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Same with points systems. Why am I forced to understand your made up currency and status system to get the full value of my money. There might be some benefi

Same with points systems. Why am I forced to understand your made up currency and status system to get the full value of my money. There might be some benefits to price discrimination (which is in effect what a point systems achieves) but the collective time wasted dicking around with points isn’t worth it. Make all point systems illegal.

b112 1y ago
The entire point behind reward cards, is to track every purchase you make. They're the original evil tracking device, so the airline makes money with those points. They do it by selling data, by points expiring, and by often only allowing points when seats would be empty otherwise. And often retailers pay more at POS terminals! This all ties into any rewards program. It's part of the package, even if points are granted for use.
- margalabargala 1y ago
  > And often retailers pay more at POS terminals! This is really the whole point. The sale of data is much less lucrative than the purchases by the customers themselves, especially for the "nicer" cards. If you are a CC company with wealthy clientele, they tend to spend more. This means that retailers are willing to offer deals/rewards to attract those clients, and also that you want to offer rewards to keep those clients. This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more.
  - JumpCrisscross 1y ago
    > high annual card fees to keep the riffraff away It’s more a sunk cost/commitment thing. Their approvals department keeps away low and inconsistent spenders.
  - arcticbull 1y ago
    > This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more. At the high end it actually diminishes. Rewards cards targeting middle of the distribution are more lucrative, generally. Citi Double Cash gets you 2% cash back on purchases whereas the Amex Platinum gets you 1X on all spend worth at most 1.25% (and 5X on airfare).
    - ghaff 1y ago
      For most purposes, a free 2% cash back card is probably optimum. I have another relatively low fee card for various reasons. If I still traveled enough to justify an airline club card (as I used to), I might have that.
      - arcticbull 1y ago
        I would say unless you find playing the miles and points game to be very enjoyable, which I do, you're better off with a cash-back card. For most people the Citi Double Cash at 2% is a great bet, if you have $100K in investments with them, you can get 2.625% back via Bank of America's Unlimited Cash Rewards card.
- devin 1y ago
  Not saying you're wrong exactly, but https://www.bitsaboutmoney.com/archive/anatomy-of-credit-card-rewards-programs/ https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... does a good job of explaining the mechanics of rewards programs. It is more complicated/interesting than what you describe IMO.
- Zak 1y ago
  Evil tracking is half of it, but the nominal "loyalty" benefit is there too. If I have a bunch of points with one company, I'm likely to accept a slightly worse deal from them relative to a competitor where I have none in the hope that I'll acquire enough for an award.
- Retric 1y ago
  Non rewards credit cards also track purchases. It’s a revenue stream few companies are just going to leave sitting around.
kimos 1y ago
They also have the poorest who have cheap credit cards subsidize the richest who have the best cards and receive most of the rewards. The inequality is baked into the system. Which is adjacent to: Nearly everyone loses, because the house knows the odds and controls the terms and conditions of the rewards.
- ghaff 1y ago
  The richest pay for the best cards and presumably buy enough appropriate goods to make the best cards worthwhile.
- JoshTriplett 1y ago
  > They also have the poorest who have cheap credit cards subsidize the richest who have the best cards and receive most of the rewards. This is false. https://x.com/patio11/status/1902555603534295115 https://x.com/patio11/status/1902555603534295115
  - kimos 1y ago
    Right. This isn't about interchange fees. But you're right I wasn't clear. It's the points/rewards/miles systems that are.
    - JoshTriplett 1y ago
      You talked about "the poorest who have cheap credit cards subsidize the richest who have the best cards". The point of the thread I cited is that in general credit cards make money from both poor and rich people alike, and make more money from rich people, and neither one is subsidizing the other in any framing of it. It doesn't matter whether you're talking points, miles, or any other form of rewards; there's no degree to which credit card reward programs have anyone subsidizing anyone else.
  - amrocha 1y ago
    It’s not false. Patrick disagrees with it. The atlantic doesn’t. The general consensus is with the Atlantic, but it’s not a clear cut subject.
ncruces 1y ago
> Why am I forced to understand your made up currency and status system to get the full value of my money. You're not forced. This allows them to make extra money from people who don't bother, and offer discounts to price conscious people. Time is money. Convenience too.
- cassianoleal 1y ago
  I think you missed the last bit of GP's sentence (even though you quoted it literally on your own): > to get the full value of my money. No one is forced to understand the system, but that means leaving some indeterminate amount of money/value in the hands of the predatory airline.
  - ncruces 1y ago
    I didn't. If you wanna save money, you figure it out. If you don't wanna figure it out, you leave money on the table. They're selling (negative) convenience, but that's pretty much by design.
    - yadaeno 1y ago
      Selling negative convenience very succinctly describes the issue. You already have to spend time researching airlines, buying tickets in advance, etc. but now in addition to that there is a completely contrived layer of bullshit I need to know about. You can extend this concept even further and imagine literal series of hoops that you must jump through to earn “cash back” on your ticket at the end of the flight.
- amrocha 1y ago
  They make extra money from fools thinking they can beat the system, not from the people that avoid it. If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket.
  - fn-mote 1y ago
zeroonetwothree 1y ago
To get full value of your money takes time and information in every market. It’s not unique to this space. If you want to buy anything and just pick the first option then you probably will have worse results than someone that did research. Or someone that used coupons. Or someone that waited for a sale. Or someone that bought used. Etc etc We obviously shouldn’t make all those behaviors illegal. There is an inherent time/money trade off in life. It’s actually the whole basis for economic activity (ie it’s why employers are able to pay you to do stuff for them) so stopping it would probably be quite bad.
- AnthonyMouse 1y ago
  In general markets are pretty good at arbitrage. If you can get a $50 discount for a product by doing X, someone is going to set up a service whereby they do X for you, resell the product for a $45 discount and put $5 in their own pocket. At which point nobody would pay full price to the original seller and the convenience fee for not doing it yourself is $5 instead of $50. The problem comes when the original seller doesn't want their price discrimination scheme to be thwarted by efficiency-improving arbitrageurs and takes measures to prevent that, because that's rent-seeking behavior and shouldn't be tolerated.
- schiffern 1y ago
  Being the status quo doesn't change that it's an inefficient waste of resources. That's still true. The airline wastes resources on their end, and so do the consumers. They're both doing what they're incentivized to do, but that's not what's actually efficient for society. The whole point of a good economy is that these two are always pulled into alignment (Efficient Market Hypothesis), but ours has failed in this case. It was fascinating to chat with the software engineers at ITA Software.[0] Turns out flight routing (which everyone knows "should be" just a simple A*) is actually NP-Hard because of how convoluted the airline pricing systems are. At that company it was obviously a group of super smart people solving super hard problems..... and for what? This is Kurt Vonnegut Jr's "Dynamic tension": muscles working against muscles, with no work being done. This is what Bullshit Jobs (good title, disappointing book) should have been written about. To quote Eisenhower, this (lesser) scourge also signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. Maybe an outright ban isn't the best intervention (and maybe it is), but I'm certain denial of the underlying problem will yield us zero progress. [0] https://news.ycombinator.com/item?id=29425650 https://news.ycombinator.com/item?id=29425650 or https://en.wikipedia.org/wiki/ITA_Software https://en.wikipedia.org/wiki/ITA_Software

b112 1y ago

The entire point behind reward cards, is to track every purchase you make. They're the original evil tracking device, so the airline makes money with those points. They do it by selling data, by points expiring, and by often only allowing points when seats would be empty otherwise. And often retailers pay more at POS terminals! This all ties into any rewards program. It's part of the package, even if points are granted for use.

margalabargala 1y ago
> And often retailers pay more at POS terminals! This is really the whole point. The sale of data is much less lucrative than the purchases by the customers themselves, especially for the "nicer" cards. If you are a CC company with wealthy clientele, they tend to spend more. This means that retailers are willing to offer deals/rewards to attract those clients, and also that you want to offer rewards to keep those clients. This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more.
- JumpCrisscross 1y ago
  > high annual card fees to keep the riffraff away It’s more a sunk cost/commitment thing. Their approvals department keeps away low and inconsistent spenders.
- arcticbull 1y ago
  > This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more. At the high end it actually diminishes. Rewards cards targeting middle of the distribution are more lucrative, generally. Citi Double Cash gets you 2% cash back on purchases whereas the Amex Platinum gets you 1X on all spend worth at most 1.25% (and 5X on airfare).
  - ghaff 1y ago
    For most purposes, a free 2% cash back card is probably optimum. I have another relatively low fee card for various reasons. If I still traveled enough to justify an airline club card (as I used to), I might have that.
    - arcticbull 1y ago
      I would say unless you find playing the miles and points game to be very enjoyable, which I do, you're better off with a cash-back card. For most people the Citi Double Cash at 2% is a great bet, if you have $100K in investments with them, you can get 2.625% back via Bank of America's Unlimited Cash Rewards card.
devin 1y ago
Not saying you're wrong exactly, but https://www.bitsaboutmoney.com/archive/anatomy-of-credit-card-rewards-programs/ https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... does a good job of explaining the mechanics of rewards programs. It is more complicated/interesting than what you describe IMO.
Zak 1y ago
Evil tracking is half of it, but the nominal "loyalty" benefit is there too. If I have a bunch of points with one company, I'm likely to accept a slightly worse deal from them relative to a competitor where I have none in the hope that I'll acquire enough for an award.
Retric 1y ago
Non rewards credit cards also track purchases. It’s a revenue stream few companies are just going to leave sitting around.

kimos 1y ago

They also have the poorest who have cheap credit cards subsidize the richest who have the best cards and receive most of the rewards. The inequality is baked into the system. Which is adjacent to: Nearly everyone loses, because the house knows the odds and controls the terms and conditions of the rewards.

ghaff 1y ago
The richest pay for the best cards and presumably buy enough appropriate goods to make the best cards worthwhile.
JoshTriplett 1y ago
> They also have the poorest who have cheap credit cards subsidize the richest who have the best cards and receive most of the rewards. This is false. https://x.com/patio11/status/1902555603534295115 https://x.com/patio11/status/1902555603534295115
- kimos 1y ago
  Right. This isn't about interchange fees. But you're right I wasn't clear. It's the points/rewards/miles systems that are.
  - JoshTriplett 1y ago
    You talked about "the poorest who have cheap credit cards subsidize the richest who have the best cards". The point of the thread I cited is that in general credit cards make money from both poor and rich people alike, and make more money from rich people, and neither one is subsidizing the other in any framing of it. It doesn't matter whether you're talking points, miles, or any other form of rewards; there's no degree to which credit card reward programs have anyone subsidizing anyone else.
- amrocha 1y ago
  It’s not false. Patrick disagrees with it. The atlantic doesn’t. The general consensus is with the Atlantic, but it’s not a clear cut subject.

ncruces 1y ago

> Why am I forced to understand your made up currency and status system to get the full value of my money. You're not forced. This allows them to make extra money from people who don't bother, and offer discounts to price conscious people. Time is money. Convenience too.

cassianoleal 1y ago
I think you missed the last bit of GP's sentence (even though you quoted it literally on your own): > to get the full value of my money. No one is forced to understand the system, but that means leaving some indeterminate amount of money/value in the hands of the predatory airline.
- ncruces 1y ago
  I didn't. If you wanna save money, you figure it out. If you don't wanna figure it out, you leave money on the table. They're selling (negative) convenience, but that's pretty much by design.
  - yadaeno 1y ago
    Selling negative convenience very succinctly describes the issue. You already have to spend time researching airlines, buying tickets in advance, etc. but now in addition to that there is a completely contrived layer of bullshit I need to know about. You can extend this concept even further and imagine literal series of hoops that you must jump through to earn “cash back” on your ticket at the end of the flight.
amrocha 1y ago
They make extra money from fools thinking they can beat the system, not from the people that avoid it. If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket.
- fn-mote 1y ago

zeroonetwothree 1y ago

To get full value of your money takes time and information in every market. It’s not unique to this space. If you want to buy anything and just pick the first option then you probably will have worse results than someone that did research. Or someone that used coupons. Or someone that waited for a sale. Or someone that bought used. Etc etc We obviously shouldn’t make all those behaviors illegal. There is an inherent time/money trade off in life. It’s actually the whole basis for economic activity (ie it’s why employers are able to pay you to do stuff for them) so stopping it would probably be quite bad.

AnthonyMouse 1y ago
In general markets are pretty good at arbitrage. If you can get a $50 discount for a product by doing X, someone is going to set up a service whereby they do X for you, resell the product for a $45 discount and put $5 in their own pocket. At which point nobody would pay full price to the original seller and the convenience fee for not doing it yourself is $5 instead of $50. The problem comes when the original seller doesn't want their price discrimination scheme to be thwarted by efficiency-improving arbitrageurs and takes measures to prevent that, because that's rent-seeking behavior and shouldn't be tolerated.
schiffern 1y ago
Being the status quo doesn't change that it's an inefficient waste of resources. That's still true. The airline wastes resources on their end, and so do the consumers. They're both doing what they're incentivized to do, but that's not what's actually efficient for society. The whole point of a good economy is that these two are always pulled into alignment (Efficient Market Hypothesis), but ours has failed in this case. It was fascinating to chat with the software engineers at ITA Software.[0] Turns out flight routing (which everyone knows "should be" just a simple A*) is actually NP-Hard because of how convoluted the airline pricing systems are. At that company it was obviously a group of super smart people solving super hard problems..... and for what? This is Kurt Vonnegut Jr's "Dynamic tension": muscles working against muscles, with no work being done. This is what Bullshit Jobs (good title, disappointing book) should have been written about. To quote Eisenhower, this (lesser) scourge also signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. Maybe an outright ban isn't the best intervention (and maybe it is), but I'm certain denial of the underlying problem will yield us zero progress. [0] https://news.ycombinator.com/item?id=29425650 https://news.ycombinator.com/item?id=29425650 or https://en.wikipedia.org/wiki/ITA_Software https://en.wikipedia.org/wiki/ITA_Software