@Anonymous wrote:
@Anonymous wrote:
@Sharingan wrote:As for the OP's second consideration, there are other banks with charge cards; however, they have AFs as well from what I can see. The challenge would be combining a competitive reward structure with $0 AF, as there wouldn't be a steady flow of interest for the bank to defray some of the rewards disbursements. Such a charge card may work well for customers but would probably perform quite poorly for the bank. The American Express Zync card (which I still have to this day) was AmEx's attempt to compete in this segment and it fell flat. The AF started as low as $25 and increased as the user added more rewards to the card in the form of "packs." I doubt you will see AmEx introducing a no-AF charge card anytime soon.
I think AmEx could do a flat 1.5x cashback/MR charge card without charging an AF considering the higher swipe fees they get. In fact, I'd go as far as to say that nearly every credit card reward program is likely funded almost completely through swipe fees (which is why they've been tending to upgrade cards to Visa Signature/WMC/WEMC lately).
If you're a Schwab client, they offer a 1.5% CB card.
Going off topic but we're talking 3 different revenue models between Amex (at least historically), Schwab, and your typical bank (Chase, Citi, et al.).
I suspect the majority of Amex cards excluding the artist formerly named Costco are of the charge variety: no interest means they lose that revenue stream (though admittedly they've flirted with pay over time to try to open that up) to offset rewards.
Schwab makes their core revenue on asset management / transaction fees, so the 1.5% CB is just advertising.
Chase etc, not only get some measure of the swipe fees, but also do have some balance carried interest and other revenue streams too for that matter. Actually to further support that, look at Chase's AF's on cards offered to the average consumer (not the Palladium), both the Ritz and the CSR are marked departures from their earlier fee structure.
End of the day a company is going to have some business metric target, one of those is certainly going to be bottom line revenue, and Amex doesn't have as many levers to pull. Personally I think someone will buy Amex whenever the stock price becomes cheap enough... or maybe they turn it around, either way I don't think Amex is going to be left as a rotting carcass even if they do look like they're going to fold: at some point it'd be a rounding error for WF and they should be diversifying as the mortgage market may not be a cash cow forever (like as soon as interest rates go up non-trivially).
Anyway interesting thread; I'm back at college now and still with my eating out ways, the majority of people I see are using debit cards. Of the people I interact with directly, again mostly debit cards... this includes one legit financial advisor (age 27) and one 21ish year old who claims to do financial advising and credit repair etc on her LinkedIn page (who asked on seeing my carried stack of 4 credit cards if I had credit issues haha).
I'll get an interesting datapoint this week as I'm eating lunch with one of the Economics lecturers, I will be surreptiously observing what he pays with too 
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I'm the father and uncle of 7 millennials in total. One observation I would have is that
millennials in general are less financially sophisticated than recent previous generations
were at the same age. It shows up in the delayed household formation and the delayed
home ownership or renting as an individual. The economy is structured differently now
and personal financial skills aren't as necessary or useful as they were for previous generations
during young adulthood. Maybe they will catch up later as delayed financial decision
time comes to them or maybe it is a societal evolution. Dunno, it will be interesting to
follow.
I have spent some time with "the kids" trying to impart a little knowledge about matters financial.
To be very honest, I think that credit card usage is a very low priority compared to getting up to
speed on things like retirement savings, preparing for home ownership and managing insurance
coverages. But I have made some of them AU's on various cards to jumpstart their credit profiles.
I give them the strong advice though, that actual usage of credit cards has only limited rewards and
potential of greater risk. You have to have your eyes wide open and educated if you are going to
integrate credit cards into your day to day finances. So far, none of them have really jumped on the
credit card bandwagon, which I think is fine.
+
850 FICO8 since 2015, Thanks MyFICO - 5+ years since last HP
@bada_bing wrote:I'm the father and uncle of 7 millennials in total. One observation I would have is that
millennials in general are less financially sophisticated than recent previous generations
were at the same age. It shows up in the delayed household formation and the delayed
home ownership or renting as an individual. The economy is structured differently now
and personal financial skills aren't as necessary or useful as they were for previous generations
during young adulthood. Maybe they will catch up later as delayed financial decision
time comes to them or maybe it is a societal evolution. Dunno, it will be interesting to
follow.
I have spent some time with "the kids" trying to impart a little knowledge about matters financial.
To be very honest, I think that credit card usage is a very low priority compared to getting up to
speed on things like retirement savings, preparing for home ownership and managing insurance
coverages. But I have made some of them AU's on various cards to jumpstart their credit profiles.
I give them the strong advice though, that actual usage of credit cards has only limited rewards and
potential of greater risk. You have to have your eyes wide open and educated if you are going to
integrate credit cards into your day to day finances. So far, none of them have really jumped on the
credit card bandwagon, which I think is fine.
I see things as far more intertwined than that: without credit cards or other tradelines it's non-trivially hard to obtain a mortgage in the current market. Additionally in some states it is legal (and therefore done) to use credit as a determining factor of insurance rates... being fiscally responsible mandates optimizing one's credit report for these and other reasons TBH.
That doesn't even include more advanced topics like floating balances for a month so you can max out your annual tax-deferred retirement contributution.
Admittedly a financial collapse isn't out of the realm of possibility in which case we may go back to a cash or even barter based economy, but barring that near doomsday scenario, can't simply ignore the fact that a credit score requires tradelines, which generally speaking, means credit cards. More likely with the attempt in FICO 8 and the yet to be proven false comments regarding FICO 9, I'd be very leery of relying on AU's while delaying the decision to pull the trigger on establishing their credit.
Running around without a credit score is simply handicapping oneself, I made it to age 36 mostly without a credit card and wearing the numbers off my BOFA debit card (literally)... then whoopsie, no house for me. I wouldn't recommend that for anyone.
/soapbox
I'm a responsible spender so I don't fear using credit cards. It's feels too prestigious to put off credit cards. Having prime credit cards tell others that I'm a financially responsible person - not everyone can have these cards.
I'm not saying this assumption is always right, or is it right to feel so, but I feel repulsed when I see people pay with their debit card. It makes me think they either have no credit or bad credit. I enjoy using the bank's money for free while earning rewards simply from using their cards. Of course, this isn't for everyone, just for the financially responsible. However, I'm not the type to purchase anything that appeals to me the moment see it.
