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I've always felt ambiguous about such card features because ultimately the way those features work is by exploiting vendors via interchange and other membership

I've always felt ambiguous about such card features because ultimately the way those features work is by exploiting vendors via interchange and other membership/hardware/transaction fees. Vendors, in turn, have to stay in business so they pass the cost onto the consumer. In the short term with small populations using these types cards, it wasn't a problem. As more and more people use these features, more and more pressure is put on vendors. The Durbin Amendment capped interchange for debit transactions, but only for banks with relatively large asset pools. Smaller banks can and do charge more, as do other types of cards. Credit cards have much broader license (although arguably, they at least have a reason to charge for using the card; they're taking a risk). So the money you are getting is not free. We are all paying for it via the increased cost of doing business. Honestly, I'd rather my bank and card transactions had 0 interest and minimal cost to the vendor to keep overall costs down. Bluntly, every time I swipe I sort of resent indirectly paying the vendor to help pay for everyone else's benefits.

daeken 14y ago
Agreed, but it's hard to argue against the "you're already paying for it; why aren't you benefiting?" line of thought. That's what finally tipped me over to using rewards cards where I can.
- KirinDave 14y ago
  Allow me to provide an argument: The current degree of overhead is representative of a relatively small fraction of the world's consumers using these features. Were everyone to do it, the cost (and the perfectly reasonably maintained profit margins of every intermediate) would increase costs substantially more than it is now. It's easy to take a classic first-world view of the problem, where a relative minority of the world's consumers have much better access to credit (albeit somewhat abusive in terms) than the rest of the world. As countries like India and the African nations modernize, their populations have already shown incredible demand for electronic currency. The current system is entirely too expensive for them.

daeken 14y ago

Agreed, but it's hard to argue against the "you're already paying for it; why aren't you benefiting?" line of thought. That's what finally tipped me over to using rewards cards where I can.

KirinDave 14y ago
Allow me to provide an argument: The current degree of overhead is representative of a relatively small fraction of the world's consumers using these features. Were everyone to do it, the cost (and the perfectly reasonably maintained profit margins of every intermediate) would increase costs substantially more than it is now. It's easy to take a classic first-world view of the problem, where a relative minority of the world's consumers have much better access to credit (albeit somewhat abusive in terms) than the rest of the world. As countries like India and the African nations modernize, their populations have already shown incredible demand for electronic currency. The current system is entirely too expensive for them.