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Comment by kovrik | Hacker News Reader

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.

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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.

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.

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.

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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.

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?

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