Comment by wookmaster
16 days ago
Im really surprised the number of comments here who think the rewards are free money they're getting. The stores are paying 3-5% transaction fees for you to use credit cards then they give you 2-3% back and force you to spend it on things they deem can be redeemed. You're paying for that 2-3% back in higher prices for everything. The whole thing is a giant scam and should be shut down.
Anyone who likes economics or money should see it for what it is, a tax on every transaction. Of course you don't want anyone to lodge themselves into your market and get 3% skimmed off on every transaction. This, for the good of the free market, the fees must be limited to sub 1%, preferably zero.
The cost of accepting cash is not necessarily lower - you have take into account higher theft risk, miscounts and cost of delivering it to the bank. Also there is no incentive for businesses to pass saved fees to customers.
> force you to spend it on things they deem can be redeemed.
Cards that redeem to cash or payment credit are readily available. You only get miles or flooz if that's what you want.
The system is bad, but if I'm buying stuff within the system, a rewards card is usually the least cost out of pocket.
At an individual level it is. I could use cash or debit card and get 0% back, or use a rewards card and get 5% back. Easy choice.