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The article and none of the comments mention rewards yet, which are the biggest reason to use cards! Credit card processors charge large fees on transactions,

The article and none of the comments mention rewards yet, which are the biggest reason to use cards! Credit card processors charge large fees on transactions, which is a huge tax on just about... everything. You can make a lot of that tax back via rewards. And not every card user has a good rewards-paying card - it's usually the more rich that do - so rewards function as a wealth transfer from the less rich to the more rich. Very few stores have lower prices for cash, and processors try to ban that via their contracts when they can. If you pay with cash you pay the higher price to cover the credit card fees anyway, so you're just subsidizing the rewards earners. Might as well recoup some of that yourself.

aleph_minus_one 1y ago
> The article and none of the comments mention rewards yet, which are the biggest reason to use cards! In my observation being that much incentivized by the reward system seems to be a very US-American thing. In Germany, I have never heard anybody seriously talking about that they love the reward system of their credit card. I would claim that at most some (but I think rather few) people in Germany consider some very specific reward that their credit card has as a slight convenience - but nothing more.
- seabass-labrax 1y ago
  This point - that EMV cards have the effect of siphoning money out of many countries to the USA in payment processing fees - is one of the primary motivations behind the development of Wero[1]. For those that haven't come across it yet, it's a new payments system based on 'instant' SEPA wire transfers. It is starting to gain ground now, particularly in Germany and the Benelux. I'm not aware of any smartcard-based implementations yet, though - currently it functions more like WeChat typically does, where you need to authorize the transaction on a smartphone. [1]: https://wero-wallet.eu/ https://wero-wallet.eu/
  - IAmBroom 1y ago
    > This point - that EMV cards have the effect of siphoning money out of many countries to the USA in payment processing fees... Money isn't sent to the USA. It is sent to the banks that own your particular credit card. Many of these are certainly in the USA, but your statement makes it sound somehow patriotic/anti-USA to avoid using credit cards.
    - seabass-labrax 1y ago
      There is a component that is directly paid to the card schemes such as MasterCard and VISA. See this page from Barclays[1], for example: > Interchange: the fee we pay to the card issuer, i.e. your customers’ banks > Scheme fee: the fees we pay to the schemes, i.e. Visa or Mastercard > Visa Consumer Debit > Interchange fees 0.1% to 0.2% or 0.02€ > Scheme fees 0.0082€ + 0.11% to 0.312% Obviously all the large payment card schemes have investors and subsidiary legal entities all around the world, and not all of the card schemes are from the USA. However I think it's fairly clear that at least 1/1000th of total card transactions everywhere in the world ends up flowing into the USA eventually, and that's without accounting for licensing and accreditation fees for the technology underpinning the system, also mainly from the USA. I'm not surprised that European politicians would like to get hold of that money for domestic purposes by promoting Wero, and no doubt if political/propaganda gains can be made by presenting this as patriotic, at least some will try. [1]: https://www.barclaycard.co.uk/content/dam/barclaycard/documents/business/help-and-support/interchange-rates-and-scheme-fee-guide.pdf https://www.barclaycard.co.uk/content/dam/barclaycard/docume...
- devilbunny 1y ago
  Credit card financial protections for Americans are one of the most strongly pro-customer sets of laws we have in the US. The rewards are a nice way to get some of your money back, but you really can’t be cleaned out by fraud on actual credit cards (not debit cards using the MC/Visa logo and payment system). “That is an unauthorized charge, please cancel the card” is perfectly acceptable. In theory you are on the hook for the first $50, but in practice almost no bank holds you to that. The consumer essentially can’t be accused of not exercising due caution unless you have ignored at least one bill with fraudulent charges. This is real value, so once you’ve bought into the system, getting the rewards is a major incentive to choose one card over another.
  - wilkystyle 1y ago
    Yep. I exclusively pay via credit card for this reason alone. (I have my autopay set to pay down the entire balance each month) Rewards are nice, but not the primary reason I use a credit card.
  - IAmBroom 1y ago
    And to further this point: PayPal tries to position itself as "another flavor" of credit, but has none of these protections. In fact, PayPal binds you to their in-house mediation of fraud claims. I was required to ship $60 worth of merchandise back to the fraudster in China to receive a refund, but the cheapest shipping available to me was $50.
- JustExAWS 1y ago
  That’s because most countries cap merchant fees so credit card companies can’t offer as lucrative awards
  - IAmBroom 1y ago
    Credit card companies aren't aching to give more money to customers, but unfortunately can't because of mean old countries.
    - JustExAWS 1y ago
      A credit card company is not going to loose money on each transaction.
lisbbb 1y ago
Most rewards systems have brutally diluted their points, same as airline "miles."
dlcarrier 1y ago
Most of the places I buy from charge an extra 3% for credit card transactions, so rewards cards are just giving your money back, but worse.
- zippergz 1y ago
  Curious what part of the world this is in. I can recall a grand total of three places I've seen in my area do this. It's a tiny minority here.
  - bfg_9k 1y ago
    Pretty much anywhere in Australia that isn't a big chain
    - dlcarrier 1y ago
      I've heard electronic direct payments (like PayPal) are much more common in Australia than the US. Do they charge similar fees to credit card transactions?
      - bfg_9k 1y ago
        Yes and no. I've never heard of someone trying to use PayPal to pay someone else, however we do have PayID which is linked to your phone number (I hate it, since you can plug anyone's number into the PayID system and see who owns it). This is free and instant, however you don't really pay businesses with this. Paying businesses you can use EFTPOS which I believe is run by the central bank and has very low fees on debit cards, or the usual credit card networks/Apple Pay/gpay.
  - dlcarrier 1y ago
    A less urban but not rural part of California. I do tend to shop at low-margin places like WinCo Foods. There's also an auction house I buy big ticket items from. Both charge credit card fees. I've never seen a gas station anywhere in the US not charge extra for credit cards, and most also charge extra for debit cards. The DMV also charges a fee. I don't know if Grocery Outlet charges a fee, but I do shop there too. Also, pretty much every recurring charge I have, e.g. from T-Mobile, Comcast, and my water supplier and mortgage processor all charge credit card fees, if I use a card instead of ACH transfers.
jaza 1y ago
Various studies have shown that, for the investment needed to "maximise your rewards" (ie time needed to research the different cards on the market / read the fine print of your chosen product / put through payments on a high rewards card; money on signup fees, recurring fees, transaction fees, etc), you'll achieve a much better ROI just investing the equivalent time and money into an index fund.
- mercutio2 1y ago
  Can you point to these studies? Anyone who gives a 3% discount for cash will get cash from me, but I already have all my money in index funds. The effort to maximize points is “use this credit card, get the cash back”. It’s really not that much effort, for rich people with excellent credit. It is of course a hugely regressive system, but that wasn’t the argument you made.
  - JustExAWS 1y ago
    If you have a 2x points card and not cash back, you can still come out ahead with using a credit card over 3% cash back.
  - jaza 1y ago
    Alright alright, maybe not "various studies", but I read this article a few months ago: https://www.aureusfinancial.com.au/blog/title-are-credit-card-rewards-points-really-worth-it-a-comprehensive-analysis/ https://www.aureusfinancial.com.au/blog/title-are-credit-car...
- arealaccount 1y ago
  Got a link or two?
- moduspol 1y ago
  Perhaps, although there are multiple “2% on everything uncapped” that are pretty easy to get with no annual fee. Set up automatic payments and you’re golden. Still wouldn’t recommend them for anyone who’s not particularly good with money, but 2% back for almost no effort is a pretty good trade-off. Keeping track of rotating quarterly bonuses? Yeah—-then it’s worth thinking about ROI of your time.
al_borland 1y ago
Remember that the credit card companies wouldn’t offer points if they weren’t profitable. People tend to spend more on a credit card than they do with cash, and it’s not enough to make up with points. I’m generally a pretty responsible credit user. I pay the whole bill each month and never paid a dime in interest. But I’d be lying if I said I never justified a slightly larger purchase that I would have otherwise made by calculating the “discount” from the points. Doing this just one time on a modestly large purchase can effectively negate all the points you might earn in a given year. I found even moving to a debit card helped in two ways. One, the point game goes away. But I think more importantly, when spending on a debit card you see the balance go down, so there is an instant and clear impact of the expense. With a credit card the number goes up, and you have to invert it and do the math in your head to feel the expense in the moment, which most people don’t do. And when people look at their bank balance at it hasn’t moved, they think they still have that money to spend. It’s subtle, you might not realize it, but those are the games they play. I’ve probably saved more money from simply spending less, than I would make in points. I do keep one credit card around that I use for my recurring online payments. These are set it and forget it, so the psychology plays less of a role, as far as I can tell. And I review all the stuff on that recurring list on a regular basis to keep it lean. I have to spend $5k to make $100 in points. Who cares? It’s a lot easier to trim $200 or even $500 out of $5k in terms of spending, if I’m really looking to maximize my savings. Not to mention, the points aren’t cash in your pocket, they are an excuse to spend even more. Let’s say I have points to get a free flight. Great, now I’m also spending money out of pocket on a hotel, meals, entertainment, etc. That “free” $600 plane ticket actually costs $5k in other expenses, but it’s ok, because we’re earning $100 more in points for spending that $5k. It’s a trap. It’s subtle, it might feel like a win, but they’re coming at you from several different angles. It’s not just about the people paying interest on their balance. They make about as much on the interchange fees from high volume users as they do from those interest payments. Those points are also a trick to get you to swipe more to boost their interchange fee profits.
- cindyllm 1y ago
  [dead]
- JustExAWS 1y ago

aleph_minus_one 1y ago

> The article and none of the comments mention rewards yet, which are the biggest reason to use cards! In my observation being that much incentivized by the reward system seems to be a very US-American thing. In Germany, I have never heard anybody seriously talking about that they love the reward system of their credit card. I would claim that at most some (but I think rather few) people in Germany consider some very specific reward that their credit card has as a slight convenience - but nothing more.

seabass-labrax 1y ago
This point - that EMV cards have the effect of siphoning money out of many countries to the USA in payment processing fees - is one of the primary motivations behind the development of Wero[1]. For those that haven't come across it yet, it's a new payments system based on 'instant' SEPA wire transfers. It is starting to gain ground now, particularly in Germany and the Benelux. I'm not aware of any smartcard-based implementations yet, though - currently it functions more like WeChat typically does, where you need to authorize the transaction on a smartphone. [1]: https://wero-wallet.eu/ https://wero-wallet.eu/
- IAmBroom 1y ago
  > This point - that EMV cards have the effect of siphoning money out of many countries to the USA in payment processing fees... Money isn't sent to the USA. It is sent to the banks that own your particular credit card. Many of these are certainly in the USA, but your statement makes it sound somehow patriotic/anti-USA to avoid using credit cards.
  - seabass-labrax 1y ago
    There is a component that is directly paid to the card schemes such as MasterCard and VISA. See this page from Barclays[1], for example: > Interchange: the fee we pay to the card issuer, i.e. your customers’ banks > Scheme fee: the fees we pay to the schemes, i.e. Visa or Mastercard > Visa Consumer Debit > Interchange fees 0.1% to 0.2% or 0.02€ > Scheme fees 0.0082€ + 0.11% to 0.312% Obviously all the large payment card schemes have investors and subsidiary legal entities all around the world, and not all of the card schemes are from the USA. However I think it's fairly clear that at least 1/1000th of total card transactions everywhere in the world ends up flowing into the USA eventually, and that's without accounting for licensing and accreditation fees for the technology underpinning the system, also mainly from the USA. I'm not surprised that European politicians would like to get hold of that money for domestic purposes by promoting Wero, and no doubt if political/propaganda gains can be made by presenting this as patriotic, at least some will try. [1]: https://www.barclaycard.co.uk/content/dam/barclaycard/documents/business/help-and-support/interchange-rates-and-scheme-fee-guide.pdf https://www.barclaycard.co.uk/content/dam/barclaycard/docume...
devilbunny 1y ago
Credit card financial protections for Americans are one of the most strongly pro-customer sets of laws we have in the US. The rewards are a nice way to get some of your money back, but you really can’t be cleaned out by fraud on actual credit cards (not debit cards using the MC/Visa logo and payment system). “That is an unauthorized charge, please cancel the card” is perfectly acceptable. In theory you are on the hook for the first $50, but in practice almost no bank holds you to that. The consumer essentially can’t be accused of not exercising due caution unless you have ignored at least one bill with fraudulent charges. This is real value, so once you’ve bought into the system, getting the rewards is a major incentive to choose one card over another.
- wilkystyle 1y ago
  Yep. I exclusively pay via credit card for this reason alone. (I have my autopay set to pay down the entire balance each month) Rewards are nice, but not the primary reason I use a credit card.
- IAmBroom 1y ago
  And to further this point: PayPal tries to position itself as "another flavor" of credit, but has none of these protections. In fact, PayPal binds you to their in-house mediation of fraud claims. I was required to ship $60 worth of merchandise back to the fraudster in China to receive a refund, but the cheapest shipping available to me was $50.
JustExAWS 1y ago
That’s because most countries cap merchant fees so credit card companies can’t offer as lucrative awards
- IAmBroom 1y ago
  Credit card companies aren't aching to give more money to customers, but unfortunately can't because of mean old countries.
  - JustExAWS 1y ago
    A credit card company is not going to loose money on each transaction.

lisbbb 1y ago

Most rewards systems have brutally diluted their points, same as airline "miles."

dlcarrier 1y ago

Most of the places I buy from charge an extra 3% for credit card transactions, so rewards cards are just giving your money back, but worse.

zippergz 1y ago
Curious what part of the world this is in. I can recall a grand total of three places I've seen in my area do this. It's a tiny minority here.
- bfg_9k 1y ago
  Pretty much anywhere in Australia that isn't a big chain
  - dlcarrier 1y ago
    I've heard electronic direct payments (like PayPal) are much more common in Australia than the US. Do they charge similar fees to credit card transactions?
    - bfg_9k 1y ago
      Yes and no. I've never heard of someone trying to use PayPal to pay someone else, however we do have PayID which is linked to your phone number (I hate it, since you can plug anyone's number into the PayID system and see who owns it). This is free and instant, however you don't really pay businesses with this. Paying businesses you can use EFTPOS which I believe is run by the central bank and has very low fees on debit cards, or the usual credit card networks/Apple Pay/gpay.
- dlcarrier 1y ago
  A less urban but not rural part of California. I do tend to shop at low-margin places like WinCo Foods. There's also an auction house I buy big ticket items from. Both charge credit card fees. I've never seen a gas station anywhere in the US not charge extra for credit cards, and most also charge extra for debit cards. The DMV also charges a fee. I don't know if Grocery Outlet charges a fee, but I do shop there too. Also, pretty much every recurring charge I have, e.g. from T-Mobile, Comcast, and my water supplier and mortgage processor all charge credit card fees, if I use a card instead of ACH transfers.

jaza 1y ago

Various studies have shown that, for the investment needed to "maximise your rewards" (ie time needed to research the different cards on the market / read the fine print of your chosen product / put through payments on a high rewards card; money on signup fees, recurring fees, transaction fees, etc), you'll achieve a much better ROI just investing the equivalent time and money into an index fund.

mercutio2 1y ago
Can you point to these studies? Anyone who gives a 3% discount for cash will get cash from me, but I already have all my money in index funds. The effort to maximize points is “use this credit card, get the cash back”. It’s really not that much effort, for rich people with excellent credit. It is of course a hugely regressive system, but that wasn’t the argument you made.
- JustExAWS 1y ago
  If you have a 2x points card and not cash back, you can still come out ahead with using a credit card over 3% cash back.
- jaza 1y ago
  Alright alright, maybe not "various studies", but I read this article a few months ago: https://www.aureusfinancial.com.au/blog/title-are-credit-card-rewards-points-really-worth-it-a-comprehensive-analysis/ https://www.aureusfinancial.com.au/blog/title-are-credit-car...
arealaccount 1y ago
Got a link or two?
moduspol 1y ago
Perhaps, although there are multiple “2% on everything uncapped” that are pretty easy to get with no annual fee. Set up automatic payments and you’re golden. Still wouldn’t recommend them for anyone who’s not particularly good with money, but 2% back for almost no effort is a pretty good trade-off. Keeping track of rotating quarterly bonuses? Yeah—-then it’s worth thinking about ROI of your time.

al_borland 1y ago

Remember that the credit card companies wouldn’t offer points if they weren’t profitable. People tend to spend more on a credit card than they do with cash, and it’s not enough to make up with points. I’m generally a pretty responsible credit user. I pay the whole bill each month and never paid a dime in interest. But I’d be lying if I said I never justified a slightly larger purchase that I would have otherwise made by calculating the “discount” from the points. Doing this just one time on a modestly large purchase can effectively negate all the points you might earn in a given year. I found even moving to a debit card helped in two ways. One, the point game goes away. But I think more importantly, when spending on a debit card you see the balance go down, so there is an instant and clear impact of the expense. With a credit card the number goes up, and you have to invert it and do the math in your head to feel the expense in the moment, which most people don’t do. And when people look at their bank balance at it hasn’t moved, they think they still have that money to spend. It’s subtle, you might not realize it, but those are the games they play. I’ve probably saved more money from simply spending less, than I would make in points. I do keep one credit card around that I use for my recurring online payments. These are set it and forget it, so the psychology plays less of a role, as far as I can tell. And I review all the stuff on that recurring list on a regular basis to keep it lean. I have to spend $5k to make $100 in points. Who cares? It’s a lot easier to trim $200 or even $500 out of $5k in terms of spending, if I’m really looking to maximize my savings. Not to mention, the points aren’t cash in your pocket, they are an excuse to spend even more. Let’s say I have points to get a free flight. Great, now I’m also spending money out of pocket on a hotel, meals, entertainment, etc. That “free” $600 plane ticket actually costs $5k in other expenses, but it’s ok, because we’re earning $100 more in points for spending that $5k. It’s a trap. It’s subtle, it might feel like a win, but they’re coming at you from several different angles. It’s not just about the people paying interest on their balance. They make about as much on the interchange fees from high volume users as they do from those interest payments. Those points are also a trick to get you to swipe more to boost their interchange fee profits.

cindyllm 1y ago
[dead]
JustExAWS 1y ago