Comment by TMWNN
2 months ago
> Sometimes you get travel insurance, with the card that charges 200 EUR annual fee
Why would someone pay EUR200 each year for that credit card, then? Why does it exist at all? The only US credit cards I know of that have fees have fees because of their (huge) benefits.
You, of course, pretended to not see my pointing out your laughable math regarding fees versus cashback even though I said up front that I get 2-5% back.
The math must to check out from the bank perspective, there's no way around that, no bank will accept losing money.
If your credit card gives you 2% cash back on everything then obviously interchange fees charged must be just a tiny bit higher. [1]
As for 5% cashback on Amazon purchases (or similar promos) that's a completely different business model: the card is co-branded by Amazon, so it is Amazon that eats the cost of cashback, hoping that they will make up for that from your increased spending. That's why cashbacks higher than 2% are always on specific categories, or even specific stores/product brands - because bank needs a partner to eat the cost.
[1] https://www.wellsfargo.com/biz/merchant/payment-processing-p...
It could be amortized by the amount of people they expect to be delinquent. CC interest have super nasty rates.