Those rewards cards . . . . . . a.k.a "reward cards for dummies 101".
To those of you using, or contemplating using, one of the rewards cards now proliferating by most of the credit card companies, I have just one admonition: "THERE AIN'T NO FREE LUNCH!"
With commercials spouting buzzwords like, "The money just magically appears in my account.", I'd like to set the record straight.
When you purchase with a rewards card, the money does appear in your account, but the source, and end result, of that "magic money", is what must be considered.
When you use such a card, your merchant is charged an additional amount, plus fees, to offset the transaction. Visa doesn't pay it. Discover doesn't pay it. MasterCard doesn't pay it. Your merchant pays it!
So what happens when your merchants have enough of these tranactions to impact their bottom line? You guessed it! Prices go up to offset the transactions. So, the next time you go to your merchant, prices have increased 5 to 10%. You use your rewards card again, and soon, prices go up again. And so the cycle goes.
You're not gaining 5%. Your merchant is not gaining 5%. But, the banksters are gaining fees & interest because of the use of these cards. Fees to both merchants & consumers, and interest to the buyers.
As I said, "THERE AIN'T NO FREE LUNCH!"
To those of you using, or contemplating using, one of the rewards cards now proliferating by most of the credit card companies, I have just one admonition: "THERE AIN'T NO FREE LUNCH!"
With commercials spouting buzzwords like, "The money just magically appears in my account.", I'd like to set the record straight.
When you purchase with a rewards card, the money does appear in your account, but the source, and end result, of that "magic money", is what must be considered.
When you use such a card, your merchant is charged an additional amount, plus fees, to offset the transaction. Visa doesn't pay it. Discover doesn't pay it. MasterCard doesn't pay it. Your merchant pays it!
So what happens when your merchants have enough of these tranactions to impact their bottom line? You guessed it! Prices go up to offset the transactions. So, the next time you go to your merchant, prices have increased 5 to 10%. You use your rewards card again, and soon, prices go up again. And so the cycle goes.
You're not gaining 5%. Your merchant is not gaining 5%. But, the banksters are gaining fees & interest because of the use of these cards. Fees to both merchants & consumers, and interest to the buyers.
As I said, "THERE AIN'T NO FREE LUNCH!"
Muley
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