Comment by Sohcahtoa82 | Hacker News Reader

Comment by Sohcahtoa82 | Hacker News Reader

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> Why do I borrow $100 to buy groceries every week? I have more than $100 in my bank account at any given moment. Why do I borrow $3.50 to buy a coffee at Starbucks? I'm constantly borrowing money that I don't need, and then paying it back within a few weeks, just so that I can prove that I'm a responsible debtor.

I do it because I get a 1-3% rebate on all my purchases. That's free money for me.

Before I had a credit card that gave me a rebate, I bought everything with a debit card. I still had a credit card, but it was only for emergencies.

> Still, the whole system of taking on debt for every minor purchase, just to prove that you'll pay it back, is sort of absurd.

You don't really need to use the credit card to establish credit history. Simply having one is enough. A lot of people believe that to maximize the boost to your credit score, you shouldn't completely pay off the card, and instead carry a small balance every month, but that's a myth.

> I do it because I get a 1-3% rebate on all my purchases. That's free money for me.

In your mind it's a 1-3% rebate, but in actuality you're paying for it anyway due to merchant fees, etc.

If we're going to question the overall system, then not having credit cards would likely mean savings for pretty much everything you would buy today that uses a credit card as a facilitation of payment.

> In your mind it's a 1-3% rebate, but in actuality you're paying for it anyway due to merchant fees, etc.

Most US businesses don't bother with offering discounts for cash/debit payments, so it's not like cash-only lifestyle will generate dramatic savings.

You're missing the point.

If (a) everyone who owned a credit card actually had the means to pay for the good/service with available cash (even if not literally in their pocket) then (b) credit cards wouldn't be necessary and thus (c) good/services that typically use credit cards would be ~1-3% cheaper. In other words, the people who are getting rebates are artificially getting them b/c if credit cards didn't exist, all goods/services would be cheaper.

But credit cards _do_ exist. Who cares about hypotheticals where they don't?

But credit cards do exist. And the person is getting a rebate over paying cash.

Cash has its own costs:

* someone needs to drive to the bank to ensure the register has enough pennies, quarters, and dollar bills to make proper change in the morning

* a system needs to be developed to prevent employees from stealing cash

* to avoid being a crime target, there needs to be a way to safely store larger amounts of cash

* there's a cost of an occasional fake bill being accepted by an employee

* someone needs to drive to the bank to deposit the day's earnings into the bank account

It's not like the US has zero businesses that deal exclusively in cash, so there should be success stories of disruptive startups going against the establishment by foregoing merchant fees and passing the savings on to consumers.

But outside of Arco am/pm gas station, I struggle to find a good example where a cash-only business, or chain, or a sector would offer consistently lower prices than their credit-card-accepting counterparts.

Which is exactly why it's not "free money" as the GP suggested.

You're not really getting a rebate, the extremely high merchant fees in the US are paid by the customers.

While it makes sense for the individual, high fees should be regulated.

> You're not really getting a rebate, the extremely high merchant fees in the US are paid by the customers.

I don't know if it's the same in the US, but in Canada, the price can't be affected by the way you pay for it. That push some places to refuse cards.

That means that customers who doesn't use credit cards, pay for my rewards too.

Well, if you never put any transactions on the card, it's liable to get closed by the bank without notice - I had that happen with my oldest credit card after a few years of not using it, which hurt my credit score because you want your credit lines to be as old as possible.

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