CC rewards seem like a indirect regressive tax. Wealthier consumers who can afford to pay on time and have better credit ratings are subsidized by poor consumers who actually use the "credit" part of "credit card".
Paper from 2010 showing this: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1652260
News article with a good summary: https://www.reuters.com/article/us-usa-fed-wealthtransfer/cr...
tldr: >> ...the lowest-income household ($20,000 or less annually) pays $21 and the highest-income household ($150,000 or more annually) receives $750 every year.
Is being able to read and write an "individual responsibility?" How about the ability to communicate in a language at all? What about any other basic core skill that would make a person capable of learning more things to make them "productive?"
"Individual responsibility" as it pertains to these topics is at best a misnomer, if it even names an existent thing at all.
Surely you don't think it's ok for, say, a Company Town to exist? Can you extrapolate from there why it's not ok for credit card companies to bamboozle less educated Americans for money?
I guess we could look at the general fact that education is one of the better investments to increase a nation's GDP, bit I'm more concerned with the ethics than the money.
I could follow your argument if the card issuers weren’t transparent in their pricing and terms like payday loan companies. However, the interest rates are laid out very clearly several times as you apply and are approved as regulations demand. I’m all for education but at some point you have to let people do what they want with their money.
I'm not sure the country has taken the necessary step up in early education to even have the population have a baseline understanding of what interest rate is. I didn't learn that anywhere in elementary, middle, or high school. I had to figure it out on my own.
I don't think that's acceptable. I think that leaves our population vulnerable to predatory companies, who have a disproportionate ability to lobby the government to allow them to stay predatory.
I envision a capitalist hellscape where the population is kept purposefully reapable.
Such protections should either be scrapped or extended to cover all methods.
You are free to invent a payment method and provide all these protections to your customers. Why would you want to remove protections that CC companies are providing to their users?
Predatory lending generally refers to companies like payday loan companies and cash advance companies which feed off of forcing people to continuously borrow until they can't borrow any more.
Lending should absolutely be accessible to everyone in some way or another, especially in a world where a transmission failure can lead to a lost job if you can't afford to fix it right away.
It is highly restricted in many places.
If you've got great credit, you get a high limit, slightly-less-astronomical rates, and all the rewards.
The cost of the rewards is (as I understand it) mainly carried by the transaction fees, spread out over all purchases everywhere. So you have pointless price increases for people who /don't/ use credit cards (like me) or have poor credit, and the benefits of that 'tax' going to users with good credit (ie, rich people). So, yeah, it's a wealth transfer to people with better credit.
There are relatively few businesses in the world that can rip someone off for a year, then allow them to pay a more reasonable fee in exchange for guaranteed business, and still have the consumer claim that the system “doesn’t feel punitive.” The whole thing is kind of brilliant.
By participating in the cashback scheme you're putting more people through that ordeal by means of higher fees.
The only way to win is not to play.
At that moment in my life, the risk on lending me money was high and therefore the product I could access was limited. There was little incentive for the bank to risk lending me money, so I needed to purchase my way into rebuilding my credit. As the risk in lending me money decreased, banks became incentivized to offer me lines of credit so the cash backs kicked in.
Rebuilding my credit has allowed me to access lower rates on my mortgage , investments loans and other financial tools that have greatly contributed to my quality of life. I would consider that to be the reward.
It's frankly a brilliant scam, and the fact that people don't think it's a scam is its most brilliant aspect.
Visa/Mastercard charge merchants 1-2% interchange fees for each transaction.
I'd guess that people putting $20k a month on their Visa (I know a few that do) are paying for themselves with the interchange fees.
> "Out of the various fees, interest charges are the primary source of revenue." [1]
Yes, credit cards charge a large transaction fee, but wind up refunding a large portion of that back to the consumer in the form of rewards, so these days that's not the main source of profit.
[1] https://www.valuepenguin.com/how-do-credit-card-companies-ma....
I still have to pay the higher transaction costs even without a credit card, because the credit card companies require that vendors have the same prices for card or cash, resulting in higher prices for everyone.
You'll see cash discounts at some gas stations, and the occasional small coffee shop or takeout place will have a $10 minimum, but otherwise it's gonna be the same price most places.
Then it's nothing like taxation and it is optional.
I'm in Canada. With one exception, no bank client card I have had (which were all usable for debit) had any Visa logo on it. That includes current ones.
The exception is one TD client card.
The situation is explained here:
https://en.wikipedia.org/wiki/Visa_Debit#Canada
TD is one of the banks that offer Visa Debit. This TD client card is also Interac-branded, so I'm guessing that the card will use the Interac network for domestic transactions, and in that case its Visa Debit personality does not come into play.
Those are not the only two networks for debit/ATM in Canada. There is also "The Exchange":
https://en.wikipedia.org/wiki/Accel_(interbank_network)#The_...
(used by a lot of smaller banks and credit unions).
The Canadian Credit Union Association also runs an ATM network called AccuLink.
It's important to know which network your card uses if you want "ding free" transactions. E.g a "The Exchange" card can be used at an "Interac" ATM, but there will be a fee.
It's a plastic card, it is issued by your bank, it's still using the visa/mastercard network, but instead of credit, it is tied to actual funds in your bank account.
Definitely not the case here in the UK, credit cards are very common.
Tell that to the increasing number of shops that no longer accept cash.