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Comment by sgwae | Hacker News Reader

credit cards charge a fee, which you get some back as rewards. which exchanges allowed for feeless credit card purchases?

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I paid like $5 in fees, but earned like $20 in cash back.

The rewards outweighed the fees.

You of course know most people don't pay the balance off like you did, in which case the typical consumer would pay WAY more than the $20 in cash back.

I used to think banks hated us people who paid off our balance every month, but they still make money on us too...

The fees the vendor pays outweigh the cashback too. He says he paid $5 in fees, but that doesn't include the vendor's fees, which were probably baked into a lousy exchange rate.

I don't think there's any card that offers more than 1.5% cash back on everything (some offer above 1.5% on certain things). And most fees are at least 2%, so just on the transaction fee alone they cover the cost of points/cashback.

Interchange rates on Visa are >2%, and there's definitely cards that offer 2% cash back on everything, with the exception they generally bar "cash-like" items like cash withdrawals and t-bill purchases, to avoid holders just churning purchases for the rewards. (There used to be a way to make tons of points for buying like $10K of t-bills on your Visa, then immediately reselling them for $10K, because the Treasury wasn't charging the interchange fee.)

Depending on which banks. Some banks like Citibank and Capital One are known to target the subprime market. They expect to earn more from interest than from interchange fees. Others, like American Express are the opposite. See here for a table: https://www.reddit.com/r/churning/comments/5oucdq/the_econom...

> I don't think there's any card that offers more than 1.5% cash back on everything

Not quite true. For example the Citi Double Cash is a card that earns essentially 2% cash back.

> And most fees are at least 2%

Also not true. It depends on your card category (MasterCard World, MasterCard Elite, Visa Signature, Visa Infinite, etc) and purchase category. This is just the interchange fee, but even including other types of fees, a basic no-frills card can easily cost the vendor <2% in total fees.

See all the MasterCard interchange rates (Visa is similar): https://www.mastercard.us/content/dam/mccom/en-us/documents/...

Citi offers 2% cash back on everything with their DoubleCash card. It's the highest general purpose/non-category-specific card as far as I know.

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