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Comment by billfruit | Hacker News Reader

One modern trick to earn a tiny bit of extra money: Use credit cards for buying/paying anything at all, never use debit cards or cash: Credit cards usually pay a small reward point for spends which can often be redeemed as a cash discount later, and also since the expenses go to the credit card, the cash in the savings account stay untouched till the day you make the credit card bill payment, which will keep earning interest for the additional days it remains in your account(Which may be a significant amount over long term, in a high interest rate country).

In some countries you can route large payments like insurance premium payments through the credit card. Sometimes insurance companies even have investment products which they claim are "insurance policies", that can be bought with credit cards too.

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There is a psychological effect when spending money with credit cards. Spending physical cash hurts one the most, then debit cards, and credit cards cause the least hurt. It is very easy to overspend with credit cards, and leave the tab for future you to worry about.

Depending on how susceptible you are to such psychological tricks (and cashback is also a trick to make you spend more or hook you to the brand -- it is only offered because it is EV profitable to the bank), your advice may be neutralized or net negative for a large part of the population that lacks your strong self-discipline. One late fee and you wipe out all your profits (and your credit score).

Smart and risk-free to only spend what you've got ("pay as you go"), besides you help avoid a national credit crunch.

> Debt robs a man of his self-respect, and makes him almost despise himself. Grunting and groaning and working for what he has eaten up or worn out, and now when he is called upon to pay up, he has nothing to show for his money; this is properly termed “working for a dead horse.”

> It is all very well to say, “I have got trusted for sixty days, and if I don't have the money the creditor will think nothing about it.” There is no class of people in the world, who have such good memories as creditors. When the sixty days run out, you will have to pay. If you do not pay, you will break your promise, and probably resort to a falsehood. You may make some excuse or get in debt elsewhere to pay it, but that only involves you the deeper.

You have a point, but pay them off every month and you have a good credit rating for a (strictly defined) emergency.

In the Netherlands, credit cards aren't widely accepted because the local debit card system has no transaction fee. Without 3% card fees, the consumer prices are lower, so the whole country saves extra money.

In north america, I think they mostly (still?) aren't allowed to offer differential pricing - by law - which helped the rise of credit cards. There has been a lot of back and forth on this in law so YMMV depending where you are.

Not true since 2012.

https://www.nytimes.com/2012/07/14/business/mastercard-and-v...

More details here, but some states ban surcharges while allowing cash discounts:

https://www.cardfellow.com/blog/cash-discount-eliminate-proc...

It's not about differential pricing. If a vendor has to pay x% on a majority of purchases, he will just increase the price for all purchases. So without CC everyone pays less, while with a majority CC customers, everyone pays more. While CC payers get some of that additional cost back as reward points. Overall everyone would be better of without CC though.

I'm not pointing this out to be pedantic, but because I think it's interesting: it was actually not by law that merchants were not allowed to offer different prices for cash vs. credit card purchase, it was by contract.

That is to say, in the merchant agreement required to accept credit cards, merchants promised to the credit card companies that they would not charge users of credit cards more than cash payers.

As another poster points out, this anti-competitive bullshit was made illegal by law circa 2012.

These kinds of coercive/collusive agreements among a cartel of providers of a particular type of service worry me deeply, especially when a previously-luxury service (e.g., credit cards) becomes semi-necessary infrastructure for operating in the modern world. For more on this type of problem, I encourage you to read about the unbanked [0] and the challenges they face.

Despite how much better they make my life, I also look at the success of Uber, Lyft, AirBnB, and other platforms with worry, precisely because they are in many cases creating semi-necessary infrastructure in the private domain. Individuals can already be banned from Uber [1] and Lyft (and Google [1], etc.) without any legal recourse, which also means by mistake because you are treated as guilty until you can prove your innocence, and innocence is usually impossible to prove.

Here's one (hypothetical and admittedly unlikely) future I worry about: autonomous cars rule the world, 99% owned by four companies (Uber, Lyft, Waymo, ???) that provide Uber-style transportation services. There's no public transport anymore (all outsourced to those four, it's much cheaper than dealing with public transit unions!) and so to get around more than walking distance requires being in the good graces of at least one of those four companies.

Poor John takes a ride in an Uber, gets sick from something he ate in earlier that day, and makes a mess in the car. Uber bans him for this infraction, and shares his name on a ban list (e.g., credit reports) so now John is banned from transportation, and has no recourse (e.g., Google's Gmail bans) -- for the simple mistake of eating undercooked scallops, John is now royally fucked because our infrastructure is outsourced and our society has no say.

I don't expect this future to come about. I expect heavy regulation of these semi-necessary infrastructure companies, and I expect it will come soon. GDPR is one example of this pushback, perhaps not the best example. But I welcome more.

[0]: https://en.wikipedia.org/wiki/Unbanked

[1]: https://www.elliott.org/problem-solved/i-am-banned-by-uber-c...

[2]: http://www.jonasblog.com/my-gmail-account-got-deleted (among many)

There are still laws at the state level in the US that make it illegal for a merchant to charge more for credit cards. I lived in Colorado when the law passed there. It was impressive marketing by the credit card companies under the guise of consumer protection. Sucks because most people fell for the propoganda and now it's law.

  Colo. Rev. Stat. §5-2-212 
  “(1) Except as otherwise provided in §§24-19.5-103 
  (3) and 29-11.5-103 (3), C.R.S., no seller or lessor 
  in any sales or lease transaction or any company 
  issuing credit or charge cards may impose a surcharge 
  on a holder who elects to use a credit or charge card 
  in lieu of payment by cash, check, or similar means. A 
  surcharge is any additional amount imposed at the time 
  of the sales or lease transaction by the merchant, 
  seller, or lessor that increases the charge to the buyer
  or lessee for the privilege of using a credit or charge
  card. For purposes of this section, charge card includes
  those cards pursuant to which unpaid balances are 
  payable on demand.”

FTC clearly states merchants can offer discounts for cash other payment methods:

https://www.ftc.gov/tips-advice/business-center/guidance/new...

>A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously.

I also live in Colorado. It is still legal for vendors to offer discounts if you do not use a credit card. Some gas stations have lower prices for gas with cash versus card. If you are buying something you bargain for (e.g., furniture), you may be able to negotiate a lower price with cash versus card as well.

Been to a gas station? Cash vs Credit pricing. My local beer store does the same thing.

I was in NL a few days ago. The taxi driver asked me to change me €5 extra for a €10 ride. Of course I declined and paid what was in the meter. Stealing is not ethical. If they don't want to use cards then they should remove their VISA/MC stickers and we will use other ride services (or a tram!)

€5 seems high, but it's fairly common in eg Australia for smaller merchants (corner shops etc) to charge a card processing fee if your transaction is below a minimum threshold, usually $10.

The driver was probably trying to cover the transaction fee, it's not like most taxi drivers are raking in the big bucks.

This advice is specific to the US and maybe a few other countries.

In most other countries, the general idea is that you should be saving money and a credit is the opposite of that. As a result, you are not likely to be offered more than "no fees" for your credit.

Note that in many countries, debit cards are called "credit cards" and US-style credit cards don't exist.

Note, though, that debit and credit cards are named so from the position of the lender, not the cardholder.

I'm against this practice because of two things:

First, you are selling a little bit of your privacy, the bank you know all your purchase patterns and even though this seems not to be abused it creates a precedent that I do not like.

Secondly, every time that you buy things with your credit card the bank change the business a small fee, so in a way you are making the 'rich' more richer and the 'poor' more poorer.

I believe that these two thing will make me use cash forever.

Cash comes with a fee; armored trucks, safes, money-handling mistakes, etc.

Don't have a source on hand, but I remember when I looked into this that that extra spending on cash that you mention is dwarfed by the ~2% charged by e-payment processing.

In some countries there are no additional fees if you pay with credit card.

Really? How would that even work? Somebody has to pay the transaction costs...

May be the merchant absorbs them, may be the bank does not charge them..

I'm not aware of any countries where no fees at all would be levied, but to provide two examples from Europe:

- In the EU, interchange rates are limited to 0.3% [1] for credit card transactions at physical terminals ("card present transactions"). That's not free, but it's an order of magnitude below US levels. Caps for other payment methods (card not present transactions and transactions made with debit cards) range from 0.2 to 1.5%.

- Some banks, or groups of banks, operate their own schemes (i.e. payment processing networks competing with Visa and Mastercard), and generally achieve lower fees. See [2] for one example where the price per transaction starts at $0.23 and goes down for transactions below $10, and for customers processing more than 10k transactions per year.

[1] http://europa.eu/rapid/press-release_IP-18-6655_en.htm

[2] https://www.postfinance.ch/en/business/products/accounts-rec...

No additional fees, but they get around that by offering discount for cash.

What I see in some countries is same price for cash or card.

Visa/Mastercard have a rule that you can't charge extra for using a credit card. If you find a business doing so you can report them and they will get the credit card facilities yanked.

But you can always offer a discount for cash. So some places do this to get around that rule.

If you're buying in cash you can try ask for a discount. If you're not asking you will get charged the same price they can't offer it out of the blue.

> every time that you buy things with your credit card the bank change the business a small fee, so in a way you are making the 'rich' more richer and the 'poor' more poorer.

I used to work for a small "mom n pop" style computer store, and did the cash drops most days. My understanding was that the cash handling fees were roughly the same as the card fees. Arguably card processing was cheaper for us,and less error prone (card machine hooked up directly to the till means I won't accidentally give the wrong change when I'm hungover, for example. )

Most of the time you see steep charges for paying by card (e.g. taxis) theyre related to tax avoidance - if you pay cash thryll just pocket it and not log it as a trip, whereas if there's a card payment there's a paper trail.

That's technically tax evasion, not avoidance. The former is illegal.

Apologies you're right. I'm unable to edit my previous messagr to fix it unfortunately

The only (imho) benefit for a credit card is the safeguard and the ability to get your money back.

I have stopped using credit cards for more than a decade.

In the UK I bank with RBS and when I have fallen victim to a fraud (e.g. my card been cloned or an online service stupidly saving more data than they should) I always gotten my money back.

I understand collecting points, but a debt is a debt and a credit card is a gateway to debt. Cash is king!

Edit: by 'cash' I mean debit card, not carrying £1000 on me :)

Offtopic, Frank Abnegale ( Catch me if you can fame ) also says the same thing in his [1] lecture at Google. The whole lecture is also pretty interesting.

One of the best google talks I have seen.

[1]: https://www.youtube.com/watch?v=vsMydMDi3rI&t=3264s

Didn't people abuse this one time to by buying $1 coins from the US Government with credit cards and then immediately re-depositing them into their bank accounts? They were essentially pocketing a fraction of the merchant fees the govt had to pay in order for people to buy the coins with credit cards.

Yes, and (in the US) money orders too, at USPS.

Then, USPS realised what was happening, and blocked them for purchase on credit cards.

The “manufactured spend” community (who cycle money through cards to get cashback/points without really spending money) then started buying prepaid debit cards & gift cards on credit, then buying money orders on gift cards, then depositing the money back in their bank.

That came to an end a couple of years ago when prepaid cards were also blocked: https://www.reddit.com/r/churning/comments/7ac5t9/doc_link_n...

What about fees?

Not sure about US, but I think in NZ all credit cards with cashback have fees. And I remember there was a research or something concluding that you had to spend at least ~$3000 (don't remember exactly) per month using cashback credit card to break even.

Also, credit cards are not accepted everywhere. And often there is a minimum transaction amount as well.

In the US we have a much better system. The overwhelming majority of buyers spend ~3% more on every purchase and then wealthy cardholders who can attain the requisite credit ratings for rewards cards are given a cut of this 3%. The rest of it goes to the card companies bottom line. A truly magnificent system.

You don't have to be wealthy to have a good credit score and/or a rewards card. It's pretty easy for anyone to get a decent rewards card nowadays. In fact I'd say the system is more perverse in that it rewards good credit to those who are slaves to credit, not those who are fiscally responsible.

I think in India, there is no extra charges if you pay via credit card at most merchants, i.e you pay the same amount as what you would pay with cash.

Same in NZ, but credit cards with cashback have monthly/annual fees.

For example, ASB (bank) asks ~$150 per year for a cashback credit card. How much do you get from cashback on average?

The fee for the ANZ Cashback card is around $200, so you need to spend around $20k/annum to break even.

It's $60 with a cashback cap of $300/yr (i.e. only the first $30,000 spend is counted), or $125 for unlimited cash back.

Still not great, but it's only $6000 spend to break even on the lower-tier card. Buying groceries each week will be close to covering it.

----

Edit: Oops, it's more complicated as it's not always 1% cash back:

  <$5000: 0% cash back.
  <$10,000: 0.5% cash back.
  $10,000+: 1% cash back.

It's not a marginal rate like taxes, so break even point is at exactly $10,000 when your payout jumps from $50 to $100.

https://www.anz.co.nz/personal/credit-cards/cashback-visa/

Even without cash back, the interest earnings could be something, a 1000$ deferred payment made through credit card may give 4$ to 5$ interest payment(assuming an interest savings interest rate of 5%, some countries have much higher interest rates), while that cash is sitting in the savings account, waiting for the credit card billing cycle to complete.

The Capital One Venture Rewards card gives me 2% back on all purchases (I'm in the US). It comes with a $60 per year fee. So, if I spend more than $3,000 on the card over the course of the year it's a net positive. Now, they have access to all of my purchase data but I get around $700 every year to spend on travel. I've weighed the costs/benefits and it's worth it to me.

Why not get the citi double cash, or fidelity 2% back with no annual fee?

to get $700 in rewards, you have to charge $35,000 on it, that's almost $3,000 monthly. I guess that would be doable if including rent and utilities (I doubt you can pay a mortgage with credit), but yes, more than the annual fee is definitely easy. Especially the first year in which you get the 50,000 bonus plus no fee.

I have a card with Barclays I discovered through uber. I only use it for uber rides and at restaurants. I have enough rewards points to get a $25 Amazon gift card at least once a month. Last month it was $50.

This is such a great tip.

Yes, but this comes with a caveat: keep an eye on your credit card spend and make sure that you never consistently spend more than 2/3 of your credit line, otherwise your credit score will be negatively impacted. In the US market they push you to use credit cards as much as possible, so for instance if you have a credit line of 5000$ you would expect to be able to spend up to that amount with no problem (as long as you pay it back) but I then found out about the 2/3 magic spend threshold oO

These cards typically have annual fees. The rewards are worth it if the volume of purchases is sufficient to yield benefits in excess if that fee, e.g. $100 a year.

If you have good credit you can easily get 1-2% cash back with no annual fees.

And it's much easier to get your money back from a fraudulent credit card use than debit card use.

that's a prisioner dilemma, actually.

Use credit card today, and you save some negligible money today, while prices go up since the fee is now a sure requirement for all vendors.

Avoid credit card like the plague, and operators will have a harder time justifying 3-12% fee from vendors, lowering prices for everyone in the long run.

The moment someone starts telling me to optimize for keeping my money in a savings account a little longer for the interest as financial advice I stop listening.

Maybe it's just my country (USA), but savings accounts are easily the worst place I have ever kept significant sums of money. They yield basically nothing for the depositor.

You can easily beat savings accounts just by trading a single tech stock with minimal exposure. Dumb strategies like riding the climb in the day or two approaching an anticipated earnings call and selling before the actual call to avoid risk will already net you a few percent per call. If you did that once per quarter, you can achieve +10% in a year without having any special skills or knowledge while barely even exposing yourself to the market, leaving your money as liquid cash in the brokerage account the rest of the time will still destroy any savings account I've seen.

Savings accounts are useful for isolating your funds from your checking account as a self-control measure. Once you're beyond struggling to save money at all and fully grown up, the utility is basically nil.

They're obsolete in a world with services like E-Trade offering a checking account w/debit card that refunds ATM fees and a linked brokerage account serving as both isolation from your checking account with the ability to trade online using those funds.

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