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Comment by WalterBright

4 years ago

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.

20 comments

WalterBright

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ericmay  4 years ago

Yes the issue is that if you decide not to participate you still pay the same price and get 0% of the cash back.

  • WalterBright  4 years ago

    For gas, there's one price for cash, a higher one for credit card. Guess what, that cash back covers only part of the price increment.

    The idea is:

    1. pay cash when there's a lower price for cash

    2. pay with credit card when they're the same price

    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.

    • lxgr  4 years ago

      > 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?

      2 replies →

tastyfreeze  4 years ago

While true, if there isn't a different cash price you are wasting money by not paying with a rewards card.

tzs  4 years ago

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.

jjav  4 years ago

> When you get 1% cash back, you paid for that cash back. You're not receiving redistributions from other people.

Certainly, but given that it's how it is, you can participate in the game and get your 1-2% back (sometimes more), or not. Might as well get it back.