Comment by ifwinterco

3 days ago

Yep if you use a card in the US the company just takes 2c from your left pocket and puts it in your right pocket in a form that's more difficult to use.

And if you don't use a card, the business takes 2c from your left pocket and keeps it.

It's a great trick though, people really buy into the whole points/cashback thing and don't realise they're being paid with their own money

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ifwinterco

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lxgr  2 days ago

It's usually more than 3 cents out of your left pocket and 1.5-2 into your right one, even if you do everything right and never incur interest charges or fees.

> It's a great trick though, people really buy into the whole points/cashback thing and don't realise they're being paid with their own money

Even better, they become poorly-paid lobbyists for the entire scheme, since it successfully makes them feel like they're getting "luxury" items/services for free by "gaming the banks", when they're really just participating in a loyalty scheme exactly as designed.

Sure, it's possible to eke out a net cash profit here and there, but all in all, it's just a great counterexample to homo economicus.

lotsofpulp  3 days ago

It’s not being paid with my own money. If I can get 2% cash back, then the situation is I either pay 98% of $x, or $x.

Nowadays though, many sellers are offering at least 3% or higher discounts for not using credit card. My mobile network provider, home ISP, daycare and kids activities, insurance, taxes, healthcare, tradespeople, and even Target offers a 5% discount if you do not use a credit card.

It’s basically only travel, restaurants, and non Target retail that earns credit card rewards. Although sign up bonuses make it worth paying the additional credit card fees sometimes.

  • lxgr  2 days ago

    > It’s not being paid with my own money. If I can get 2% cash back, then the situation is I either pay 98% of $x, or $x.

    The counterfactual isn't getting or not getting 2% cash back, it's the merchant paying or not paying ~3% in fees, a part of which you get back from your issuing bank as a kickback to keep participating in and advocating for this scheme.

    Of course this would require regulatory action. Absent that, the status quo represents the stable equilibrium.

  • veidr  3 days ago

    Well if you can get $100 worth of X on credit card for $98, but you can buy the same thing with cash for $97, aren't you actually paying 150% of the "cash back" with your own money? ¯\\_(ಠ_ಠ)_/¯

  • ifwinterco  3 days ago

    My point is if credit cards didn't exist, the $1 thing would cost 98c, so in that sense it's your money.

    Admittedly that is overstating it a bit because not everyone uses a rewards card. In reality the 2% cashback is 1% your own money being given back to you and 1% money from people paying in cash being transferred to you (normally regressively as someone else pointed out).

    If you get a discount for paying cash, then it really is just your own money