I am an European, so maybe it's different in US, but is too many cards problem that people actually have? Judging by the top 2 stories on HN right now, it probably is.
I have a card. It is hooked up to my bank account. It works.
I have a card. It is hooked up to my bank account. It works.
The reality though is that these programs are not sustainable if fully exploited. Interchange (the fee U.S. merchants pay when you run a card) is under 2%.* A bank can't reward you more than that without losing money. Well, they can make up for it on the interest they charge on debt, but presumably if you're optimizing cards then you're optimizing where you hold your debt too. The way banks make these programs viable is with marketing, tricks, rules, time limits, etc. that make you think you're doing better than you really are.
Smart consumers figure it out. But not everyone bothers to, and so there's enough "dumb" ones to make it possible. Kind of like how gym memberships work.
Long story short: If a service like Wallaby takes off and levels the playing field, then these programs will disappear. So if you're one of those "smart" consumers that enjoys exploiting cards to make an extra buck or two, then you're better off not rocking the boat.
*Europe's interchange is a fraction of that, which is why you don't see this rewards phenomenon there.
I pay all my credit cards off monthly, and basically treat them as cash (so I'm not the target consumer of a rewards card, I know).
* I might be biased in terms of people I know.
See the rates here: http://usa.visa.com/merchants/operations/interchange_rates.h...
Meanwhile UK interchange is no more than 1%.
Perfect example of what I'm talking about. Those figures are based on a certain model of reward utilization which is retarded by rules and limits. If that model changes and more people exploit the reward program, the program will change. The math has to add up.
The prevalence of these programs in the US would have to be attributed to some other factor(s). I'd posit that it is due to the American obsession with credit, and the intense pressure for growth in the US financial industry.
The point I was trying to make was that we don't have as many rewards programs in Europe because we're behind curve, and they are starting to appear, not because of low interchange.
For example, my Chase Sapphire card gives me 1% cash back everywhere and 2% on restaurants.. all of them. Whereas Santander only offers it at certain chain stores. That's because of interchange.
http://www.santander-products.co.uk/banking/calculator/cashb...
So, none of my water, fuel, energy, mortgage or communications providers qualify.
Under the hood it's a promotional scheme with certain big companies.
Most the other cards we carry aren't bank cards, they're Medicare (if we get hurt), drivers license / ID, and RFID cards to get into work or your apartment building (I have 2 of them)... and all these cards, these "one card" startups can't replace.
Unless they can replace my entire wallet with a single card, that works as a drivers license, medicare, debit/credit card, and RFID card for my house, then you're not really offering anything special.
Obviously, Australia is not free™ enough.
But without support for PayWave / PayPass / Chip & PIN, it's DOA in Australia. I want a card I can use when traveling to Europe as well (requires Chip & PIN). And Coin has a sleeker Uber-esque look to it as well - that rainbow on the Wallaby card doesn't exactly say "luxury" or "exclusive". (Not that it has to be, but it'd be nicer to drop a black / carbon card as an early adopter, not a plastic thingy called "wallaby" with a rainbow.)
If you can shift the lion's share of your purchasing onto rewards cards, you can bank hundreds of dollars per year, especially if you use the card for business travel and expenses. There's an opportunity for that to increase by 2X or more if you can put your purchases on the "best" card.
Acts as a debit card, credit card, ID / Driver's License, Passport, library card, Costco card, etc.
Wish I could replace my wallet with something like that.
What is the problem is all the loyalty cards. I sign up for any loyalty cards even if I don't plan on going back. Design a way for me to have all of them on me, and remind me to use the right one when I'm in the location, and I'm sold. Currently I just leave most at home, leading to under-utilization without careful planning.
I know it's not directly related to the consolidation card topic but I even have friends who use their father/mother card using their own signature which I don't think is safe because, even if their parents authorized them to use the card, the usual way to verify that you are really you is through the signature and I doubt nobody checks you signed with the right signature in a greasy reastaurant check, so basically I'm pretty sure anybody could steal your card, use it and you would realize just after seeing the charges on the bank statement.
A consolidation card is maybe a way to solve the problem. Another way which to me makes more sense is not to sign up for every damn card in the country which most of the time end up collecting dust in the wallet.
a debit card, a credit card, a backup credit card and my corporate card
I would love a positively fail safe solution to get this down to one card, but to be honest, neither of these top stories offer that. Because at the end of the day, the most common reason for failure in my standard use case is user error on my part.
I am from India, I have multiple cards but most because there is a surge of credit card offers in India, most banks are providing free credit cards and offers to get people signed up.
So many of those cards are just used to utilise those offers to get discounts and a certain select websites for discounts.
But I practically use my debit card, a credit card hooked to online payment services ( paypal et all ) and a backup credit card when I cross the limit of my other credit card. That's all.
One other card I use is just when dining out in which I get some % discount/cash back offers thats all.
It works just like any other card, you just select which one you want to use when you make a payment. Here is an example of how it looks like
http://handelsbanken.fi/shb/inet/icentfi.nsf/vlookuppics/10_...
That sounds good and very handy.
The chip based cards ( EMV ) are being introduced in India, rather RBI ( Reserve Bank of India - Controls monetary policy of India) has made it mandatory for all banks to replace the present cards and make them all as EMV.
But its not to merge them but to reduce the frauds.
In the US, a debit card can be charged like a credit card but the funds are obviously deducted from the balance on your bank account. It also lacks the protection and rewards that a typical credit card would have. I just want to clarify that you indeed have two separate things here on one card and its nothing like how the US does it correct?
The selection process is very simple, you just put your card into the machine (almost all the cards nowadays are chip based nowadays but there is also a magnetic reader usually on the right), something like this
http://data.talka.com/files/Yomnani.JPG
then the machine shows amount and you select
1) Credit
2) Debit
Then it asks for pin and that's it.
There are legal differences, too: credit cards are regulated by the Consumer Credit Act, which makes the card issuer jointly liable in many cases. So, for example, if you order a product with a credit card, and the retailer goes bust before supplying it, the credit card issuer is also liable. If you'd bought it with a debit card, you'd be out of luck.
Finally, if your card details are compromised, you've slightly longer to sort things out with a credit card: with a debit card, you could find yourself with no cash at all.
http://www.moneysavingexpert.com/shopping/section75-protect-...
I'd want a single card and I'd want one of those sleek wallets if all I had were cards and bills.
I also have a company credit card.
They don't really have this idea that you should avoid credit, and should you take one it should only be for (hopefully) productive investment, they buy TVs, clothing and food with credits.
Not uselessly using borrowed money for everything can actually hurt you the day you actually need to borrow money because they will consider your econ. 101 attitude (save before buying if it's not an investment) a "risk".
The second way to do this is to take advantage of the grace period. Every purchase you make gives you a roughly 30 day period where no interest is charged. Pay off the full amount during that period and you simply use the credit card service for free. If you do this you end up ahead: typically credit cards offer benefits for using them. For example American Express gives you an extra year of warranty on most items. Lots of them give you cash back (1% or more) or "miles" or "points" you can redeem for various goods. Most cards do not have a yearly membership fee either so you end up getting everything you buy for a small discount.
It is true that some portion of Americans do "carry a balance": do not pay off their balance at the end of the grace period and must pay a finance charge proportional to the amount they did not pay off. However, this is usually not done by choice but out of necessity. I would do this too if for example I had to pay for an emergency trip to see family but did not have enough savings, etc. As long as you pay things off quickly, you are not really getting trouble in terms of losing substantial amounts of money.
Moreover, I think the grace period it still a debt even if it carries no interest, it's the bank tempting people. You can still accrue it more than your account size, it's still borrowing without thinking about what the revenu the spent money will bring.
Debt is a financial tool like others (like selling capital for example), but I really think its use should be restricted to productive investments, and its overuse is a big problem. It's a useful dangerous tool, like a chainsaw, if you're not a lumberjack there is not reason to use it everyday, but it's practical if you make your own wood.
A credit card is not automatic debt. It is a line of revolving credit. Think of it as an abstraction on top of the money you already have on your bank account. Additionally, credit cards provide additional protection, such as fraud prevention and charge backs. Yes you can misuse them but... Don't?
Edit: I guess a better way to phrase that is that a credit card is the ability to take out small short term debt in real time. And potentially pay it off for free.
The only thing I have to do is pay the bill in full each month. I can't imagine letting people have access directly to my bank account.
1. Yes, the US system overall is less than ideal. Banks could take initiative to simplify the system and the consumers probably should demand that they do.
2. American consumers are not somehow more stupid than people elsewhere. Introduce the same incentives elsewhere and people will follow the same pattern. The only reason other countries seem not to get into as much personal debt is mostly because loans are not as widely available and ones that are cost much more. In the US this used to be the case during the majority of the 20th century. Since relatively cheap credit became available, americans started taking advantage of it. This has nothing to do with whether they are smart or stupid.