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Comment by barnbuilder | Hacker News Reader

I don't feel bad about extensively using these rewards cards. If you are a net recipient in this distribution, your participation doesn't directly correlate with any higher participation by any of the victim groups. We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards.

However I do withhold recommending these cards to others because they only make sense for people who don't carry debt or spend recklessly, and I usually cannot be certain that others meet those criteria.

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> We simply make it more costly for the bank -- if anything, discouraging them from issuing such cards.

No, you aren't making it more costly for the bank. Banks would be stupid to offer such a setup. The banks pass that cost on to the merchants, who have no choice in the matter.

The percentage that the bank charges merchants is fixed (for e.g. all Visa credit cards.) If you have a non-rewards Visa credit card, the bank just pockets the entire processing fee. With a rewards credit card, you get some of that fee back.

That's actually not quite true. Depending on the Visa card 'tier' (non-branded, Signature, or Infinite), there are fees that go up. If you have an 'Infinite' card, you're costing a merchant more than if you have a regular unbranded Visa. The difference is really small, like 0.2-0.3% between base and top tier, I think, but there is a difference.

This is not true, interchange fees depend on the credit card type and rewards offered.

https://merchantcostconsulting.com/lower-credit-card-process...

Although, yes, banks pass costs to merchants... the thing is, banks do in fact lose money if you are savvy enough with rewards usage/sign up fees/etc. Take a look at the churning forums some time; it would be impossible for banks to actually be making money on this and also pass it along to merchants. The money is coming the ratio of consumers that pay interest (at ~20% or whatever outrageous fee they get) on their credit card bills.

> No, you aren't making it more costly for the bank.

I sure am; almost all of my spending earns a rewards percentage that exceeds the rate charged to the merchant. (This is not even counting the significant sign-up bonuses.)

Anyone (with good credit) can do the same with a modest amount of research.

> No, you aren't making it more costly for the bank.

No, you are. Think about it, you as an individual can't change how this system works. But if you use a card with 0% rewards, you're gifting that extra 1-2% to the credit card company. If you use a 2% back card, you're taking that 2% that's on offer away from the bank.

Of course they're still making money, the fees are higher. But they make a tiny bit less if you use the rewards card. So might as well.

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