Comment by maest
17 hours ago
How come this is not a problem in Europe? Credit cards make same promises there, but usage is greatly diminished.
17 hours ago
How come this is not a problem in Europe? Credit cards make same promises there, but usage is greatly diminished.
A very big percentage of credit card expenses in the US come from cards with rewards programs, so you get money/gift cards/travel discounts in exchange for using the credit card instead of the debit card. A lot of this is funded from much higher interchange fees: It's ultimately the merchant you buy from funding most of the rewards. Since those very high fees are nowadays illegal in the EU, European credit cards cannot have this kind of generosity, and incentives are very different.
How does this work when using a US credit card in the EU? I assume the merchant still pays the lower interchange fee, so are the banks just betting that customers won’t do a large proportion of spending abroad?
They exempt those transactions from rewards.