In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for the privilege. And yes, they're crying about it.
> In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for the privilege. And yes, they're crying about it.
Either way, it's a bit tone-deaf to say that people are crying about not getting free rewards. Many people are upset because companies like our notoriously anti-competitive telecom industry already factor merchant fees into the costs; adding on a separate charge is essentially double-dipping in a time of record inflation and profiteering.
The CRTC disallowed Telus from doing this, but every merchant not covered by the CRTC is now allowed to disregard any "best price" clause in their credit card agreements.
I expect the first merchants to take advantage of the new rules will be some of those Mom & Pop stores that currently have the "minimum $10 for credit card" signs.
Sure, that's an interesting case. The CRTC's ruling, if I'm reading that right, is narrow and only impacts telecoms. I do see that as a good thing. What I'd really want is for merchants to be able to pass exact interchange fees on to the customer with no overhead -- which, alas, isn't what the law encourages, along with a cap on interchange fees like was done in Europe (TIL).
This is allowed in the US. But it's not like the surcharge is tied to the amount of rewards on the card, at least here. If you have a no-rewards card, you pay the same surcharge as if you have a upper-tier Amex. And since most places don't make it very obvious that they're charging a cc surcharge, customers generally don't even realize they're paying it.
I was not thrilled when I saw it on my receipt, after not being told there was a credit card charge. I don't mind a surcharge but it felt like a cash-grab because they didn't tell people (or ask them, which would be even better).
Cash and check handling also have costs through leakage and bank fees (at least in the US banks charge money for taking cash deposits from businesses). Many merchants are happy to take credit cards and just mark up the price accordingly. Ask the Cannabis industry about the hassles of handling cash.
IMO it's much better to do it the EU way - cap on the fees, and a ban of adding a surcharge for cards (because now they're competitive if not cheaper than handling cash).
Meanwhile in Europe we just aggressively capped the fees card networks can charge merchants. No one has rewards but everyone benefits from cheap card payments.
I disagree with this. This assumes that cash is the baseline. And all too often the cost of handling cash is not taken into account when comparing it to credit cards.
Debit is my baseline. It's unfortunate that banking technology is so far behind; in Canada, anyway, debit doesn't incur interchange fees. That's great at point of sale, but notably kludgy for bill payments.
Some merchants were already allowed to add a credit card surcharge. Some post-secondary institutions did this for years before this change came in.
The funny thing is that, apart from the aforementioned post-secondary institutions, I haven't seen anyone else add this surcharge. Maybe I'm just not shopping in the right places, but so far this change has amounted to absolutely nothing.
It used to be the case that the credit card companies put language in their merchant agreements language requiring the merchant to change the same price for credit and cash transactions. I'm not sure how many places they just lost the leverage to do that sort of thing and how many places enacted legislation to prevent that kind of strong-arming.
I’ve seen it occasionally too, but it’s usually a violation of a merchants’ agreement with Visa/MC, who don’t want consumers to be discouraged to pay with their product.
How I usually see this is instead of a surchage for credit card, stores offer a cash discount of 2-4%. Likely to get around exactly what you're talking about
Interesting to hear this. I was once visiting Canada about a decade ago and tuned in to a radio station (likely some local CBC station), and they were debating this very issue: Can it be made legal for businesses to charge more for CC transactions?
I learned one thing:
The amount a CC charges the business is not fixed - and cards with rewards result in a higher fee for the business.
At some point a retired CC industry shill (who clearly identified his background) called in and his explanation on all this was the most reasonable:
In the vast majority of cases, a business's revenue goes up by accepting CC payments. Some of it is because customers have become accustomed to paying with it and may not carry cash, but the bulk of it is due to the convenience - and this is heavily backed up by research: The easier and more convenient you make transactions, the more consumers spend. The amount businesses pay the CC company in fees is more than compensated for by the increased revenue.
Most businesses will treat these fees as part of the cost of doing business, and price their products accordingly. Just as they do when their utility rates go up or the price of gas goes up.
Businesses support the campaigns about this issue so that they can get the best of both worlds: Increased revenue due to CC usage as well as passing those fees on to the consumer. They are not waging this battle to benefit the consumer, but to offload a cost of doing business to the consumer. In principle, this is all fine, but the consumers need to be aware of it! Ultimately the consumer is paying those fees whether a business charges extra for it or not.
And of course, if the goods that business is selling is priced the same as other businesses not passing that charge on directly, then the consumer is "double paying" - the goods' price already has that fee baked into it even if they pay cash, and when they pay by card, they'll pay it twice at those businesses.
Having known some business owners, his take is highly believable :-)
As an example, the AirBnB cleaning fee is not just for cleaning, but a way for the host to make extra money (easy to Google, and I know multiple hosts personally). Almost any business that charges extra for optional amenities is using it as a way to make even more money.
And that was the CC shill's ultimate point. CC companies are doing things to increase their revenue, as are the businesses. A given business may say they're campaigning for this in order to benefit the consumer, but in most cases they're not really benefiting the consumer and are simply trying to increase their revenue. The exception is when they really do have reduced prices compared to other stores.
> The amount a CC charges the business is not fixed - and cards with rewards result in a higher fee for the business.
It should be noted that most businesses have limited visibility into that. The monthly bill from whatever company handles their card processing usually charges a fixed rate, or has multiple tiers of fixed rates, and all the merchant sees is that on their bill they are told the number and total amount of transactions for each tier.
I agree with the less privileged folks getting shafted statement, but for the rest:
I am 100% unwilling to use my debit card for any purchases.
Why?
Fraud. If I pay with cash, then fraud amounts to getting actually robbed. Identity theft and account compromising is literally impossible. If I pay with credit, it is MASSIVELY simple to get that fixed, and it becomes the cc company's problem.
With a debit card, any issues immediately become my issue, because the money is out of my account in that moment. Not good.
> If I pay with cash, then fraud amounts to getting actually robbed.
Getting robbed cash in your wallet you are 100% out of the money. But fraud on a debit card must be made whole by the bank within 30-60 days per “Regulation E”, which offers similar protections to debit cards that credit cards receive under “Regulation Z”
This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
Not that it buys you much; there's plenty of small / specialty merchants who might offer you a discount for paying with cash or check, but they treat credit and debit the same.
> This is a popular take, but I found relatively little difference in how my bank handles CC and debit card fraud. In both cases, they credited the disputed amount to me right away.
There is indeed usually not much difference in how banks handle the fraud on credit cards and debit cards.
But it is vital to understand that with credit cards, you are off the hook on fraud due to regulations (in the USA, don't know other countries laws). With debit cards, you're probably off the hook on fraud only because the bank wants to be nice in the name of customer service (usually and only up to a point).
So with debit card fraud the bank might decide they don't really want to keep you as a customer and things become your problem. With a credit card it'll never be your problem because the regulations make it so.
> with credit cards, you are off the hook on fraud due to regulations
If your issuer contractually offers zero liability for debit fraud, that is just as binding as regulations – and most do.
And if they don't, from a regulatory point of view, the liability for debit cards is limited to $500 when reported within 60 days of receiving your statement, compared to $50 for credit cards: Certainly a difference, but definitely not as drastic as "you're always on the hook" vs. "never your problem" as it is often characterized.
> So with debit card fraud the bank might decide they don't really want to keep you as a customer and things become your problem. With a credit card it'll never be your problem because the regulations make it so.
The regulations say nothing about the issuer having to keep you as a customer going forward. I highly doubt that, given reoccurring fraud cases even after a couple of card/number replacements, credit card issuers would be keeping you as a customer any more than debit issuers.
> If your issuer contractually offers zero liability for debit fraud, that is just as binding as regulations – and most do.
Every bank card or account I've ever had regularly send out notices saying they have changed their terms of service and your continued use of the account indicates your agreement to the new terms.
In other words they can change those any time they want unilaterally and you probably won't even notice (because who reads those terms of service?)
You may also want to read all the fine print to see if they carve themselves any exceptions.
The great benefit of the protections under credit card regulations is not having to worry about any such shenanigans. The bank can't change the regulation so you know you're always protected, full stop.
Also remember that fraud on a debit card hits your account balance immediately, even if you can later argue to have it credited. Fraud on a credit card simply hits the credit card and can't touch your real money. Think of a credit card as cloudflare layer for your bank account agains fraud DoS.
I'm always very puzzled as why in the US one would ever use a debit card (I say US because I'm not familiar with regulations in other countries). A credit card offers stronger protections, stronger account isolation and cash back rewards.
> [...] fraud on a debit card hits your account balance immediately, even if you can later argue to have it credited. Fraud on a credit card simply hits the credit card and can't touch your real money.
It can touch your real credit score (if not resolved in your favor), which directly correlates with your ability to continue using credit cards.
And either way, you lose liquidity until the provisional credit (which is very soon in both scenarios, also required by law!), although admittedly money in a checking account is slightly more liquid since you can pay rent and cash-only expenses with it without incurring interest changes.
> I'm always very puzzled as why in the US one would ever use a debit card
Many people don't have credit, don't feel comfortable with the possibility of having to pay absurd interest rates in case they can't make a payment, or a combination thereof.
> It can touch your real credit score (if not resolved in your favor), which directly correlates with your ability to continue using credit cards.
The topic of this thread is real fraud (as opposed to someone claiming fraud on a charge they actually made). So, it will always be resolved in your favor, that's my point here. Regulations on credit cards mean it will always be resolved in your favor (assuming actual fraud). So, no, it won't impact your credit score.
Yes, whenever a credit card fraud investigation will be resolved in your favor, so would it be for a debit card – and the outcome is "no money lost" in both scenarios as well.
But in the odd case a credit card issuer does not side with you, are you absolutely sure that they would just silently drop the pending balance and not report you for a missed payment if you decide to not pay? (Yes, there is recourse against that – but so is there against a Regulation E debit card fraud case, at least as far as I know.)
> Yes, whenever a credit card fraud investigation will be resolved in your favor, so would it be for a debit card – and the outcome is "no money lost" in both scenarios as well.
No, you're assuming the bank is obligated to refund you everything. As I mentioned at the top, this is always the case for credit cards but not necessarily always the case for debit cards.
As this is becoming circular, I don't wish to continue. Enjoy your debit card and I hope you never experience fraud.
On my credit card I've reported fraud and been reimbursed immediately. On my debit card there's a lot more hassle. I can stop a transaction and I can report the fraud, but it takes a long time to resolve (usually weeks). They're two different systems entirely. For instance, I signed up for a single month of the LA Times as part of a charity drive. They continued billing me for over a year which is clearly fraud. The best I could do was stop the transaction that month and I'd have to contact them for reimbursement before my bank would step in. Basically, "try to do business with the fraudsters first, if they refuse we might help."
Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.
Using credit cards allows you to keep close to a zero checking account balance and manage your own cash flow, since credit card bill dates are deterministic.
Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now especially when the risk free rate of interest (US treasury bills / equivalent money market funds invested in US treasuries) yields 4.00%+ APY now?
> Using debit cards means that you need to keep a sufficient balance on a zero interest checking account in order to make transactions.
Many banks allow linking a savings account to a checking account as a backup funding source.
> Why would anybody want to keep _any_ amount of money in a non-interest bearing checking account right now
Conversely, why would any credit card issuer give you an interest-free loan for a month in a world of 4.00%+ risk-free APYs?
Leaving aside all concerns of repayment risk, somebody is paying for your interest-free loan already.
Depending on how you view it, that's either yourself (via 2-3% of credit card fees baked into all retail prices) or other credit card users that don't pay their credit card bills in full every month, or a combination of both.
True, but how high is the chance that somebody that can't handle a $400 emergency today will be able to pay back $400 of credit card debt next month? And if they don't, they usually end up in more problems down the road.
Also, there is nothing that says you couldn't use a debit card for normal spending and resort to using a credit card only for when you actually need credit (assuming that the rewards inefficiency gets fixed).
I was answering in the context of the difference between chargebacks on credit cards vs debit cards. You aren’t out of your money while waiting on a chargeback to be processed when using a credit cards.
You're out of $400 of liquidity (until the issuer provisionally credits your account, which they are required for credit and debit alike) either way.
The only difference is lost interest payments for these ~5 business days (which the issuer might even have to reimburse as well; I'm not too sure about that though), as well as not being able to pay for cash-only expenses using the money in your bank account.
Also, nobody is saying that people can only have one single bank account, and a debit card linked to it with no spending limit attached to it.
Or you know, completely disconnect the need for cards. My time in india is so much fun since I can walk out of my house with just my phone in hand knowing I can pay using QR codes directly and not worry about accounts or charges.
Big difference is QR code based payments in india are absolutely free, no processor is allowed to charge a fee for such payments. In fact that’s the fundamental crux of what we are talking about here so I’m not sure why Apple Pay working is relevant unless it has no hidden fees to the merchant.
How does that work with fraud? I noticed that everyone accepts those QR codes.
I will say though as a tourist who was visiting my family but doesn't have a bank account, those QR codes are pretty nice but completely inaccessible to everyone outside of India :/
Same issue in Thailand. QR accepted absolutely everywhere, _but_ tourists can’t really use it (TrueMoney is supposedly a solution but it didn’t end up working, can’t remember why). Cash is so painful as many vendors flat out refuse large notes. I wish someone would just set up a service where I can link my CC to pay via QRs. I’d pay a 3% fee to avoid the inconvenience of cash.
Handling cash is not free. You have to count it. It can be easily stolen. It is a target for armed robberies.
In addition, credit cards increase how fast you can process customers. Given all that, I am not sure that credit cards are such a bad deal for merchants.
Yeah, cash looks cheap when being handed over the counter, but the costs are realized later. Brinks and Loomis are both multi-billion dollar companies.
Not if the merchant wants to evade taxes. Which is why you see 10%+ discounts for cash (but not debit card or ACH) at some small businesses or independent contractors.
When the merchant is charged 3% for a credit card use, that gets factored into the price. When you get 1% cash back, you paid for that cash back. You're not receiving redistributions from other people.
> For gas, there's one price for cash, a higher one for credit card.
I never buy gas, so distinct credit vs. debit vs. cash pricing applies to 0% of my monthly spending. No merchant that I frequent offers a discount for debit cards over credit cards (some do offer a cash discount, but that's a different topic).
> Many outfits will give you a discount for cash if you ask. That's even better for you than the cash back. All you gotta do is ask.
Have you actually tried doing that at e.g. a grocery store? An online retailer? An airline?
> Have you actually tried doing that at e.g. a grocery store?
Grocery stores have such thin margins, that isn't going to work.
> An online retailer? An airline?
There's nobody to negotiate with with online sales. Though if you're dealing with an agent at the airport, you can negotiate. Yes, I've done it.
I've successfully negotiated with doctors, dentists, repair shops, department stores, agents selling things, employees, employers, contractors, flea markets, pawn shops, furniture stores, anywhere there's a person with some authority to deal with. Although I haven't, you can also negotiate at restaurants and hotels and car rentals. Usually the higher priced the item, the more negotiation can be done (and is expected).
> Grocery stores have such thin margins, that isn't going to work.
That doesn't make sense. Credit cards cost them some 1-3%; debit cards cost them 0.05%. The difference is exactly the same for high and low margin businesses.
> There's nobody to negotiate with with online sales.
Which makes your proposition to address the problem non-viable for a sizeable proportion of all transactions.
This myth persists even 13 years after federal law in the US explicitly forbid made discounts for cash or debit or ACH or whatever payment legal regardless of merchant agreements with card networks:
>A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card. But the new rules do not address other PCN restrictions that may prevent you from offering discounts or similar incentives that vary based on the use of a card from a particular issuer or a particular PCN.
Merchants are allowed to charge a lower price for cash or debit card purchases everywhere in the US.
Individually or small business/franchised gas stations will usually have a cash/debit lower price, on east and west coast in my experience. Big company owned gas stations like Walmart, Costco, Kroger, etc will only have 1 price.
The credit card processor for that merchant took into account the mix of reward cards they historically see across all the merchants on the same plan and set that 3% based on that.
If everyone was using a reward card and they all had the same reward percentage you would be right that there is no redistribution.
But because most merchants charge the same price to every credit card user (and often also to cash users) there is a redistribution from those using lower rewards rate cards to those with higher rewards rate cards.
> We estimate an aggregate annual redistribution of $15 billion from
less to more educated, poorer to richer, and high to low minority areas, widening
existing disparities.
This is why I stay away from credit cards that offer rewards. Did you really think that big corporations give you pennies out of the goodness of their hearts? They might be people (according to Citizens United), but they have no heart.
Using a credit card that doesn't offer rewards doesn't mean the corporation offering it is any less greedy... it just means they aren't cutting you in on the greed.
If anything, using a credit card that doesn't offer rewards is even worse for redistribution... since it's redistributing credit card fees straight into the pocket of the big corporations. At least if you use a rewards CC properly, a portion of it is given back to you.
I don't feel bad about extensively using these rewards cards. If you are a net recipient in this distribution, your participation doesn't directly correlate with any higher participation by any of the victim groups. We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards.
However I do withhold recommending these cards to others because they only make sense for people who don't carry debt or spend recklessly, and I usually cannot be certain that others meet those criteria.
> We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards.
No, you aren't making it more costly for the bank. Banks would be stupid to offer such a setup. The banks pass that cost on to the merchants, who have no choice in the matter.
> No, you aren't making it more costly for the bank.
I sure am; almost all of my spending earns a rewards percentage that exceeds the rate charged to the merchant. (This is not even counting the significant sign-up bonuses.)
Anyone (with good credit) can do the same with a modest amount of research.
The percentage that the bank charges merchants is fixed (for e.g. all Visa credit cards.) If you have a non-rewards Visa credit card, the bank just pockets the entire processing fee. With a rewards credit card, you get some of that fee back.
That's actually not quite true. Depending on the Visa card 'tier' (non-branded, Signature, or Infinite), there are fees that go up. If you have an 'Infinite' card, you're costing a merchant more than if you have a regular unbranded Visa. The difference is really small, like 0.2-0.3% between base and top tier, I think, but there is a difference.
> No, you aren't making it more costly for the bank.
No, you are. Think about it, you as an individual can't change how this system works. But if you use a card with 0% rewards, you're gifting that extra 1-2% to the credit card company. If you use a 2% back card, you're taking that 2% that's on offer away from the bank.
Of course they're still making money, the fees are higher. But they make a tiny bit less if you use the rewards card. So might as well.
Although, yes, banks pass costs to merchants... the thing is, banks do in fact lose money if you are savvy enough with rewards usage/sign up fees/etc. Take a look at the churning forums some time; it would be impossible for banks to actually be making money on this and also pass it along to merchants. The money is coming the ratio of consumers that pay interest (at ~20% or whatever outrageous fee they get) on their credit card bills.
FedNow instant payments go live this year. This will allow bifurcation: if you need immediate settlement for commerce, you’ll be able to get it for a few cents per transaction. If you want to charge the customer who wants credit card float, you can pass along a credit card surcharge and let them pay for the feature. This should shrink this vacuum of value from those of less means to those with the means to efficiently use rewards cards.
Due to US politics and the financial services lobby, it’s unlikely we’ll see interchange caps like Europe enacted, killing most rewards programs, so you’ll have to rely on merchant economics to drive the change.
I don't have a moral problem with using a rewards card. If past me could avoid credit card debt while scraping by below the poverty line on disability, with nothing but a high school education, I believe everyone could with the proper discipline. It's basically a transfer from spendthrifts to savers.
> This is why I stay away from credit cards that offer rewards.
Why punish yourself like that?
I understand taking a moral stance even if makes your life harder, I do that with various things. But I guess I don't see it on this one since the vendor doesn't even know if you get any reward back when you hand them a credit card, so it doesn't show your posture in any way. All you're doing is gifting extra money to the credit card companies.
My wife and I are “hybrid digital nomads”. We fly around the US staying in hotels (mostly Hiltons) from mid March through the end of September. The other half of the year we own a unit in a “Condotel” in Florida that gets rented out like a hotel when we aren’t there to cover the cost. We also don’t have cars and depend on Ubers and the occasional rental car for ground transportation.
We will be in at least 13 cities this year. Some vacations. Some “nomadding” and some a little of both.
I also travel for business 7-8x a year (cloud consulting at $BigTech)
All that to say, credit card rewards and loyalty points makes traveling, staying on budget and being able to enjoy more expensive places possible.
For our major categories, we get the following “returns” from credit card points/loyalty points (miles, hotels, transferable credit card points)
- Hilton hotels - 20-25%
- Hyatt Hotels - 20%
- Delta/American Airlines - 14%
- Groceries/Dining Out - 5.5%
- Uber - 4.2%
- everything else 2.4%
Then there is also the concept of “churning” where you sign up for cards just for sign up bonuses. Those can be worth between $600-$1200 per card.
You are part of the aggregate like it or not and this is aggregated demand that gets this plane flying.
You are free to do what you want but you can’t deny your impact. Given your post you probably have by yourself the carbon footprint of two to three families.
So how many people do you assume in the US are throwing away everything they own to fly as much as we do?
And you’re also assuming airplanes are flying at 100% capacity. I can tell you out of the 12 flights I was on between business and personal the last two months of last year [1] none of them were at capacity.
1) it's not just you, it's your partner too. So that's two seats x # flights/yr.
2) with the extra seat miles you are occupying, airlines can sustain their existing routes/itineraries or expand them if they're at capacity.
At a larger scope it can be viewed as: will the airline fly more flights with its existing fleet? Will the airline buy more aircraft to fly more flights? If yes to either, then your argument breaks down.
Unless you have your own private plane, the airplane would just as much take off without you as Google would still be running servers whether you used it or not.
Are you alone going to make a difference by not flying? Like that neocon anti-environmental Obama said “we aren’t going to save the planet by throwing a bottle in the recycling bin”
The airplane takes off if, on average, the sum of dollars that all ticketed passengers are willing to pay for the benefit of being on it is larger than the operational and capital cost of the airline for operating that one flight.
Your contribution (in a purely causal sense, regardless of what moral statement you might read into it) to all of this is very indirect and diluted, but that does not make it zero.
Note that you're the one bringing the "carbon footprint" concept into this conversation, not me.
> How much could you reduce your carbon footprint if you didn’t use HN? Google?
Again, I don't really subscribe to the idea of carbon footprints, but for the sake of the argument: Insignificantly little, compared to the emissions caused by the flights I take.
Yes, but I‘m not the same person that mentioned your carbon footprint.
My point is, carbon footprint or not, that buying flight tickets and airplanes flying are in a causal relationship, which you seem to be denying, which in turn I find absurd.
You are responsible (again, no moral judgement or carbon footprint shaming implied; again, I fly too, and not too infrequently) for the consequences your actions, and dilution of responsibility seems like an extremely immature way of dealing with that.
Buying a flight ticket isn‘t the same thing as chartering a private jet, but it‘s also not the same thing as riding a bike around the block in terms of energy and resource expenditure. What we do about all of these things is a question completely secondary to the discussion at hand.
And if you didn’t ride a bike and walked everywhere you would save the resources required to make the bike.
Are you not also “diluting” the responsibility by not taking into account all of the energy you use by being on your computer? By being on the internet?
At what point does it become silly? Or do you set the bar right above “the things I don’t do”?
> Are you not also “diluting” the responsibility by not taking into account all of the energy you use by being on your computer? By being on the internet?
No, I am accepting the responsibility for all of these actions (at least insofar as I am aware of their consequences) – which are not nearly in the same ballpark as flying in terms of energy expenditure, but again, you're the one counting/comparing, not me.
> Or do you set the bar right above “the things I don’t do”?
Like what, taking airplanes? You seem to be intentionally ignoring the fact that I have repeatedly stated that I do. I just don't engage in ridiculous logical acrobatics in trying to rationalize away the consequences of doing so.
You know, if there are enough people like you then you can generate a lot of additional demand for flights, and an airline will actually add flights to their schedule to accommodate that. The law of supply and demand still works here.
Yes, I’m sure there are lots of people like me who are willing to throw away everything they own that won’t fit in three suitcases and travel around the US for half the year.
"I am a beautiful and unique snowflake, there aren't really any people like me" is a wrong answer here :) We are not talking about people exactly like you, we're talking about people taking a lot of unnecessary trips just for fun. Some will do that constantly, like you, some will try this for a month or two. Still those travels add up.
Again, I'll take having fun over saving the planet every time, let's just stop pretending that your travels add no carbon emissions.
Do my personally taking a plane that was already flying “add to the carbon emissions” of the plane was going to fly anyway?
Or should I also start a collective action to keep others from flying to reduce the number of flights overall? My refusing to ever fly is not going to stop one plane from flying.
How do you manage to get 20-25% on Hilton hotels? True, I never accomplished anything more than Silver membership, but I also read the analysis that one Hilton point is worth like 0.6 cent. It takes a while to accumulate even 100.000 points, and then that's worth maybe 1 free night.
I don’t redeem HH points for any less than .7 cpp. You get a free night when you pay all of your nights with points.
But as far as collecting points. Each time I stay at a Hilton, per dollar, I get:
- 10 base points
- 10 points for being Diamond (automatic with the Amex Hilton Aspire)
- 14 points on the Aspire card.
That’s 34 points minimum or around 24%.
But Hilton ran a 3x special the third quarter of last year followed by two 2x specials for 54x and 44x. At 54x that’s almost 38% back.
I don’t use more than 70K points per night or 280K points for 5 nights (fifth night free).
Our “housing budget” is $3500/month. We spend that on our own place during the winter and hotels the rest of the year and the income pays for our mortgage at our “winter home”. I’m also traveling for reimbursed work trips. That means at times, I’m collecting points for two hotels at once if my wife doesn’t come with me.
Seems like Amex Hilton Aspire card is the key here, just not sure how to get one, not living in the US, and having no credit history there. I assume they require some exorbitant income level as well?
Anyway, seems like just getting Diamond status gives you quite a bonus. I'm in this weird situation where I plan to go to US for the next 3-6 months, and I am actually considering living in Hiltons the whole time :)
There is an entire crowd source science around how to churn and different companies have different policies.
For instance signing up for business cards using your SSN as the EIN doesn’t show up on your credit report.
Once you have one card from Amex, they don’t do a credit pull for additional cards. Between personal and business, Amex has six Delta cards and four versions of the Platinum.
That means you can apply for as many Amex business cards as you want with no effect on your credit.
Chase has a hard 5/24 rule where you can’t have opened more than 5 cards with any issuer within 24 months. But that doesn’t include business cards.
You also have to space credit card applications out. It also helps that I have a long credit history. I opened my first card in 1996.
> Chase has a hard 5/24 rule where you can’t have opened more than 5 cards with any issuer within 24 months. But that doesn’t include business cards.
I've never been able to get a Chase card.
> You also have to space credit card applications out. It also helps that I have a long credit history. I opened my first card in 1996.
I think I applied for too many at once. Also I take advantage of those 0% introductory APRs and run a balance (only paying the monthly minimum for the duration, and paying the remainder as one lump sum before it expires), which adversely affects my score.
Banks seem to be OK giving cards to known churners. It should be trivial to figure out. My theory is it's either because the marketing department is happy to show off the success of their campaign, or that the banks are leveraging the high credit scores of churners to reduce the risk on-paper of customers with lower credit scores.
Sone companies like Amex have a “once per lifetime rule” and others make you wait four years and others don’t give you sign up bonuses for the same “family” of cards.
Marriott for instance has restrictions between Chase and Amex cobranded cards.
Banks have methods to try to limit churning some are explicit like Amex “once per lifetime rule” where you can only get a sign up bonus for a particular card once.
And they have what is colloquially known as “pop up jail” where when you try to sign up for a new card, they will allow you but pop up a warning saying you won’t get the bonus if you apply for the card. It’s based on your previous behavior with them.
But even while the algorithm for how they choose it is secret, it’s been reverse engineered for the most part via crowd sourcing.
Most credit cards also will deny you if you have opened too many recent cards no matter what your credit is. For instance I just got denied the CapitalOne SavorOne card that had 10% cash back for Uber and I have an 800+ Fico.
I love the idea but it seems like you’d have to be quite a minimalist when it comes to personal belongings. Do you keep stuff in storage when you’re not occupying the condo?
We threw away everything we owned that wouldn’t fit in three suitcases - two checked bags and one carry on.
Of course, I also have a large bookbag with my laptop a second portable display, my iPad and often a client laptop since we aren’t allowed to install a customer’s VPN on our work computers.
> We find a redistribution from low- to high-FICO consumers regardless of income. While super-
prime high-income consumers benefit the most from reward credit cards ($20.1 in net
rewards relative to classic cards), high-income consumers with sub-prime FICO scores
on average pay the most (-$12.8). Meanwhile, super-prime low-income consumers ben-
efit less ($9.7), but sub-prime low-income consumers also pay less (-$2.6). Thus, high-
income consumers with high FICO scores benefit from reward credit cards largely at the
expense of high-income consumers with low FICO scores.
> As our findings are inconsistent with the “reverse Robin Hood” hypothesis
tl;dr: it's a stupid tax. People with high incomes who are still financially unsavvy end up indirectly subsidizing lower income, savvier CC users.
Rewards aside, credit card also offers things like extended warranty, travel insurance, chargeback protection. These things makes them invaluable to customers. I use my credit cards for everything because it’s strictly better than debit and it works everywhere.
Accepting credit cards is a net benefit for merchants, even accounting for fees due to increases in volume. This is just greed. They want access to the network without actually paying for the privilege.
It’s not entirely one-sided, customers do pay for the rewards: My 3 credit cards are costing me 1500$ per year in membership fees.
Of course, without credit cards, people could only spend what they have so demand would fall, at least in the short term (or merchants would have to go back to offering credit themselves like the old days).
Credit card companies also offer a whole bunch of services to users like chargebacks and disputed that make it easier to enforce things like warranties.
Plus there are social benefits like reduced crime and saved time and energy visiting banks etc.
I don't think you can do a charge back on a debit card. At least not here in the UK. Though you are quite right about crime etc.
I mostly use debit cards because I have no real interest in getting credit and dealing with debt etc.
I never know the status of debit cards. I assumed they were free riding on the credit card infrastructure (hence the zero fees etc). Is that not correct?
Not necessarily. Ever notice how your card usually has a bunch of retailers you can pick to get discounts or extra points from? That's not just your bank being generous. That's usually paid for, in one way or another, by those retailers. They're basically sponsored rewards (I don't know what the industry term is). Credit card companies would still get paid transaction fees and get paid for those "sponsored" rewards, so they'd still be incentivized to make you spend more. But I imagine the rewards would be less generous, and perhaps differently structured.
No. A reward card might charge the merchant a 2.5% interchange fee, they kick back 1% to the customer. Versus a non-reward card that might charge a 1.5% interchange fee.
