I'm still ahead with the 1.5% cashback Schwab AMEX and no fee, even on the groceries, if I burden the groceries with the annual fee.
I'd like to see data on how these cash back cards actually increase spending. I'd wager that the "incentive" to get that free money is more than offset by overconsumption even on basic items like groceries. Sure, a few really disciplined people will benefit from them, but overall aren't they just an instrument to get people to buy stuff they don't really need?
Hmm, a quick online search shows this isn't exactly a novel idea. Here is just one example:
For this reason, I've been using cash more and more in recent years.
I'm sure. The people who design these programs aren't idiots. They have entire departments staffed by psych PhDs trying to trick you. And how about you? Are you a psych PhD? Food for thought.
MangoMan wrote:
Not many people realize that merchants pay a higher fee to process reward cards. So lame. The bank decides to offer the reward, and the merchant gets hosed. Of course, those expenses are partially passed on to the consumer when possible.
That's pretty lame. But I'm not going to stop stacking my 2% reward CCs with cashback rebate programs. July-Sept is 5% at Amazon via Discover which helps the 9% sales tax bite when I'm not getting the 15% S&S discount. Basically, the stupid-rich subsidize me and I'm fine with that. Frugality is one of the planks you actually have the most control over.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
I'm aware of the potential for spending increases with credit card rewards. However, here's a really good way to counteract that effect: use YNAB or equivalent, YMOYL style, to track your spending. That one step worked wonders for me.
Ochotona, you got your numbers mixed up. The 6% cash back card is the one with the fee. The 3% card doesn't have a fee. Go back and read my earlier post.
Nearly all the groceries here accept Amex, even the small corner bodegas.
Thanks for the Fidelity 2% card reminder. I've always considered getting one, but held back because of the limited acceptability of AMEX. The Visa switch is pushing me over the top.
I got my Fidelity Visa in the mail the other day. (Long time Fidelity Amex cardholder).
I don't know that you have to ask for the 2%, MangoMan. Maybe that's for those Mastercard suckers? The literature it came with proudly heralded the "unlimited 2%" cash back, although the fine print under the superscript 2 3 detailed the limitations of this unlimited bonus. The easiest thing to do is to let them deposit the cash back into a Fidelity cash account. If you take a statement rebate or points, it won't be 2%.
If Elan does not cooperate, I'm leaving. Quicksilver from Capital One only gives 1.5% back, but they are hassle free.
I used to love an early version of that Amex Blue card that Sophie mentioned. (That's funny about liquor stores!) No fee, lots of cash back. Only problem is, I don't buy gas. So, I was constantly working to keep the heavy cash back on groceries while spending most of my money at Amazon and restaurants.
A flat 1.5-2% off everything is wonderfully simple.
Simple, dualstow: find a grocery that lets you charge gift cards, and buy Amazon.
No doubt the 2% hassle-free is simpler. I got the Citi Double Cash card for that reason. Technically it's slightly less than 2% cash back if you take a statement credit for the cash, but they'll send you a check just as easily. You could also get the Amex Everyday card for the 3% cash back on groceries with no fee.
However - I'm DONE with credit cards for a while. I froze all my credit accounts. I got sick of getting letters from random institutions telling me "Oops, some dude lost a computer with your SSN on it in the subway and I'm sure the Russians have it now. Here's an ad for a pricey ID protection service. Have fun."
Ah, so it's the Visa suckers as well as the Mastercard suckers.
I wonder how this works with regard to the merchants. I mean, so many merchants hated American Express because they had to pay up so that consumers could get those 2% rewards. If Visa is giving 2% cash back now and pretty much every merchant takes Visa, do these merchants have to may Amex-level fees?
I guess I knew that, but I still don't quite understand how Visa can give the same amount back that Amex was giving (2%). The only logical thing I can think of is that they simply make less profit than Amex did (before all these merchants started cutting them out), and are ok with that.
Less profit per transaction, but plenty of transactions to grind out a tidy overall sum.
dualstow wrote:I guess I knew that, but I still don't quite understand how Visa can give the same amount back that Amex was giving (2%). The only logical thing I can think of is that they simply make less profit than Amex did (before all these merchants started cutting them out), and are ok with that.
Less profit per transaction, but plenty of transactions to grind out a tidy overall sum.
MangoMan wrote:Well, as stated upthread, Amex gives away 6% on groceries, and also note that Chase/Discover give 5% on rotating categories.
Ah, I should have specified the 2% Amex. I dropped the grocery one.
But they make most of their money when people don't pay the balance in full and are subjected to usury rates of interest on the unpaid balance. Plus late fees, over-the-limit fees, cash advance fees, etc.
That makes sense. I had forgotten about those other fees.
sophie wrote:I got the Citi Double Cash card for that reason. Technically it's slightly less than 2% cash back if you take a statement credit for the cash, but they'll send you a check just as easily.
Grrrrr! I'm really glad you pointed that out. <cursing deleted> I did stop using my Discover points at Amazon because I suspected the same thing was occuring.
Merchant accounts have always been a scam far as long as I can remember. They used to get you on overpriced leasing fees for the processing terminals required; then leasing the overpriced and clunky proprietary software to input and process transanctions; then the web mixed things up a bit for shopping cart integration from multiple processors. So far no one has managed to disrupt the industry but Dwolla has come close at $1 per transfer, though its only ACH.
It's a virtual monopoly and class actions haven't been sucessful though a recent one got dropped because the judge didn't like the settlement VISA/MC was offereing to merchants. There's always hope!
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
