Comment by CalChris
2 months ago
> According to the Federal Reserve, over 100 billion debit card payments were made in 2021, compared to 51 billion credit card payments. In terms of transaction value, debit cards processed $4.6 trillion, while credit cards reached $4.9 trillion, indicating that credit transactions tend to be about double in average value.
Interesting that debit cards are twice the swipes that credit cards are. Didn't know that. I wore the debit card hair shirt for decades. They have a ~0.73% transaction cost vs 1.5% to 3.5% for credit card swipes. But I never once got any benefit from this lower transaction cost.
So now I have the Trifecta and a Savor. I work my credit cards aggressively and use their benefits to exceed their annual fees before even accounting for 3% cash back and Membership Reward Points and signup bonuses.
I am winning on this. Consequently someone else must be losing. It seems to me that the debit card users are subsidizing me.
Just a quick note, no one has ever become wealthy from their credit card rewards.
I don’t know what your system is, but it sounds like you enjoy it, so you do you.
And yes. Cash and debit cards have always subsidized credit.
The final straw was a trip to the UK. My debit card had foreign transaction fees and then I was waiting in the cattle call area for a BA flight seeing people significantly more relaxed coming out of airport lounges.
My system, so to speak, is really nothing. Sign up bonuses, (American Express wanted me bad), read the fine print and work the benefits, use the right card for the given transaction.
Does this make sense? No, it does not. Yet here we are. I've always detested this stuff yet merchants are forcing me to take this benefit. So I take it.
FWIW, 99% of my transactions are with my phone. So there is no flex involved. My iPhone makes the transaction virtually the same as with a debit card.
It's often about getting benefits out of transactions you're going to make regardless of how you pay for it.
If you're going to buy groceries, does it matter if you pay cash (debit) or use a credit card? The credit card gives you some percentage of that purchase back in rewards, which you then redeem on other things such as airfare, hotels, dinner out, uber, etc.
Think of it like a coupon that's valid everywhere, and every time you use it, a tiny sum is deposited into a savings account.
Pay it off at the end of the month and it's pretty much free money. Credit cards also have better cardholder protections, security and safety than using debit cards or cash.
Some people use credit cards for every purchase and become highly skilled at maximizing card rewards. This is also why many will say card fees don't matter - you often accrue enough rewards to pay for the fee itself plus lots more, making the fee irrelevant. The fee is there to compel you to use the card often enough to exceed the fee's value.