Re:U.S. credit card debt jumps 18.5% and hits a record $930.6B
by jlmorton on Friday February 03, 2023 @01:48PM
(#34645994)
Exactly. The interest covers the cost of capital, delinquencies, administration, but it's the merchant fees that are paying the rewards.
Before Dodd-Frank and the regulation of debit card interchange fees, many debit cards were also offering lucrative rewards, despite there being no interest at all. With debit cards now limited to $0.20 + 0.05%, those debit rewards cards are gone.
Re:U.S. credit card debt jumps 18.5% and hits a record $930.6B
by david422 on Friday February 03, 2023 @02:03PM
(#34646255)
Right, and then they in turn need to charge higher prices to make up this loss. Cashback is a scam.
Re:U.S. credit card debt jumps 18.5% and hits a record $930.6B
by Anderkent on Friday February 03, 2023 @05:17PM
(#34648549)
but since they charge the same prices to holders of credit (2% fee) and debit (0.05% fee), users of credit cards are de facto subsidized by cash/debit payers in the US
so as an individual it still may pay you to have one
Re:U.S. credit card debt jumps 18.5% and hits a record $930.6B
by david422 on Saturday February 04, 2023 @04:35PM
(#34658588)
> users of credit cards are de facto subsidized by cash/debit payers in the US
Yes, sadly. So you have to play the game in order not to lose, and playing the game means that the credit cards take their cut, which means everyone loses except the credit cards.
My impression is that the cash back (& similar rewards) are mostly paid for by the merchants - who do not get (say) $100.00 when you pay them $100.00 with your credit card.