Comment by andruby
2 years ago
> I wouldn’t assume everyone is happy with it. Consumers are going to prefer rewards programs over no rewards programs.
Personally, I would disagree. I prefer no rewards and a simple landscape where I don't have to compare credit cards.
I lived in both EU and US, and didn't like the work needed to compare (and keep comparing) all the credit card offerings. In the EU, you just the credit card from your bank and don't feel like you're missing out.
I my part of the EU I'd certainly feel like I'm missing out if I just kept on paying the ~€5 a month fee for a bank account and didn't look for a card that gave me some kind of return on my spend every month...
(It's Finland btw, and you need a Finnish, not "anywhere-in-SEPA", bank account in order to practically function in society here with the strong online authentication service)
The return you get is just taken from you without you knowing it. The rewards programs is taking your money and giving you back a part of it.
No, it's taking the merchants' money and giving you back part of it. How much do merchants eat it vs passing on the cost? I don't think that's an easy question to answer and probably varies a lot by merchant type and product, but I think we can assume the answer is not always passes on 100% of the cost, so owners of the high end rewards cards are winning to some degree. You could argue that non-rewards cards are absorbing costs of rewards cards in the case where merchants do pass through costs, though.
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I thougt that it works like when you make a purchase using a credit card that offers rewards, the issuer earns money from the transaction through interchange fees, which are fees charged to merchants for processing credit card payments.
> paying the ~€5 a month fee for a bank account
That's the problem right there. Bank accounts should be free by force of law. A bank charging depositors for literally anything is just absurd. They should be paying you, not the other way around.
For many average people I don't see how they could be free. Maybe savings account with limitations should pay something and be free, but with checking account. You get what couple thousand passing through each month?
You have all the costs like KYC requirements, actual overhead of tracking and managing the balances and payments. And many of the payments options are free or low cost...
If it was such money maker, surely there would be lot of competition offering zero fee bank accounts.
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Why would you prefer a world where where you can’t get a 1-5% discount on everything you buy vs the alternative (spending on a debit card or using cash)? Obviously some people try to over optimize, but 30min of research every few years is definitely with the thousands of dollars of benefits in my mind