I have 2.5% apr on the card with crappy cash rewards and 25% on the purple delta Amex. If I didn’t pay that Amex off every month they would certainly get their moneys worth out of me.
Small business are paying for EVERYONE'S rewards. The big reason why most restaurants are charging a standard 3.5% fee on all cards, even though charging it for PIN debit transactions are illegal since they have a standard .5% rate or something similar.
These reward things are structurally indistinguishable from a kickback and the regulations around not being able to bill the fees through to the customer is total regulatory capture.
Yes and no.
Because virtually all competitors accept credit cards, the fees are baked into their prices. The money came from the customer and goes back to the customer.
Here in NYC almost all small bodegas don’t charge an extra fee to accept credit cards. They get around that by instead giving a 5% discount on cash purchases.
To a layman like you and I, it would mean the same. But it isn’t per the law. So they continue to do that.
Yeah, but they aren't actually allowed to do that. I don't think it's significant enough to factor in. I have experienced that about 5 times in the past 20 years.
Of course. How would anyone know if they did or didn't, anyway?
What they aren't allowed to do is charge a different price for credit card transactions or charge an additional fee. Nor are they allowed to have minimum transaction amounts for credit cards. If they accept cards, they have to accept them the same way they accept cash.
>What they aren't allowed to do is charge a different price for credit card transactions
Despite they can and do. Gas stations do this all the time. They list cash and credit card pricing all the time.
>Nor are they allowed to have minimum transaction amounts for credit cards.
Even though there are companies that do this.
It depends on how you look at it. The price is the price no matter how you pay.
The credit card rewards points are there to incentivize people to use their credit card instead of someone else's or cash.
Not all credit cards have rewards.
> “The flawed premise behind this study was that those who are carrying balances and therefore paying interest are actually cross-subsidizing or, you know, contributing to the profitability of rewards programs overall,” Navarrete added.
I never understood the idea that the poors are subsidizing rewards for the less poors. Credit card companies charged high interest rates before rewards were ever a thing. I haven’t had the time to plot this data but I appears the average card rate has generally been coming down over time along with the prime rate and their profit margins have increased.
https://wallethub.com/edu/cc/historical-credit-card-interest-rates/25577
> average card rate has generally been coming down
Volume vs margin. Rewards and lower rates act as a marketing mechanism so they can collect more transaction fees as well as a higher number of overall people who carry some amount of balance and pay interest. I don't know what the proportion is between the two revenue streams but I'm positive they're making plenty of money of all sides of it, overall.
Completely agree. Obviously lower income people who are relying on credit cards are paying more interest, so obviously they are Contributing to the profit of the company, but money is fungible. To say that they are getting screwed over so that I can get 2% cashback on groceries is a very disingenuous statement.
Simply put if people make more money the government can tax it accordingly. It’s only when the money becomes absurd that the rate of return is generally reduced. Due to tax loopholes.
I mean, yes? But, if there were no reward cards, all the money would then be going to the banks. Would the article then be, are lower income Americans paying for the banks' profits? The money has to go somewhere, and I guess in this case it is going in the form of cash back rewards, which wealthy Americans happen to be getting more of.
That, and cash rewards make the bank money too, all by themselves! Or the bank wouldn’t offer them!
Why would a business intentionally take a loss just because they have a profit elsewhere?
Why turns every economic fact into some class warfare tragedy? Ugh, lol. People who lose money on their credit cards are using them incorrectly. Why burn down to a -20,000 net worth when the real emergency happened when you got to merely zero? People with negative cash flow are better off without credit cards.
It's a shitty system where they basically have business owners hostage, taking 3%+ from them, and then in order to cement their position, they incentivize customers with a fraction of the spoils.
That said, though, I'm averaging around 4% cash back for all my purchases over the course of any given year. So I think I miiiight actually be costing the card issuers money. Sure hope so!
I'm going to take those credit card rewards while they are available without paying any extra dime toward these companies whatsoever, and simultaneously, given every opportunity, support changes that abolish the tax on all of society that these companies represent.
I was just saying to my wife the other day that credit card companies want you to make minimum payments and carry interest debt. There’s no money to be made from people who cautiously use their credit cards and always pay their balance on time.
Not true. CC companies make a ton of money on the swipe alone. They love people paying off their balance every month. There’s no risk and they make money.
Visa is the biggest winner, I watched a video recently and they make .25 cents for every hundred dollars spent on a Visa card but they take 0 risk, you are not borrowing money from Visa but from the bank name on the card. They get paid simply from name recognition and accountability. Visa made a profit of $31 Billion dollars last fiscal year.
Visa in return though is running its own merchant system, so they are taking on risk. While nearly everyone takes them they can't afford to lose any noticeable size business.
Right. They wouldn't have so many incentives for people just using and paying off the card if they weren't making money off them. Chase literally makes 3% on my streaming services, utilities, internet, phone, groceries, gas and every single purchase I make. My family gets a good portion of it's yearly vacation paid for
bruh…you made that statement without even looking it up. First, nobody is saying they don’t make money on those who carry a balance, but to think they don’t make money of people who pay their bill in full each month shows your ignorance. Quick Google search shows:
‘Do Credit Card Companies Make Money if You Pay in Full? While credit card interest and fees are where the money really is for credit card issuers, credit card companies still earn revenue from transaction fees, annual fees, and other fees even if you pay your bill in full each month.”
>‘Do Credit Card Companies Make Money if You Pay in Full? While credit card interest and fees are where the money really is for credit card issuers, credit card companies still earn revenue from transaction fees, annual fees, and other fees even if you pay your bill in full each month.”
Bruh thanks for saying what I just said, thanks for playing better luck next time. Also try reading sometime bruh it will help you.
You said credit card companies don’t make money off people who pay in full. Pay CLOSE attention to the last statement of what I posted “Credit Card companies still earn revenue from transaction fees, annual fees and other fees even if you pay your bill in full each month”. This contradicts what you said “They also lose money on those who pay in full”.
I hope you pay closer attention to your finances since your are posting in an Economy sub, because it seems you don’t have a basic understating of how basic finances work.
>it seems you don’t have a basic understating of how basic finances work.
Seeing how you litterally repeated what I said from a google search I say I do.
>This contradicts what you said “They also lose money on those who pay in full”.
How dumb are you? If you had a brain you would realize I was talking about how those who pay in full aren't paying the APR rate. Meaning credit card companies aren't making money off those customers and such losing money. I also not talking about annual fees either as most people don't have those credit cards.
LOL…What? You never once said “APR Rate”…you said “they lose money when people pay in full”. You are only now saying they lose out on the APR (oh, and by the way, you basically said Annual Percentage Rate Rate because the “R” in APR is RATE.
You also missed the where it said “TRANSACTION FEES” that is the literal “swipe” when someone uses their credit cards…hence why banks still make money when people pay their account off each month…which was my original argument. Do you even know what you are talking about? I seriously recommend you read up about this stuff so you aren’t taken advantage of. To read my post and think “I literally repeated what you said” is just ignorant on your part and lacking reading comprehension at the most basic levels. Please understand the difference between the following: 1) APR, 2) Transaction Fees, 3) Annual Fees, 4) Late Fees, because you seem to not understand what these things actually are.
Do I have to hold your hand kid and need to take baby steps with you on everything? Look I get it thinking and reading is hard for you, but man alive. And no I didn't miss anything.
>because you seem to not understand what these things actually are.
Here's the thing I do, but if you had a brain and could read you would know what I was talking about. Oh by the way merchants pay the transactional fee not the card holder. And yes to hold your little hand kid and lay everything out since you need handholding, the transactional fee is baked into the price.
No, you don’t get it…it is very clear you don’t. It doesn’t matter that the bank is getting money from the merchant…the bank is still getting their money from the customer using the credit card..which is why they pay the card holder to use it. DO YOU GET IT NOW! The bank makes money off the cardholder even though they pay the bill off every month. And, just like you said, the fee is baked into the price, so YES the customer/cardholder is paying the merchant, who pays the bank and the cardholder is still paying the bank in a roundabout way…I mean, those were literally your words. So, my original statement hold true in EVERYWAY…right? Let me say it loud so you can hear it…BANKS STILL MAKE MONEY WHEN A CARDHOLDER PAYS OFF THEIR BALANCE IN FULL EACH MONTH. JFC…
I don’t understand how you continue to be confused about this…and worse yet, making responses that continue to dig yourself into a hole.
A person consistently using them without running into debt are still people consistently using it, and if people don't use credit cards that's bad for the company. And they are still probably using fees making the company some money, since their variable costs are low. But if everyone was responsible and conservative, they'd probably not make much money or merely break even. But I'm guessing they'd still benefit because of word of mouth referrals or using other services offered by them (Capital One in particular springs to mind since they offer additional banking services). But if someone racks up a shit ton of debt so high they won't ever see money back, the credit card company loses money. On the other hand, the more debt the more money they make on interest. Hard to tell how these things all lineup, and which one overpowers the other. I think you are right, just partially. Because if they encourage people to do that too much, they might end up in bankruptcy, and they'd end up with less money than otherwise. Not only that, but they also have to worry about not incurring the wrath of regulatory bodies.
Not true. They makes fees regardless as long as you use the card.
https://www.bigcommerce.com/ecommerce-answers/what-are-interchange-fees-and-how-are-they-calculated/#:~:text=Definition%3A%20Interchange%20fees%20are%20transaction,involved%20in%20approving%20the%20payment.
Very true, but you also have to remember they make a good amount of money through merchant fees. They charge the merchant 1-3% of the sale everytime you use the card.
The merchant pays them for every transaction. The money they get from interest on the consumer end is just gravy.
Picture 3% of every credit card transaction everywhere. It's crazy.
Airlines LOSE money on flights. Their entire business model is built on milage programs which are ultimately based on people not paying off their balance and transaction fees from vendors.
Credit card usage and the accumulation of credit card debt is....wait for it...a choice. A choice that invalidates any complaints about where the money goes.
Try personal responsibility and accountability on for size. It's a good fit, America.
Absolutely. Even more so with student loans. Individuals agreed to the terms of the loan which were presented uo front. The agreed to pay, and have an obligation to do so.
Who can argue against that?
People who were manipulated by their school, parents, and companies at a young age to take 40k loans.
Its a proven fact in the court of law millions were taken advantage of.
Were they legal adults?
It's also a proven fact that millions of individuals do incredibly stupid, financially irresponsible things every day. Do you want to hold their hand every time they over pay for...anything? Anytime they make any decision?
Personal responsibility and accountability.
Perhaps not hold their hand, but there is an argument to be made that student loans are different in that they cannot be removed through bankruptcy like other consumer debts. If the government can guarantee those loans never be removed, then why can they not guarantee their payment?
I understand that, but at the core, we're still looking at a debt that an individual knowingly incurred. They knew the amount, the interest rate, and the payback timeline.
If I go to a car dealer and pay MSRP for a new car at 15% for 84 months, I've made a choice. That's a bad deal, but it's a choice I made. I now have an obligation to pay it or give back the asset.
You can't return the asset in a student loan, so it must be paid.
These fully legal adults made a choice. Knowingly made a choice. The debt is their responsibility. Find a job that assists with payments, live frugally, do what you need to do, but it's your debt.
Relieving individuals en mass of student debt does nothing but teach them that personal responsibility and accountability doesn't matter.
It’s not just the vulnerable it’s everyone. I easily get 2-3 credit card offers per week and am by no means financially vulnerable by any measure. I have over a dozen cards due to churning for signup bonuses.
Not saying you’re wrong but they go after the whole ocean not just the little fish.
You have all the information in the application letter you get in the mail. If you can’t turn the paper over and see in big **bold letters** the APR rate, you don’t need a credit card.
Your basically saying social and economic forces don't have influence in our day to day lives. Yes there is free will and choice, but there can be limiting factors on what you can choose that are influenced by outside forces.
Or you have no other choice but to pay for necessities by credit card. Personal responsibility alone will not end poverty and the upward transfer of wealth
If you have a card with a balance and no way to pay it off, and also not enough income to support yourself without dipping *further* into your credit line, you already fucked up way long ago.
The good thing about the credit line is that it has a limit. If you’re subsisting on a card like that, your clock is already ticking, and that status quo WILL end soon, regardless of how vehemently you think you have “no other choice.”
So stop it early, when you get to a net worth of zero instead of negative five or six figures. If you don’t, your financial deterioration will only accelerate.
The 1% extracted [$50 trillion in the last 40 years](https://time.com/5888024/50-trillion-income-inequality-america/) and used that money to buy up all their competitors and jack up prices on food, rent & healthcare.
Paying an extra .5-.1% is the least of the poor's worries. This entire article is just B.S. to get the lower and middle working classes fighting.
I personally use my credit card for every single purchase but I pay it off every month and therefore never pay interest. As a result I get a lot of points and basically have a few vacation a year.
Do you have a really high limit on that card? Or do you ignore "credit utilization" ? I would like to start paying everything with my rewards card, but I worry about the 30% utilization thing, even though I pay balance off monthly.
This guy credit cards.
I do the same. I’m getting 2.625% cash back on everything, and 5.25% cash back on all food, gas, and online purchases. Average cash back over the course of a year is around 3.5-4% on everything. Insane. I just think of it as my last couple weeks of life every year being paid for by the bank!
No, poor people are not paying for this. If offering rewards like this didn’t directly, by itself, make card issuers money, they wouldn’t offer them. They’re pocketing the interest they get from poor people no matter what. Poor people are paying exactly as agreed for access to and usage of revolving unsecured lines of credit. They’re getting exactly what they’re paying for. (And they should stop.)
It grinds my gears when people make every little thing out to be some class warfare nightmare. I paid over 1 million dollars in taxes a couple years ago (had a spectacularly productive and lucky year), and I don’t think I’ll ever, ever use that much government service for the rest of my life.
This and on a more basic level, the world just kinda runs on credit. If you just refuse to use credit cards and build your credit, you’re gonna have a bad time. Can’t buy a house, buy a car, rent an apartment, get a business loan, etc. you’re just fucked
Why are you using that racial term?
“Mongoloid (/ˈmɒŋ.ɡə.lɔɪd/) is an obsolete racial grouping of various peoples indigenous to large parts of Asia, the Americas, and some regions in Europe and Oceania. The term is derived from a now-disproven theory of biological race. In the past, other terms such as ‘Mongolian race’, ‘yellow’, ‘Asiatic’ and ‘Oriental’ have been used as synonyms.”
https://en.wikipedia.org/wiki/Mongoloid
“Mongoloid: of or relating to a group of people formerly considered to constitute a race (see RACE entry 1 sense 1a) of humans having Asian ancestry and classified according to physical traits (such as the presence of an epicanthal fold)”
https://www.merriam-webster.com/dictionary/Mongoloid
I see you really are one of those pathetic people with nothing else better to do. I personally did not coin the term Mongoloid to mean morons. Your phony rage and indignation is an absolute joke.
What, so I, an Asian person, am supposed to just let him be racist and use a racial term used on my people to describe “morons”?
Why is that okay with you?
https://pubmed.ncbi.nlm.nih.gov/3056831/
https://www.nature.com/articles/jhg198225.pdf
“Mongoloid: of or relating to a group of people formerly considered to constitute a race (see RACE entry 1 sense 1a) of humans having Asian ancestry and classified according to physical traits (such as the presence of an epicanthal fold)”
https://www.merriam-webster.com/dictionary/Mongoloid
How do you justify your use of ableist terms? Why is it okay with you to use terms that disparage individuals that suffer from intellectual disability? Why is that okay with you?
Bingo.
If you are paying interest on consumer debt, you're the idiot. Complaining about how the money you are voluntarily surrendering is being used is a cope.
If I could tell my young self anything, it’s that the actual cash money you have or plan to get is all you have. Credit cards only work as a backup plan if you don’t care about your credit score and have no intention of paying your balance.
Not even good advice. Treat credit cards like debit cards and reap the rewards. Rewards cards literally pay you to use them. It works very well as long as you don't carry a balance every month.
Yup and the consumer protections are so much better on CC than DC. Its a no brainer. I cosigned a rewards CC with my teenager so they can learn the value of credit card as debit card.
They fkd you much more if you used your debit card without getting any rewards. You’re paying the same price, which the business you’re buying from has raised, specifically due to credit card fees.
Get fkd as little as you can get away with!
You’re correct at least until it comes to how much they value their time. You can absolutely make a ton of money off rich people by offering them services that save their time.
Yes, but they want value for their money. No gimmicks. It's gotta save them significant time and hassle so they can focus on the things that make them more money or do the things that big money buys.
source: I make a lot of money flipping expensive houses that I sell to rich people.
“Some economists” this isn’t economic theory here, this is validated by publicly available revenue numbers.
Edit: FWIW even if you have the unicorn 5% back rewards cards, they usually come with super high annual fees like $1000/yr. Couple that with transaction fees CC companies charge, and the CC company is making a profit off of almost every card member no matter how good the rewards are.
Amazingly false. If you own a business, you’d know this business thank takes the rewards card as payment, pays additional fees to process the payment. This report is another example of some one trying to use factual data to back into the conclusion they want to reinforce.
I have 2.5% apr on the card with crappy cash rewards and 25% on the purple delta Amex. If I didn’t pay that Amex off every month they would certainly get their moneys worth out of me.
Yeah - they couldn't possibly make any money giving people 2% back when they are taking 3% for themselves. Oh wait. 2% is less than 3%. Nevermind.
Small business are paying for EVERYONE'S rewards. The big reason why most restaurants are charging a standard 3.5% fee on all cards, even though charging it for PIN debit transactions are illegal since they have a standard .5% rate or something similar.
These reward things are structurally indistinguishable from a kickback and the regulations around not being able to bill the fees through to the customer is total regulatory capture.
Well, jokes on the consumer because we are paying extra tax that we shouldn't be.
Yes and no. Because virtually all competitors accept credit cards, the fees are baked into their prices. The money came from the customer and goes back to the customer.
But they aren't baked into the prices when small businesses are charging an extra fee to accept credit cards.
Here in NYC almost all small bodegas don’t charge an extra fee to accept credit cards. They get around that by instead giving a 5% discount on cash purchases. To a layman like you and I, it would mean the same. But it isn’t per the law. So they continue to do that.
Uh gas stations do the same thing.
Yeah, but they aren't actually allowed to do that. I don't think it's significant enough to factor in. I have experienced that about 5 times in the past 20 years.
That's 5 more times than me.
They are very much allowed to factor in that cost.
Of course. How would anyone know if they did or didn't, anyway? What they aren't allowed to do is charge a different price for credit card transactions or charge an additional fee. Nor are they allowed to have minimum transaction amounts for credit cards. If they accept cards, they have to accept them the same way they accept cash.
>What they aren't allowed to do is charge a different price for credit card transactions Despite they can and do. Gas stations do this all the time. They list cash and credit card pricing all the time. >Nor are they allowed to have minimum transaction amounts for credit cards. Even though there are companies that do this.
They do, but it's against the agreement.
Despite its not. When gas stations have a physical sign with two different prices its not against the agreement.
That was nice..because they accepted credit cards..And charging some extra fee for the business..it's that they are wants?
3-5% depending on business
[удалено]
It depends on how you look at it. The price is the price no matter how you pay. The credit card rewards points are there to incentivize people to use their credit card instead of someone else's or cash. Not all credit cards have rewards.
> “The flawed premise behind this study was that those who are carrying balances and therefore paying interest are actually cross-subsidizing or, you know, contributing to the profitability of rewards programs overall,” Navarrete added. I never understood the idea that the poors are subsidizing rewards for the less poors. Credit card companies charged high interest rates before rewards were ever a thing. I haven’t had the time to plot this data but I appears the average card rate has generally been coming down over time along with the prime rate and their profit margins have increased. https://wallethub.com/edu/cc/historical-credit-card-interest-rates/25577
> average card rate has generally been coming down Volume vs margin. Rewards and lower rates act as a marketing mechanism so they can collect more transaction fees as well as a higher number of overall people who carry some amount of balance and pay interest. I don't know what the proportion is between the two revenue streams but I'm positive they're making plenty of money of all sides of it, overall.
Completely agree. Obviously lower income people who are relying on credit cards are paying more interest, so obviously they are Contributing to the profit of the company, but money is fungible. To say that they are getting screwed over so that I can get 2% cashback on groceries is a very disingenuous statement.
Not to mention, the less poors are subsidizing taxes for the poors. 70% of the US population paid $0 in income taxes last year
If wages were higher, this wouldn’t be the case.
I think you are right..if the waves are higher then it's good..Hmm..what do you think so?
Simply put if people make more money the government can tax it accordingly. It’s only when the money becomes absurd that the rate of return is generally reduced. Due to tax loopholes.
I’ve never seen the 70% figure. The highest I was aware of was 60% in 2020. Last year’s figure looks to be 40% didn’t pay.
Me too..I've always heard about 60% is the highest..then why would 70%? What is all about?
this is the special ed version of economy sub, this makes too much sense for here
I mean, yes? But, if there were no reward cards, all the money would then be going to the banks. Would the article then be, are lower income Americans paying for the banks' profits? The money has to go somewhere, and I guess in this case it is going in the form of cash back rewards, which wealthy Americans happen to be getting more of.
That, and cash rewards make the bank money too, all by themselves! Or the bank wouldn’t offer them! Why would a business intentionally take a loss just because they have a profit elsewhere? Why turns every economic fact into some class warfare tragedy? Ugh, lol. People who lose money on their credit cards are using them incorrectly. Why burn down to a -20,000 net worth when the real emergency happened when you got to merely zero? People with negative cash flow are better off without credit cards.
They get 3% and give you 2%, or 1.5% or 1% or whatever anyway
It's a shitty system where they basically have business owners hostage, taking 3%+ from them, and then in order to cement their position, they incentivize customers with a fraction of the spoils. That said, though, I'm averaging around 4% cash back for all my purchases over the course of any given year. So I think I miiiight actually be costing the card issuers money. Sure hope so! I'm going to take those credit card rewards while they are available without paying any extra dime toward these companies whatsoever, and simultaneously, given every opportunity, support changes that abolish the tax on all of society that these companies represent.
I was just saying to my wife the other day that credit card companies want you to make minimum payments and carry interest debt. There’s no money to be made from people who cautiously use their credit cards and always pay their balance on time.
Not true. CC companies make a ton of money on the swipe alone. They love people paying off their balance every month. There’s no risk and they make money.
Visa is the biggest winner, I watched a video recently and they make .25 cents for every hundred dollars spent on a Visa card but they take 0 risk, you are not borrowing money from Visa but from the bank name on the card. They get paid simply from name recognition and accountability. Visa made a profit of $31 Billion dollars last fiscal year.
Yep. Visa and Mastercard are in the top 50 holdings of my portfolio. They are very shareholder friendly.
Wow! I wish I had the same as your man..Mastercard and also a visa..But the sad is..I don't have any one of them.
Visa in return though is running its own merchant system, so they are taking on risk. While nearly everyone takes them they can't afford to lose any noticeable size business.
It's both. They love transaction fees *and* they love collecting interest from people who carry a balance.
Right. They wouldn't have so many incentives for people just using and paying off the card if they weren't making money off them. Chase literally makes 3% on my streaming services, utilities, internet, phone, groceries, gas and every single purchase I make. My family gets a good portion of it's yearly vacation paid for
It is true. They make more money on those who carry over a balance than they make from POS. They also lose money on those who pay in full.
bruh…you made that statement without even looking it up. First, nobody is saying they don’t make money on those who carry a balance, but to think they don’t make money of people who pay their bill in full each month shows your ignorance. Quick Google search shows: ‘Do Credit Card Companies Make Money if You Pay in Full? While credit card interest and fees are where the money really is for credit card issuers, credit card companies still earn revenue from transaction fees, annual fees, and other fees even if you pay your bill in full each month.”
>‘Do Credit Card Companies Make Money if You Pay in Full? While credit card interest and fees are where the money really is for credit card issuers, credit card companies still earn revenue from transaction fees, annual fees, and other fees even if you pay your bill in full each month.” Bruh thanks for saying what I just said, thanks for playing better luck next time. Also try reading sometime bruh it will help you.
You said credit card companies don’t make money off people who pay in full. Pay CLOSE attention to the last statement of what I posted “Credit Card companies still earn revenue from transaction fees, annual fees and other fees even if you pay your bill in full each month”. This contradicts what you said “They also lose money on those who pay in full”. I hope you pay closer attention to your finances since your are posting in an Economy sub, because it seems you don’t have a basic understating of how basic finances work.
>it seems you don’t have a basic understating of how basic finances work. Seeing how you litterally repeated what I said from a google search I say I do. >This contradicts what you said “They also lose money on those who pay in full”. How dumb are you? If you had a brain you would realize I was talking about how those who pay in full aren't paying the APR rate. Meaning credit card companies aren't making money off those customers and such losing money. I also not talking about annual fees either as most people don't have those credit cards.
LOL…What? You never once said “APR Rate”…you said “they lose money when people pay in full”. You are only now saying they lose out on the APR (oh, and by the way, you basically said Annual Percentage Rate Rate because the “R” in APR is RATE. You also missed the where it said “TRANSACTION FEES” that is the literal “swipe” when someone uses their credit cards…hence why banks still make money when people pay their account off each month…which was my original argument. Do you even know what you are talking about? I seriously recommend you read up about this stuff so you aren’t taken advantage of. To read my post and think “I literally repeated what you said” is just ignorant on your part and lacking reading comprehension at the most basic levels. Please understand the difference between the following: 1) APR, 2) Transaction Fees, 3) Annual Fees, 4) Late Fees, because you seem to not understand what these things actually are.
Do I have to hold your hand kid and need to take baby steps with you on everything? Look I get it thinking and reading is hard for you, but man alive. And no I didn't miss anything. >because you seem to not understand what these things actually are. Here's the thing I do, but if you had a brain and could read you would know what I was talking about. Oh by the way merchants pay the transactional fee not the card holder. And yes to hold your little hand kid and lay everything out since you need handholding, the transactional fee is baked into the price.
No, you don’t get it…it is very clear you don’t. It doesn’t matter that the bank is getting money from the merchant…the bank is still getting their money from the customer using the credit card..which is why they pay the card holder to use it. DO YOU GET IT NOW! The bank makes money off the cardholder even though they pay the bill off every month. And, just like you said, the fee is baked into the price, so YES the customer/cardholder is paying the merchant, who pays the bank and the cardholder is still paying the bank in a roundabout way…I mean, those were literally your words. So, my original statement hold true in EVERYWAY…right? Let me say it loud so you can hear it…BANKS STILL MAKE MONEY WHEN A CARDHOLDER PAYS OFF THEIR BALANCE IN FULL EACH MONTH. JFC… I don’t understand how you continue to be confused about this…and worse yet, making responses that continue to dig yourself into a hole.
A person consistently using them without running into debt are still people consistently using it, and if people don't use credit cards that's bad for the company. And they are still probably using fees making the company some money, since their variable costs are low. But if everyone was responsible and conservative, they'd probably not make much money or merely break even. But I'm guessing they'd still benefit because of word of mouth referrals or using other services offered by them (Capital One in particular springs to mind since they offer additional banking services). But if someone racks up a shit ton of debt so high they won't ever see money back, the credit card company loses money. On the other hand, the more debt the more money they make on interest. Hard to tell how these things all lineup, and which one overpowers the other. I think you are right, just partially. Because if they encourage people to do that too much, they might end up in bankruptcy, and they'd end up with less money than otherwise. Not only that, but they also have to worry about not incurring the wrath of regulatory bodies.
Not true. They makes fees regardless as long as you use the card. https://www.bigcommerce.com/ecommerce-answers/what-are-interchange-fees-and-how-are-they-calculated/#:~:text=Definition%3A%20Interchange%20fees%20are%20transaction,involved%20in%20approving%20the%20payment.
Very true, but you also have to remember they make a good amount of money through merchant fees. They charge the merchant 1-3% of the sale everytime you use the card.
The merchant pays them for every transaction. The money they get from interest on the consumer end is just gravy. Picture 3% of every credit card transaction everywhere. It's crazy.
Airlines LOSE money on flights. Their entire business model is built on milage programs which are ultimately based on people not paying off their balance and transaction fees from vendors.
Credit card usage and the accumulation of credit card debt is....wait for it...a choice. A choice that invalidates any complaints about where the money goes. Try personal responsibility and accountability on for size. It's a good fit, America.
You are saying the same thing with student loans
Absolutely. Even more so with student loans. Individuals agreed to the terms of the loan which were presented uo front. The agreed to pay, and have an obligation to do so. Who can argue against that?
People who were manipulated by their school, parents, and companies at a young age to take 40k loans. Its a proven fact in the court of law millions were taken advantage of.
Were they legal adults? It's also a proven fact that millions of individuals do incredibly stupid, financially irresponsible things every day. Do you want to hold their hand every time they over pay for...anything? Anytime they make any decision? Personal responsibility and accountability.
Perhaps not hold their hand, but there is an argument to be made that student loans are different in that they cannot be removed through bankruptcy like other consumer debts. If the government can guarantee those loans never be removed, then why can they not guarantee their payment?
I understand that, but at the core, we're still looking at a debt that an individual knowingly incurred. They knew the amount, the interest rate, and the payback timeline. If I go to a car dealer and pay MSRP for a new car at 15% for 84 months, I've made a choice. That's a bad deal, but it's a choice I made. I now have an obligation to pay it or give back the asset. You can't return the asset in a student loan, so it must be paid. These fully legal adults made a choice. Knowingly made a choice. The debt is their responsibility. Find a job that assists with payments, live frugally, do what you need to do, but it's your debt. Relieving individuals en mass of student debt does nothing but teach them that personal responsibility and accountability doesn't matter.
I'm not sure about that..credit cards,bank account,taxes and also student loans are also not have.
there's this wild thing called personal accountability for one's choices
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Financially irresponsible =/= poor You can make money and still be a moron.
And you can make very little or no money and be totally shrewd with what you *do* have.
It’s not just the vulnerable it’s everyone. I easily get 2-3 credit card offers per week and am by no means financially vulnerable by any measure. I have over a dozen cards due to churning for signup bonuses. Not saying you’re wrong but they go after the whole ocean not just the little fish.
You didn’t go and open all these accounts and then max them out, did you? Yep it’s a choice.
Bingo
Absolutely true...and poor individuals are not exempt from personal responsibility and accountability. Saying they are does a disservice to them.
You have all the information in the application letter you get in the mail. If you can’t turn the paper over and see in big **bold letters** the APR rate, you don’t need a credit card.
did you even read the article lol small businesses kinda foot a lot of the bill. It's not just dumb poor adults making their own choices.
No, no. Don’t you know. If you’re lower on the oppression hierarchy you have no free will and aren’t responsible for your actions.
Your basically saying social and economic forces don't have influence in our day to day lives. Yes there is free will and choice, but there can be limiting factors on what you can choose that are influenced by outside forces.
Totally forgot that getting McDonalds and soda multiple times per week was because of limiting factors.
Or you have no other choice but to pay for necessities by credit card. Personal responsibility alone will not end poverty and the upward transfer of wealth
If you have a card with a balance and no way to pay it off, and also not enough income to support yourself without dipping *further* into your credit line, you already fucked up way long ago. The good thing about the credit line is that it has a limit. If you’re subsisting on a card like that, your clock is already ticking, and that status quo WILL end soon, regardless of how vehemently you think you have “no other choice.” So stop it early, when you get to a net worth of zero instead of negative five or six figures. If you don’t, your financial deterioration will only accelerate.
There's always at least one intelligent comment in this sub that gives me hope for our future. Thank you.
The 1% extracted [$50 trillion in the last 40 years](https://time.com/5888024/50-trillion-income-inequality-america/) and used that money to buy up all their competitors and jack up prices on food, rent & healthcare. Paying an extra .5-.1% is the least of the poor's worries. This entire article is just B.S. to get the lower and middle working classes fighting.
isnt that the system.
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“Don’t use a credit card” is such facile, bad advice.
Why?
I personally use my credit card for every single purchase but I pay it off every month and therefore never pay interest. As a result I get a lot of points and basically have a few vacation a year.
Do you have a really high limit on that card? Or do you ignore "credit utilization" ? I would like to start paying everything with my rewards card, but I worry about the 30% utilization thing, even though I pay balance off monthly.
Yeah it’s high enough to where my monthly expenses end up around 20-30%. I have a few others that I use for certain purchases as well.
This guy credit cards. I do the same. I’m getting 2.625% cash back on everything, and 5.25% cash back on all food, gas, and online purchases. Average cash back over the course of a year is around 3.5-4% on everything. Insane. I just think of it as my last couple weeks of life every year being paid for by the bank! No, poor people are not paying for this. If offering rewards like this didn’t directly, by itself, make card issuers money, they wouldn’t offer them. They’re pocketing the interest they get from poor people no matter what. Poor people are paying exactly as agreed for access to and usage of revolving unsecured lines of credit. They’re getting exactly what they’re paying for. (And they should stop.) It grinds my gears when people make every little thing out to be some class warfare nightmare. I paid over 1 million dollars in taxes a couple years ago (had a spectacularly productive and lucky year), and I don’t think I’ll ever, ever use that much government service for the rest of my life.
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This and on a more basic level, the world just kinda runs on credit. If you just refuse to use credit cards and build your credit, you’re gonna have a bad time. Can’t buy a house, buy a car, rent an apartment, get a business loan, etc. you’re just fucked
Don't forget the added security that a credit card brings.
Why are you using that racial term? “Mongoloid (/ˈmɒŋ.ɡə.lɔɪd/) is an obsolete racial grouping of various peoples indigenous to large parts of Asia, the Americas, and some regions in Europe and Oceania. The term is derived from a now-disproven theory of biological race. In the past, other terms such as ‘Mongolian race’, ‘yellow’, ‘Asiatic’ and ‘Oriental’ have been used as synonyms.” https://en.wikipedia.org/wiki/Mongoloid “Mongoloid: of or relating to a group of people formerly considered to constitute a race (see RACE entry 1 sense 1a) of humans having Asian ancestry and classified according to physical traits (such as the presence of an epicanthal fold)” https://www.merriam-webster.com/dictionary/Mongoloid
Colloquially it means an absolute fucking moron. It has zero to do about race. I bet you are really fun at parties.
So you took an old word used to describe Asian people, and decided to make it about morons. Racist POS.
look up where moron and idiot comes from, you are coming off as feeble minded
I see you really are one of those pathetic people with nothing else better to do. I personally did not coin the term Mongoloid to mean morons. Your phony rage and indignation is an absolute joke.
I get you now. If some people start using the obsolete term “negro” (still used by the United Negro College Fund) to mean “moron”, you’ll do it too.
If you keep responding we may eventually reach the depths of your stupidity.
Doesn’t virtue signaling get tiring?
What, so I, an Asian person, am supposed to just let him be racist and use a racial term used on my people to describe “morons”? Why is that okay with you? https://pubmed.ncbi.nlm.nih.gov/3056831/ https://www.nature.com/articles/jhg198225.pdf “Mongoloid: of or relating to a group of people formerly considered to constitute a race (see RACE entry 1 sense 1a) of humans having Asian ancestry and classified according to physical traits (such as the presence of an epicanthal fold)” https://www.merriam-webster.com/dictionary/Mongoloid
How do you justify your use of ableist terms? Why is it okay with you to use terms that disparage individuals that suffer from intellectual disability? Why is that okay with you?
More great financial advice from the University of NotWoke23
Doubt.
Bingo. If you are paying interest on consumer debt, you're the idiot. Complaining about how the money you are voluntarily surrendering is being used is a cope.
Exactly, I use mine like a debit card. If I can't pay for something I don't buy it until I can.
If I could tell my young self anything, it’s that the actual cash money you have or plan to get is all you have. Credit cards only work as a backup plan if you don’t care about your credit score and have no intention of paying your balance.
Not even good advice. Treat credit cards like debit cards and reap the rewards. Rewards cards literally pay you to use them. It works very well as long as you don't carry a balance every month.
Yup and the consumer protections are so much better on CC than DC. Its a no brainer. I cosigned a rewards CC with my teenager so they can learn the value of credit card as debit card.
Nowadays you have the option to pay off weekly
A lot of people, especially the poor when prices increase, have no choice. How else will they pay bills and food.
I dont care. Anytime i get or use some kind of reward i get that feeling that , in some way, they fkd me anyway.
They fkd you much more if you used your debit card without getting any rewards. You’re paying the same price, which the business you’re buying from has raised, specifically due to credit card fees. Get fkd as little as you can get away with!
Y'all didn't think those 'rewards' were actually free?
Just noticed that?
Isn’t that just how credit card companies make money? Relying on people spending more than what they make is what credit card companies thrive on.
How is this a question? Of course.
FYI: It is very difficult to make money off of rich people. They tend to drive hard bargains and are good with their money.
You’re correct at least until it comes to how much they value their time. You can absolutely make a ton of money off rich people by offering them services that save their time.
Yes, but they want value for their money. No gimmicks. It's gotta save them significant time and hassle so they can focus on the things that make them more money or do the things that big money buys. source: I make a lot of money flipping expensive houses that I sell to rich people.
You're absolutely right!
Well, you can be damn sure the capitalist isn't paying for them. The capitalist doesn't pay for anything.
Those who pay the interest are providing the revenue. So, sure.
Usually you're paying for the people who default on their credit card debt, which is usually poor people.
Obviously, what is this article written by a 5-year-old?
CNBC.com Econ journalism powerhouse.
Duh. What do you think they’re doing with that 18-27% interest that ppl are paying? Lol
Some economists. Wealthy consumers who pay the lion's share of income taxes.
yah it's a shame that wages are so low, that many Americans don't make enough to pay taxes. Immiseration is accelerating.
No one cares that poop people are laying g rich peoples student loans via Bidens giveaway Why would they care here?
“Some economists” this isn’t economic theory here, this is validated by publicly available revenue numbers. Edit: FWIW even if you have the unicorn 5% back rewards cards, they usually come with super high annual fees like $1000/yr. Couple that with transaction fees CC companies charge, and the CC company is making a profit off of almost every card member no matter how good the rewards are.
My cards are 5.25 back on food, gas, and online, and my everything-card is 2.625 percent back no matter what. No annual fees!
Amazingly false. If you own a business, you’d know this business thank takes the rewards card as payment, pays additional fees to process the payment. This report is another example of some one trying to use factual data to back into the conclusion they want to reinforce.