this post was submitted on 23 Oct 2023
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But it's free debt. You're losing money by not using a credit card. Points
Well, this it ignores the external costs. Companies are charged by the credit processors and those fees get passed to customers. Some vendors will explicitly charge more for credit, but most vendors just raise prices for everyone. The amount of money you get in points doesn't cover the added costs.
You're not wrong… but as you said, those are external costs. While it's fine to wish for a simpler, more equitable system, given that the prices are mostly the same no matter how you pay, wouldn't you rather be part of the group receiving the benefits? Paying with cash or check or a non-reward card is leaving money on the table. The cost of handling cash and checks isn't necessarily any lower than credit card processing fees and people don't have much tolerance for strange new forms of payment, which leaves merchants without much leverage to push back against rules which prevent them from passing on the higher costs of the reward cards to those using them.
I'd rather see all companies pass their fees only to those using credit cards. Then there are no external costs and everyone is in the clear about what's going on. I like the convenience of credit cards, and sometimes I'd be happy to pay the extra fee. Other times I don't. I suspect many people are the same eay.
In the US it was ruled that card companies cannot stop vendors from passing on costs, so you see a lot more of that now. By raising awareness of the issue, it will continue to progress toward that system. It will also foster competition, where card processors will be inclined to lower fees because customers will see the charges, whereas before they were invisible.
I've seen "cash discounts" in many places but that's a bit of a false economy as cash can cost just as much to handle as an average credit card in the form of security and "shrinkage". I've never seen a business charge a higher rate based on what kind of card you use, which is what it would take to have an impact on the rewards system.