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Comment by MrFoof | Hacker News Reader

I realize I'm likely an outlier (as a millenial) in my age cohort but... the whole reason I have no credit card debt is because I'd prefer to not pay interest when I don't have to.

I certainly use my credit cards. In fact, I use them for everything I can, to maximize my rewards (which equates to ~$75 in cash back every month). The only things I can't use them for is rent and health insurance. Everything else gets churned through, and the balance is paid off at the end of every statement. It's quicker, has better fraud protection, and is easier to ensure I'm staying on budget. I just haven't paid a cent in interest in at least a decade.

I believe the term the credit card companies have for me is a "deadbeat".

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> I believe the term the credit card companies have for me is a "deadbeat".

Nope, they're still collecting interchange fees [1] from everyone you do business with. They're probably taking the same amount as your rewards, if not more.

[1] https://en.m.wikipedia.org/wiki/Interchange_fee

It's worth pointing out that as cc payments have become ubiquitous, theses fees are built into the pricing we are all paying.

Essentially, the participation and dominance of credit card transactions in our (U.S., at least) economy maintains a some-percent elevation in consumer prices. That "toll" going in large part straight into payment processors' and banks' pockets.

If you do pay by another means, perhaps the seller gets a bit more on that particular transaction. But I've talked with many small business owners who greatly lament these transaction fees. Not insignificantly, because they've been unable to compete with the negotiating power of big business, the latter as a result getting lower fees and a resulting competitive advantage.

As for "deadbeat", I've heard that term before, used for precisely the circumstance described.

Are they "losing money"? I doubt it. But along with oligopoly comes an oversized dose of greed. And some portion of management looking to sell their own performance by upping the return/profit rate on extant accounts. Or something like that, no doubt.

> I believe the term the credit card companies have for me is a "deadbeat".

No, the credit cards are making plenty of money off of you: probably on the order of $150 a month. From there it costs $.35 to bulk mail your bill, and $.25 to process your payment (including the cost of running the web site you pay it at). There is also your share of the advertising they do, and other overhead that I don't know how to place. Still their profit off of you is over $100/month!

I'm not entirely convinced that the person who maxes out their cards and pays interest is actually more profitable - a lot of them will end up defaulting in a few years and paying less than they actually put on the cards in interest. I can't be bothered to look up the numbers (if they are even available) to see if that is true or not.

Of course I made up the numbers above. They are ballpark (and somewhat variable), but they give you a picture of the truth: your are insanely profitable to them.

Having worked in payment systems and processing, I'm well aware of the interchange fees and other fees.

However, the specific name for the cohort of users who paid a very small percentage of their spend (including 0%) was indeed "deadbeat" (at least in the two data warehouses I helped build out), as I'm less profitable than others with less spend.

In fact, one issuer (Capital One) actually closed a card I regularly used (~$1000/year annual spend) about 2 years ago, the letter not stating reasons why. I actually called customer service, and they cited that the costs to maintain my account was considered too high. I used them for a specific category of transactions in which the rewards were higher than any other card I had. Though my usage was apparently insufficient to make it worthwhile keeping me as a customer.

$1000/year is a very low amount to consider regular use, I would think.

As others have stated making money off of the merchants is part of their business model. At $1k/year I wouldn't be surprised if that puts you into negative territory.

I'm a Millenial and I'm the same way. My wife and I pay for everything on our credit cards, then pay them off each month before interest accrues. We get the reward points with none of the drawbacks. We've been doing it for about a decade now.

The idea of using a credit card to spend money that I don't already have sitting in the bank is appalling to me. If I need more money than I have, I borrow it from somewhere else. I would rather sit down at the bank and ask for a small loan from them than use a credit card with an obscene interest rate.

Same here.

> We get the reward points with none of the drawbacks.

A small nitpick would be that there is a drawback: the cash value of the reward points is less than the additional cost of doing business for the merchants you pay via credit cards. Granted, if everyone else is using credit cards while you use cash, you get hit with that drawback without the benefit of recouping a portion of that value by way of points.

Unfortunately, in most cases, you are not given the option of the discount for not using a credit card - the cost is baked in and amortized over all transactions. Aside from a few gas stations that offer a cash discount and under-the-table transactions, I've seen so benefit to not using a credit card.

This is rather baked in agreements that the merchants signed with the credit card companies, where it is stipulated that they must not make goods cheaper for cash paying customers.

Most are worded such that a merchant can't "charge more for using a credit card", making cash discounts OK.

That's because the merchant won't give you a discount for handing over a wad of cash. They just pocket the extra that would have gone to the interchange fees if you had paid by credit. So you'd be stupid not to just play the game and use credit.

If a merchant gave me a solid 4% discount for handing over a wad of cash, I'd put away the credit card.

"They just pocket the extra" is another way of describing a business' profit margin. The point here is in order to pocket enough extra to stay in business, they need to increase prices in order make up for the additional cost of credit card transactions.

They don't and can't give you a solid 4% discount for cash payments (or a credit card surcharge) because it is generally against the terms of their merchant agreement and they would be at risk of losing their ability to process credit card transactions altogether.

My original comment was merely reflecting on the fact that the perceived upside of getting rewards is dampened by increased costs that are passed all the way back through to the consumer anyway.

While it is legal for merchants to charge more for CC transactions (giving the buyer incentive to not use cards), I think this is relatively new.

It wouldn't hurt, IMHO, to just ask a vendor if they can give you a discount for cash.

Some groceries near me (given the large Asian/Indian population) simply don't accept CCs. Some accept debit cards, and give you an incentive for cash.

Everyone else is using credit cards, whether I choose to or not. I'm paying that price increase either way. I might as well get some benefit. It seems idealistic in an "I'm voting 3rd party" sort of way to think that by being stubborn I will change the whole system. However, if a movement began to gain traction towards cash-only purchasing, I might join it. I'm not under illusions about my own influence on the world - I have none.

I'm not a millennial but I do this as well. However, when I was millennial aged, I used debit cards almost exclusively and credit cards only rarely. Now I use credit cards exclusively, paying it off every month, and never use my debit card. The security, rewards, credit score, etc are far better with credit cards.

The credit card companies still get paid on transaction fees, which is where your rewards come from. They collect $150 from the merchant and pass $75 on to you. They are arguably making just as much money on you as someone with low transaction volume (say $250/mo) but with a $3k-$5k balance @ 20% APR which is $50 to $80 in interest a month.

Actually I don't think you're an outlier at all. This is exactly what me and my wife do. Everything from the mortgage to daily coffee goes on a card. I have a weekly calendar event to zero of the balance on each. We get all the cash back benefits and never pay any interest or membership fees.

Also an outlier - the whole reason I don't have credit card debt is because I'd rather "pay now" lest I "forget later". I know I'm really bad with remembering to pay monthly bills if they don't pay themselves so buying things on credit involves an extra step of "paying it off immediately" which AFAIK defeats the entire purpose and negligibly, if at all, builds credit. It's a debit card with additional hassle added to every single purchase. No thanks.

Deadbeats don't pay their bills; sound like you do.

Instead, you are a "transactor", vs. a "revolver", one who takes on the debt for more than the grace period.

The article is arguing that they don't get credit cards to begin with, not that they don't want to get into debt.

Credit cards are valuable tools since they:

1. Offer all sorts of insurance/protection. 2. Lump multiple small transactions into one monthly debit from your checking account. 3. Offer a 30 to 55 day interest free float.

The issue is that some people have no self control. Once you start missing full balance payments all benefits are pretty much negated.

Honestly, that's all this argument ever boils down to.

"I don't use CCs because I have no self-control"

It's also easily solvable by getting a credit card with a low transaction limit (say, $1000), but people who have no self-control generally aren't interested in solutions.

I do roughly the same thing.

My regular bank changed the fee structure on me, somehow I missed the notice about it, and I got dinged with some account fees. So I switched ALL of my day-to-day spending to a credit card with a competing bank.

So instead of 40-ish Interac transactions per month for my day-to-day stuff, they get one bill payment transaction.

My interest payments are zero, since the bill gets paid off, plus I get the cashback bonus right around Christmas time.

Ditto. My credit cards are set up to auto-pay in full every month (because apparently I'm too dumb to understand Chase's billing dates, I actually got a late fee one time when I was trying to pay everything off 100% manually every month).

It's ridiculous, but I get more utility out of the credit cards, even with the fees, than debit cards.

I am exactly the same way. I buy everything using my credit card and pay off every cent from the last month on the 18th of each month. No extra interest, but I gain rewards and it has let me build good credit as a young person with no other means to do so. I've never carried a single penny over from one month to the next.

Using a fixed day sounds like a good way to have discipline. Usually the due date is some number of days (like 21) past the billing period date. The billing period end date is always some fixed day of the month, but the actual due date fluctuates due to the different lengths of months. If you pay a bit early and make it a fixed date, that could be a useful tool to stay in line. You can then program it into your smartphone calendar as a recurring item, too. Of course, in online banking you can also set up things to have the bill paid automatically; but there are downsides to these "set up and forget" schemes.

For your health insurance, if you're otherwise healthy, look into an HSA. You'll have a high deductible ($3k-ish) but it's linked to a savings account that can grow over time. Mine is currently paying 1.5%, which beats the pants off any other savings account I have.

How do you get so much cashback? I've always poo-pooed credit card benefits because back of the envelope calculations always make them seem negligible (ie 1% cash back)

One way is to look for introductory deals. A lot of cards give bonus reward points for opening an account, then more if you charge a certain amount in the first 30 or 90 days, etc. Some also give double or triple points for spending in certain categories e.g. restaurants or travel.

Straight cash back bonuses are maybe not as easy to find.

If you know what you're doing, it's easy to get 5-10c per point.

There are entire websites and communities dedicated to the points game.

Same here. There are a lot of advantages if you use a credit card to pay for most things, as long as you pay the balance in full every month.

I'm also a millenial, and I do a similar thing. Maybe that's why they don't think we're "using"?

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