Yet, HNers seemed to think this was a perfectly sensible product they had a use-case for. Are there really that many people here that are rotating debt or gaming credit cards (a futile game in any case)?
American credit cards nearly universally offer lengthy interest-free grace periods, as well, so there's little risk as long as you have enough base spending to qualify for the signup bonus.
As an example, you can sign up for an American Airlines credit card and earn 50,000 miles after spending $3000 on the card. Buy $3,000 worth of things you were going to buy anyway, and then you have a one-way business-class ticket from the US to Japan (worth at least $2K, probably significantly more).
There are hundreds of these offers, so gaming credit cards can be a significantly net positive hobby for people who know how to manage their spending and who don't actually use the credit facility of the cards beyond the grace period.
- 70,000 Marriott points which I estimate to be worth about $700, based on the equivalent cash price I'd have paid for the hotel rooms (which I do have plans for)
- $890 in cash bonuses
- 50,000 ThankYou points which are worth $500 cash (the trick is to request mortgage or student loan redemptions, which can be made out to the bank in which you have a checking account, and then just deposit it in your account. The redemption value is higher this way than with the normal cash option.) or more for travel (probably will just take the cash as I have enough airline + hotel points right now).
The tilt towards cash or cash-redeemable bonuses is intentional, as I have enough points of various types to support my travel plans.
One other 'danger' I've seen some fall into is valuing their points based on the cash value of whatever they redeemed them for. For example, it's common to see people redeem airline miles for a ridiculous $10,000 ticket, and then claim they got 10c/mile or whatever based on that price. In my opinion, unless you would have paid $10k cash for that ticket had the points not existed, you haven't gotten 10c/point; you've gotten $(price you would have paid for a ticket) / $(pointsRequired).
I have to spend a little over $10k to get these bonuses, which will be almost entirely in manufactured spend. I'm most certainly not spending a single penny more than I would have spent if credit cards didn't exist at all.
It's also worth adding a few statistics:
- Total credit card debt I've ever held in my life beyond the grace period: $0
- Total interest I've ever paid in my life: $0
The trouble is people who use credit to try to live above their financial means who end up getting trapped in a cycle of trying to pay down debt that accrues interest faster than they can pay it off.
- a surprising number of businesses are cash only or strongly prefer cash
- when they do take cards its the superior chip & pin system (though we've never had a problem with our crappy American cards)
- Europe tends to have strong consumer protection laws in some ways
- Credit is harder to get because of these laws
In the U.S. building up and managing credit is a life skill that starts sometimes in high-school, but almost always by 18, usually with low-cap high-interest "starter cards". Most of the U.S. is virtually cashless at this point, I can start a month with $40 in my wallet and still easily have $30 in it by the end of the month. There are some places (and some milieus) where there are exceptions. But I've recently been on several long-term trips to wildly different parts of the U.S. and don't remember using cash except in very rare circumstances, usually as tips of some sort or to make very small purchases (gum).
Credit development is strongly encouraged (for better or worse) and it's expected that everybody has at least one major credit card.
The problem really comes in with lower income levels, credit is often used to buy things above the means of that level, creating a vicious cycle that traps people into long-term revolving debt, or playing a credit game of shifting the money around endlessly between cards and debtors. Consumer protection laws in the U.S. for this kind of thing are not very strong yet for a variety of stupid reasons.
EMV is legally inferior because of the liability shift. If fraud happens (and EMV fraud does happen, don't let they tell you otherwise) the card holder is on the hook because the schemes declare EMV as "fraud safe" when in reality it isn't.
> (though we've never had a problem with our crappy American cards)
Because the schemes require it. Because of the non-discrimination clause in the acquiring contract if a merchant has a VISA or MasterCard logo on the door he has to accept every VISA or MasterCard brand. Some locally issued brands may be artificially crippled though (which isn't cool).
There are local laws about surcharging though.