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Comment by just-ok | Hacker News Reader

One of the biggest wins from credit cards (imo, of course) is reward programs. Getting a 1-3% discount on purchases is pretty nice (plus, obviously, fraud protection, etc.). However, some issuers are using crypto to claw back at this perk; for example, the Coinbase debit card can give you 4% back.

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I find it hilarious that Americans will tell you about the great discount/cashback they get, then in the next post crypto advocates will tell you that crypto currency can avoid the insane credit card fees.

It's almost like the two things are related, but few people seem to link them...

In Europe and Australia, caps have largely fixed the latter, at the expense of the former. Seems better all around.

Insane credit card fees? What? Most cards do not have a fee.

And for those that do, it’s very easy to recoup much more than the fee in rewards. For example, Chase Sapphire is one of (or actually the) the most expensive cards at $550/year. But even then it’s very easy to recoup much more in rewards.

They’re talking about interchange fees you pay on every transaction. Which is where the money to fund rewards comes from.

In the US you’ll be paying something like 1% on interchanges fees for every transaction, in the EU it’s something like 0.05%. Orders of magnitude less, thus orders of magnitude less rewards, and also fraud, because banks can’t use the interchange to write off fraud and thus implement proper controls.

Unless the merchant is offering discounts for cash payment, it's the customers who are not using credit cards that are paying/subsidizing the fees. Sadly, not using a credit card is just throwing money away in North America

In reality it’s people with poor or non-existent credit that pay. They can’t access cards that offer rewards, so they end up eating the costs. It’s a remarkably good way of transferring wealth from the poor (who are usually deemed not worthy of credit) to the rich (who are worthy of credit). Pile on the other costs like fees for using cheques rather than direct deposit (also common for poor people who aren’t salaried), crazy overdraft fees etc, and becomes pretty clear that the US banking system is paid for by the poorest in society, and only benefits the richest.

Your reward is basically money paid by the poor routed via the merchant and bank.

The Coinbase card ties up your assets (you have to hold USD or crypto on their platform). Whereas the credit card is an interest free loan for the statement period. I'd take the latter any day of the week.

Bank account savings interest rates are like 0.40% annual, 0.03% monthly. I'd take an extra 1% cash back over a loan that accrued me only 0.03%.

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