topic Re: Credit Card Rewards in General Credit Topics

Credit Card Rewards

veracious — Fri, 11 Feb 2011 18:46:51 GMT

I searched on these forums for a general consensus of opinion, and I still don't understand

who actually pays for the cost of benefits that everyone receives from their rewards cards.

Merchants, consumers, or CC companies?

Please post your opinions.

Thanks

eta: (spelling)

Re: Credit Card Rewards

Anonymous — Fri, 11 Feb 2011 02:07:24 GMT

Merchants do. My rates are about 1% higher on rewards cards and about 1.5% higher on world rewards cards.

Re: Credit Card Rewards

shiftomnimega — Fri, 11 Feb 2011 04:45:23 GMT

Merchants do, then they pass those costs along to consumers at the point of sale.

In fact, there is an article out there that discusses how those that pay cash only are subsidizing those who use plastic. If the costs are built into the price of a product to cover fees charged by CC companies, then cash buyers are not only stuck paying it, but they get no benefits from the increased costs.

Re: Credit Card Rewards

ficonightmare — Fri, 11 Feb 2011 15:07:21 GMT

@shiftomnimega wrote:

Merchants do, then they pass those costs along to consumers at the point of sale.
In fact, there is an article out there that discusses how those that pay cash only are subsidizing those who use plastic. If the costs are built into the price of a product to cover fees charged by CC companies, then cash buyers are not only stuck paying it, but they get no benefits from the increased costs.

I've found that when I offer to pay cash, the purchase price drops quite a bit. It's worked very well for me. Just be sure to get a good refund policy in writing on your receipt as you're obviously not protected by your CC.

Re: Credit Card Rewards

Anonymous — Fri, 11 Feb 2011 18:51:35 GMT

@veracious wrote:

I searched on these forums for a general consensus of opinion, and I still don't understand
who actually pays for the cost of benefits that everyone receives from their rewards cards.
Merchants, consumers, or CC companies?

Please post your opinions.

Thanks

eta: (spelling)

the CC companies make profit regardless.

people who pay interest on carried balances pay into the CC company. add to this amount late fees, BT fees, cash advance fees etc.

the CC pays 2-5% cash back during promos.

in any given time period, the aggregate of interest and fees paid to them is greater than the aggregate of cash back bonus $$ paid out.. thus the company profits