5 ms·

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 in

by 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.
  - JoshTriplett 1y ago
    You are interpreting "demonstrates to be false by citing sources and providing evidence" with "disagrees with". The thread I linked to is an instance of the former, not the latter. See the citations and graphs from that thread, showing the data that credit card companies make much more money from wealthy people than they do from poor people, and neither one is subsidizing the other. If you're going to claim "the general consensus", [citation needed]. A more likely claim is "more people have read the misinformation from the Atlantic than have read the correct refutation from a domain expert on credit cards", which is sadly probably true.
    - amrocha 1y ago
      I don’t know why you’d trust the guy that works for a credit card processor telling you that credit cards are fair, actually. And Twitter doesn’t show threads unless you’re logged in btw, so you just linked Patrick’s opinion.
      - JoshTriplett 1y ago
        This is not an argument from authority (though I would in fact give some credence to a domain expert with a demonstrated reputation for diligence and accuracy, here). This is an argument backed by evidence refuting an article not supported by evidence. (Also, the argument is not "credit cards are fair". The argument is "credit card reward programs are not a subsidy of the rich by the poor".) > And Twitter doesn’t show threads unless you’re logged in btw, so you just linked Patrick’s opinion. Fair point, thank you. Some highlights of the thread, assuming that each directly linked tweet can be loaded: Citation for people with more money spending more: https://x.com/patio11/status/1902556736956903589 https://x.com/patio11/status/1902556736956903589 (linking to https://www.bls.gov/cex/tables.htm https://www.bls.gov/cex/tables.htm ). The rich are paying far more of the "payment system overhead" of merchants than the poor are: https://x.com/patio11/status/1902556925826416841 https://x.com/patio11/status/1902556925826416841 and https://x.com/patio11/status/1902557078222176449 https://x.com/patio11/status/1902557078222176449 and https://x.com/patio11/status/1902557151807119735 https://x.com/patio11/status/1902557151807119735 and https://x.com/patio11/status/1902557413275775295 https://x.com/patio11/status/1902557413275775295 Identifying the key question: https://x.com/patio11/status/1902557654603415768 https://x.com/patio11/status/1902557654603415768 and https://x.com/patio11/status/1902557795800498477 https://x.com/patio11/status/1902557795800498477 Quoting and questioning the Atlantic's claim that rewards programs aren't funded by interchange: https://x.com/patio11/status/1902558008283992313 https://x.com/patio11/status/1902558008283992313 and https://x.com/patio11/status/1902558055310434325 https://x.com/patio11/status/1902558055310434325 Citation refuting this: https://x.com/patio11/status/1902558157169152158 https://x.com/patio11/status/1902558157169152158 Quoting relevant charts and data from the citation: https://x.com/patio11/status/1902558268070711311 https://x.com/patio11/status/1902558268070711311 and https://x.com/patio11/status/1902558360530002094 https://x.com/patio11/status/1902558360530002094 Claim (not specifically citation-backed) that in fact one group getting a subsidy is lower-income consumers during macroeconomic shocks: https://x.com/patio11/status/1902559088631771397 https://x.com/patio11/status/1902559088631771397 and https://x.com/patio11/status/1902559166729802088 https://x.com/patio11/status/1902559166729802088 Observation that while wealthier people get higher-reward cards supported by interchange, poorer people get free checking supported by interchange: https://x.com/patio11/status/1902559216214134798 https://x.com/patio11/status/1902559216214134798 and https://x.com/patio11/status/1902559349655982387 https://x.com/patio11/status/1902559349655982387 and https://x.com/patio11/status/1902559372758155325 https://x.com/patio11/status/1902559372758155325 and https://x.com/patio11/status/1902559469470412913 https://x.com/patio11/status/1902559469470412913 Refutation of another part of the Atlantic article (article claims credit-card companies "make lucrative deals with airlines and hotel chains", but credit card companies pay for those deals, not the other way around): https://x.com/patio11/status/1902559896400203987 https://x.com/patio11/status/1902559896400203987 and https://x.com/patio11/status/1902560051644002726 https://x.com/patio11/status/1902560051644002726 and https://x.com/patio11/status/1902560160632963217 https://x.com/patio11/status/1902560160632963217 and https://x.com/patio11/status/1902560257282335024 https://x.com/patio11/status/1902560257282335024 and https://x.com/patio11/status/1902560386395545603 https://x.com/patio11/status/1902560386395545603 .
- gruez 1y ago
  I don't find the thread convincing. The "standard" argument is that grocery stores bake in a 2% (or whatever) interchange rate into their prices, but only rich people get 1% (or whatever) back in cash back, whereas poor people don't. As a result, poor people are paying 1% higher prices on goods compared to rich people. Patrick doesn't really dispute this, but tries to argue that this doesn't matter because rich people pay more in absolute terms, so they're not getting "subsidized". Maybe this is just word lawyering over what "subsidize" means, but most people would characterize this arrangement as at least "unfair", even though rich people are paying more in absolute terms. He also points to some graphs about how from the point of the view of card issuers, the middle customers are actually the ones being subsidized, not the rich or the poor. That might be true, but is totally unrelated to the original original point, which is about what effective price (ie. price paid - cashback) consumers are getting at shops. Moreover, the fact that they're getting a subsidy from the card issuer doesn't preclude from them getting a subsidy from the store itself.
  - JoshTriplett 1y ago
    > The "standard" argument is that grocery stores bake in a 2% (or whatever) interchange rate into their prices, but only rich people get 1% (or whatever) back in cash back, whereas poor people don't. As a result, poor people are paying 1% higher prices on goods compared to rich people. And the thread counters that in several ways: rich people spend more in total at the store so their interchange costs are more than made up for by actual spending; and poor people are getting different rewards in exchange for the interchange system, such as free checking/banking (which was made free by using interchange fees to subsidize it so there aren't monthly fees). To be clear, I'm not suggesting that the financial system overall is particularly fair. If you want cases where it's extremely unfair, a target-rich environment would be bank accounts that have fees that just so happen to disproportionately affect poorer people (e.g. overdraft fees). But credit card reward programs aren't a case of transferring money from poor individual cardholders to rich individual cardholders; credit cards are a case of transferring money from poor and "rich" cardholders to ultra-rich credit card companies. The right target for the ire, there, is the credit card company, not the "rich" individual cardholders. This is a standard divide-and-conquer tactic: better to pit low-income and high-income people against each other, rather than cast attentions on the very large companies that have constructed a system to profit heavily from both of them.

by kimos 1y ago

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.
- JoshTriplett 1y ago
  You are interpreting "demonstrates to be false by citing sources and providing evidence" with "disagrees with". The thread I linked to is an instance of the former, not the latter. See the citations and graphs from that thread, showing the data that credit card companies make much more money from wealthy people than they do from poor people, and neither one is subsidizing the other. If you're going to claim "the general consensus", [citation needed]. A more likely claim is "more people have read the misinformation from the Atlantic than have read the correct refutation from a domain expert on credit cards", which is sadly probably true.
  - amrocha 1y ago
    I don’t know why you’d trust the guy that works for a credit card processor telling you that credit cards are fair, actually. And Twitter doesn’t show threads unless you’re logged in btw, so you just linked Patrick’s opinion.
    - JoshTriplett 1y ago
      This is not an argument from authority (though I would in fact give some credence to a domain expert with a demonstrated reputation for diligence and accuracy, here). This is an argument backed by evidence refuting an article not supported by evidence. (Also, the argument is not "credit cards are fair". The argument is "credit card reward programs are not a subsidy of the rich by the poor".) > And Twitter doesn’t show threads unless you’re logged in btw, so you just linked Patrick’s opinion. Fair point, thank you. Some highlights of the thread, assuming that each directly linked tweet can be loaded: Citation for people with more money spending more: https://x.com/patio11/status/1902556736956903589 https://x.com/patio11/status/1902556736956903589 (linking to https://www.bls.gov/cex/tables.htm https://www.bls.gov/cex/tables.htm ). The rich are paying far more of the "payment system overhead" of merchants than the poor are: https://x.com/patio11/status/1902556925826416841 https://x.com/patio11/status/1902556925826416841 and https://x.com/patio11/status/1902557078222176449 https://x.com/patio11/status/1902557078222176449 and https://x.com/patio11/status/1902557151807119735 https://x.com/patio11/status/1902557151807119735 and https://x.com/patio11/status/1902557413275775295 https://x.com/patio11/status/1902557413275775295 Identifying the key question: https://x.com/patio11/status/1902557654603415768 https://x.com/patio11/status/1902557654603415768 and https://x.com/patio11/status/1902557795800498477 https://x.com/patio11/status/1902557795800498477 Quoting and questioning the Atlantic's claim that rewards programs aren't funded by interchange: https://x.com/patio11/status/1902558008283992313 https://x.com/patio11/status/1902558008283992313 and https://x.com/patio11/status/1902558055310434325 https://x.com/patio11/status/1902558055310434325 Citation refuting this: https://x.com/patio11/status/1902558157169152158 https://x.com/patio11/status/1902558157169152158 Quoting relevant charts and data from the citation: https://x.com/patio11/status/1902558268070711311 https://x.com/patio11/status/1902558268070711311 and https://x.com/patio11/status/1902558360530002094 https://x.com/patio11/status/1902558360530002094 Claim (not specifically citation-backed) that in fact one group getting a subsidy is lower-income consumers during macroeconomic shocks: https://x.com/patio11/status/1902559088631771397 https://x.com/patio11/status/1902559088631771397 and https://x.com/patio11/status/1902559166729802088 https://x.com/patio11/status/1902559166729802088 Observation that while wealthier people get higher-reward cards supported by interchange, poorer people get free checking supported by interchange: https://x.com/patio11/status/1902559216214134798 https://x.com/patio11/status/1902559216214134798 and https://x.com/patio11/status/1902559349655982387 https://x.com/patio11/status/1902559349655982387 and https://x.com/patio11/status/1902559372758155325 https://x.com/patio11/status/1902559372758155325 and https://x.com/patio11/status/1902559469470412913 https://x.com/patio11/status/1902559469470412913 Refutation of another part of the Atlantic article (article claims credit-card companies "make lucrative deals with airlines and hotel chains", but credit card companies pay for those deals, not the other way around): https://x.com/patio11/status/1902559896400203987 https://x.com/patio11/status/1902559896400203987 and https://x.com/patio11/status/1902560051644002726 https://x.com/patio11/status/1902560051644002726 and https://x.com/patio11/status/1902560160632963217 https://x.com/patio11/status/1902560160632963217 and https://x.com/patio11/status/1902560257282335024 https://x.com/patio11/status/1902560257282335024 and https://x.com/patio11/status/1902560386395545603 https://x.com/patio11/status/1902560386395545603 .
gruez 1y ago
I don't find the thread convincing. The "standard" argument is that grocery stores bake in a 2% (or whatever) interchange rate into their prices, but only rich people get 1% (or whatever) back in cash back, whereas poor people don't. As a result, poor people are paying 1% higher prices on goods compared to rich people. Patrick doesn't really dispute this, but tries to argue that this doesn't matter because rich people pay more in absolute terms, so they're not getting "subsidized". Maybe this is just word lawyering over what "subsidize" means, but most people would characterize this arrangement as at least "unfair", even though rich people are paying more in absolute terms. He also points to some graphs about how from the point of the view of card issuers, the middle customers are actually the ones being subsidized, not the rich or the poor. That might be true, but is totally unrelated to the original original point, which is about what effective price (ie. price paid - cashback) consumers are getting at shops. Moreover, the fact that they're getting a subsidy from the card issuer doesn't preclude from them getting a subsidy from the store itself.
- JoshTriplett 1y ago
  > The "standard" argument is that grocery stores bake in a 2% (or whatever) interchange rate into their prices, but only rich people get 1% (or whatever) back in cash back, whereas poor people don't. As a result, poor people are paying 1% higher prices on goods compared to rich people. And the thread counters that in several ways: rich people spend more in total at the store so their interchange costs are more than made up for by actual spending; and poor people are getting different rewards in exchange for the interchange system, such as free checking/banking (which was made free by using interchange fees to subsidize it so there aren't monthly fees). To be clear, I'm not suggesting that the financial system overall is particularly fair. If you want cases where it's extremely unfair, a target-rich environment would be bank accounts that have fees that just so happen to disproportionately affect poorer people (e.g. overdraft fees). But credit card reward programs aren't a case of transferring money from poor individual cardholders to rich individual cardholders; credit cards are a case of transferring money from poor and "rich" cardholders to ultra-rich credit card companies. The right target for the ire, there, is the credit card company, not the "rich" individual cardholders. This is a standard divide-and-conquer tactic: better to pit low-income and high-income people against each other, rather than cast attentions on the very large companies that have constructed a system to profit heavily from both of them.