Comments on: Are Credit Card Rewards Funded By The Irresponsible?

By: John @ Curious Cat Investing Blog

John @ Curious Cat Investing Blog — Thu, 27 Nov 2008 04:20:12 +0000

I suppose you could look at it that way but really I think it is 2 things. First, the credit card companies figure on average they will make money on you both through fees to merchants and fees to you (but if you are one of those that doesn’t ever have fees they might not). Second, because their fees are so high – they might overpay a bit so maybe they really do lose money (instead of say paying 1% cash back and making a little). If the second is true it wouldn’t be surprising for the maximum payout go down as they stop making huge profits off those that see the big credit and buy more, pay more fees…

But the same would hold true for anything – at most any store they have loss leaders. If you only buy those they might lose money on you. If you buy just gas with a credit card the gas station might lose money on you or close – many stations rely on people buying extras…

By: Saturday Links | Counting My Pennies

Saturday Links | Counting My Pennies — Sat, 02 Aug 2008 10:03:05 +0000

[...] Are Credit Card Rewards Funded by the Irresponsible? [...]

By: Festival of Frugality #136 - Summer School Edition | Student Scrooge

Festival of Frugality #136 - Summer School Edition | Student Scrooge — Wed, 30 Jul 2008 06:50:45 +0000

[...] Happy Rock considers the moral implications of the possibility that credit card rewards are funded by the irresponsible, and asks whether that should influence those who use them [...]

By: Saturday Link Love: Tales From The Web Edition (Ask Mr Credit Card’s Blog)

Saturday Link Love: Tales From The Web Edition (Ask Mr Credit Card’s Blog) — Sat, 26 Jul 2008 08:18:09 +0000

[...] The Happy Rock wonders if those of us who are irresponsible with our credit are funding the rewards for those who manage their credit. [...]

By: Mommychicky

Mommychicky — Fri, 25 Jul 2008 22:03:38 +0000

As a former employee of a major credit card bank, I don’t have a bit of pity for the issuers. Trust me, they are making there money and then some. Now, would I ever get involved in a rewards program that charged me to participate? Heck no. But I will be the first to admit that when I started working for said bank and realized that if I started using my fee free rewards credit card the same way I used cash/debit, I could get something back for things I already had to buy, you bet I started using that card. On the issue of whether these programs are funded by those who are irresponsible, honestly most of the credit card industry is funded by those fees and we each decide how we handle credit. It’s really too late now to turn back from the lure of easy credit, but that shouldn’t stop us from being educated consumers and opposing the outrageous fee structures present on todays cards. (Even if they are buying art and antique cars for the CEOs of the issuers :0)

By: Double Eagle

Double Eagle — Fri, 25 Jul 2008 17:36:48 +0000

In general, credit card companies are blood sucking leeches. If you’re not paying a penny in fees or interest but are getting reward bonues, then someone else is footing the bill.

However, we’re all in charge of our own financial destiny so I wouldn’t feel guilty about it. Also, if you think about it, there’s not much difference between that and walking into a department store and haggling 15% off a large cash purchase. The fact that most other people paid full price means they can give you a discount. If they gave everyone the discount (“reward”, if you will), then they’d be out of business.

By: Pete @ biblemoneymatters

Pete @ biblemoneymatters — Fri, 25 Jul 2008 16:40:15 +0000

Rewards credit cards are not a good thing for most people because they end up spending more (because hey, i’m getting rewards!), and often don’t even claim the rewards. I wrote a post about this a while back. Linked in my name.

By: Sue

Sue — Fri, 25 Jul 2008 15:39:02 +0000

Interesting question? Are they currently earning money from you? We will assume not if you only used the credit card for items that you get 3% back but if you use the card for things that don’t qualify for the 3% back then yes.
There is always the potential to finance.

By: Friday Link Love - Leaving Town Again Edition | One Caveman's Financial Journey

Fri, 25 Jul 2008 15:03:42 +0000

[...] The Happy Rock – Are Credit Card Rewards Funded By The Irresponsible? [...]

By: Sue

Sue — Fri, 25 Jul 2008 13:10:50 +0000

I reread your post. Looks like you are aware of the charges put on the seller.