from reward cards doesn’t reduce your costs.
wing-_-nuts 4y ago
I don't have a moral problem with using a rewards card. If past me could avoid credit card debt while scraping by below the poverty line on disability, with nothing but a high school education, I believe everyone could with the proper discipline. It's basically a transfer from spendthrifts to savers.
deleted 4y ago
[deleted]
jjav 4y ago
> This is why I stay away from credit cards that offer rewards. Why punish yourself like that? I understand taking a moral stance even if makes your life harder, I do that with various things. But I guess I don't see it on this one since the vendor doesn't even know if you get any reward back when you hand them a credit card, so it doesn't show your posture in any way. All you're doing is gifting extra money to the credit card companies.
lxgr 4y ago
While understandable, game-theoretically, this approach seems like a non-starter for effecting change in the status quo.

abdullahkhalids 4y ago

The reforms needed everywhere in the world: 1. Fees related to mode of transaction (credit, debit, cash) are separate from price of product. 2. Cash-backs need to be banned altogether to prevent this pseudo-regressive tax.

toomuchtodo 4y ago
FedNow instant payments go live this year. This will allow bifurcation: if you need immediate settlement for commerce, you’ll be able to get it for a few cents per transaction. If you want to charge the customer who wants credit card float, you can pass along a credit card surcharge and let them pay for the feature. This should shrink this vacuum of value from those of less means to those with the means to efficiently use rewards cards. Due to US politics and the financial services lobby, it’s unlikely we’ll see interchange caps like Europe enacted, killing most rewards programs, so you’ll have to rely on merchant economics to drive the change.

Kirby64 4y ago

Using a credit card that doesn't offer rewards doesn't mean the corporation offering it is any less greedy... it just means they aren't cutting you in on the greed. If anything, using a credit card that doesn't offer rewards is even worse for redistribution... since it's redistributing credit card fees straight into the pocket of the big corporations. At least if you use a rewards CC properly, a portion of it is given back to you.

barnbuilder 4y ago

I don't feel bad about extensively using these rewards cards. If you are a net recipient in this distribution, your participation doesn't directly correlate with any higher participation by any of the victim groups. We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards. However I do withhold recommending these cards to others because they only make sense for people who don't carry debt or spend recklessly, and I usually cannot be certain that others meet those criteria.

klyrs 4y ago
> We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards. No, you aren't making it more costly for the bank. Banks would be stupid to offer such a setup. The banks pass that cost on to the merchants, who have no choice in the matter.
- anamexis 4y ago
  The percentage that the bank charges merchants is fixed (for e.g. all Visa credit cards.) If you have a non-rewards Visa credit card, the bank just pockets the entire processing fee. With a rewards credit card, you get some of that fee back.
  - Kirby64 4y ago
    That's actually not quite true. Depending on the Visa card 'tier' (non-branded, Signature, or Infinite), there are fees that go up. If you have an 'Infinite' card, you're costing a merchant more than if you have a regular unbranded Visa. The difference is really small, like 0.2-0.3% between base and top tier, I think, but there is a difference.
  - dahinds 4y ago
    This is not true, interchange fees depend on the credit card type and rewards offered. https://merchantcostconsulting.com/lower-credit-card-processing-fees/the-complete-guide-to-interchange-fees-and-rates/ https://merchantcostconsulting.com/lower-credit-card-process...

scarface74 4y ago

By you staying away from reward cards doesn’t reduce your costs.

wing-_-nuts 4y ago

I don't have a moral problem with using a rewards card. If past me could avoid credit card debt while scraping by below the poverty line on disability, with nothing but a high school education, I believe everyone could with the proper discipline. It's basically a transfer from spendthrifts to savers.

deleted 4y ago

[deleted]

jjav 4y ago

> This is why I stay away from credit cards that offer rewards. Why punish yourself like that? I understand taking a moral stance even if makes your life harder, I do that with various things. But I guess I don't see it on this one since the vendor doesn't even know if you get any reward back when you hand them a credit card, so it doesn't show your posture in any way. All you're doing is gifting extra money to the credit card companies.

lxgr 4y ago

While understandable, game-theoretically, this approach seems like a non-starter for effecting change in the status quo.