6 ms·
With cash back and points incentives, withholding the non trivial value of the insurance of which you speak, the only rational reason to not use a credit card i
by fnordpiglet 3y ago
With cash back and points incentives, withholding the non trivial value of the insurance of which you speak, the only rational reason to not use a credit card is bad credit. Now, for the merchant….
- ksherlock 3y agoI've encountered a couple businesses that charge an extra service fee for credit card payments but not debit card payments.
- bombcar 3y agoThis is becoming more common now that the government broke the credit cartel - especially for larger ticket items like auto repairs.
- lotsofpulp 3y agoThat happened in 2010. https://en.wikipedia.org/wiki/Durbin_amendment https://en.wikipedia.org/wiki/Durbin_amendment
- MakeThemMoney 3y agoAs they should. They credit card cartel should have never been allowed to make users of other, cheaper payment methods subsidize their benefits.
- fumeux_fume 3y agoI'll finish your sentence for you. The merchant just raises prices so you can pretend like your points are saving you money.
- nicolas_t 3y agoPoints are a way for people who buy with cash, debit cards and cards with lower fees to subsidise the travels of people who use points.
- ensignavenger 3y agoThere is nothing stopping stores from offering a discount if you pay in cash or debit. Businesses most often choose not to, so they must feel like they are getting somthing out of the deal.
- vineyardmike 3y agoHumorously, there are laws against credit card surcharges but not against cash discounts. Realistically, the price difference is probably not worth the hassle of needing two prices and card sales are probably affordable enough and common enough to not bother. https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pdf https://www.ca5.uscourts.gov/opinions/pub/15/15-50168-CV0.pd...
- kelnos 3y agoStrange, I've seen quite a few merchants that do the card surcharge thing, and no one seems to complain.
- rrrrrrrrrrrryan 3y agoThe Supreme Court settled it in 2017 actually - surcharges are fine now: https://archive.is/eYB5W https://archive.is/eYB5W They basically said a surcharge for credit is effectively the same thing as a discount for cash, and because of freedom of speech, merchants are free to communicate the difference to their customers either way.
- sidewndr46 3y agoBut is a payment processor required to process charges from a vendor stating they have a surcharge?
- oohffyvfg 3y agoonly took them a few decades
- astrange 3y agoMerchants don't automatically pass through all costs any more than they'd pass through all savings if all their customers moved to debit cards. It depends who has the pricing power.
- AnthonyMouse 3y agoNot really, because the "tax" applies to competitors as well. In an uncompetitive industry the merchant has pricing power and can just raise the price, true. But in a competitive industry, margins are thin and they have to raise the price or they go out of business, and so do their competitors, which is what allows them to.
- fnordpiglet 3y agoThere’s a lot more than fees that pass back to merchants FWIW. Fraud etc does too. That insurance is generally borne by the merchant.
- kelnos 3y agoWhich means if you want to "pay less", you have to play the credit cards rewards game to its fullest. We don't get to set the prices, merchants do. Some merchants offer cash discounts (or a credit card surcharge), and you can make use of that if you want to. Ultimately I use cards for the convenience, regardless.
- arcticbull 3y agoJust get a Citi Double Cash 2% no annual fee cash back card. Nothing to play.
- alanbernstein 3y ago... Until the terms for that card change
- jgalt212 3y agomore than some. pretty much every small biz in my town does so (around 3%). not to self: carry more cash. My B2B business charges a 3% surcharge for credit cards over ACH or checks.
- jjav 3y ago> The merchant just raises prices so you can pretend like your points are saving you money. No, you are saving money, because while the merchant raises the price to account for it, everyone gets the higher price regardless how you pay. At least with a card you can get some of it back. (With rare exceptions, some vendors do give a cash discount. In which case I always pay cash.)
- actionfromafar 3y agoSo, in other words, fraud insurance is a socialized cost paid by all consumers. Where's the incentive to minimize fraud though...
- hazmazlaz 3y agoThe networks have a massive incentive to minimize fraud. That's not to say that they are wildly successful or anything, but I do know from first hand professional experience that card networks spend a lot of time, money, and research into detecting and preventing fraud.
- vundercind 3y ago- Payment networks drop accounts with a too-high fraud rate. - They and similar businesses (e.g. Stripe) offer automated tools to deal with fraud… for a price. Outcome: the incentive to minimize fraud, which is often a result of crap security from the payment network, is on merchants, who also get charged extra protection money to get payment networks to do stuff they ought to be doing in the first place.
- vikingerik 3y agoUltimately, that incentive is the legal system, which can legislate against allowing fraud and forcefully impose penalties for it. (And operating it is a socialized cost, such that your first sentence is still correct.)
- foolswisdom 3y agoYes, because the merchants raise prices because people pay with credit cards (which take fees), you take back a little (though of course not all) of extra markup via points, assuming you use a 2% cashback card (at least) on your purchase (which assuredly many people don't).
- pengaru 3y ago> the only rational reason to not use a credit card is bad credit. I find it pretty damn rational to deliberately remove CONSUME MOAR incentives like points/miles/cash-back rewards from my life.
- astrange 3y agoA cash back reward is a reward for not behaving badly enough that your account gets closed (or the bank shuts down). If you want to get rid of all ability to consume things, you could stop working so you don't get paid. Actually, I think points are more like a savings account than a consumption reward, since the best deals are on international flights you have to save up a lot of points for…
- kelnos 3y agoI guess if you want to pay 100% for everything, rather than 98.5% (when there's no discounted cash option), you do you.
- supertrope 3y agoCredit card network operators brag that accepting their network means customers will spend more. If spend increases even 1.6%, you are on net spending more. CC acceptance decreases "friction." Some part of it is unlinking paying with the feeling of depleting resources when you pull cash out of your purse or wallet. Maybe running low on $20 bills and having to go to an ATM makes you decide to put one item back on the shelf. Or one's bank account is nearing bottom. In younger generations the opposite ironically can happen. They feel digital numbers fully but cash is spent more freely.
- wpietri 3y agoYeah, same. As a matter of policy, I don't take incentives, commissions, kickbacks, etc, for anything. My dad was super into points-related financial games, so I get it, but I don't need to give the professional manipulators of the world any more headspace than they already have.
- fragmede 3y ago
- sidewndr46 3y agoNot really, I've tried numerous times after negotiating the sale price of a vehicle to pay for it on a credit card. They won't do it. What they will do is allow a fraction of the payment to be made on a credit card and the rest via a wire transfer
- dboreham 3y agoStrange how people don't like giving money to valueless intermediaries.
- supertrope 3y agoCar dealers or payment network owners?