LogFAQs > #956268237

adjl posted...

In which case, you're paying for them anyway because retailers have to raise prices to account for transaction fees (that, or you're relying on businesses paying for them for you, but that's generally not a good way to do business).

Technically, but at that point either way you're paying the increased prices so it's the choice of getting something back or not getting something back. And, at a conceptual level, it's not much different from any other cost of doing business and, compared to other things, that's a relatively small one.

adjl posted...

However you slice it, any benefits you aren't actually paying for come out of other people's interest payments.

No, by your own admission they don't. It's coming from the transaction fee, which most benefits directly relate to. Part of the percentage they claim is being kicked back to you.

Granted, all money is ultimately fungible, but the way that it's structured, that's a more logical conclusion. (Whereas the interest payments would logically be used to cover the fact they're loaning money.)

adjl posted...

They're able to do that because of their buying power, which is entirely a consequence of how much money they have (much of which comes from interest payments).

That's a pretty massive stretch. Their buying power relies less on "how much money they have" and more on the overall userbase. Even if a credit card company had trillions, their "buying power" wouldn't mean shit unless enough consumers were using their card.

And in a perfect world where everybody paid their bills in full, a credit card company's power would STILL be the same (minus the portion of the userbase that can't pay its bills who wouldn't be buying).

adjl posted...

No such thing as a free lunch. If anyone is giving something away, it comes at another cost somewhere else in supply chain (a cost which is greater than the benefit you receive, since whoever's doling out those benefits will want their own cut).

...the cost of free miles is negligible because it's a benefit they get for almost nothing. And it's either miles or a % back, so that's still a result of transaction fees to the retailer.

adjl posted...

Yes, it's certainly not a risk-free endeavour, but I'm sure you're not actually going to try to argue that Visa and Mastercard struggle to turn profits and that any benefits their cards offer you comprise them sacrificing their profit margin out of the goodness of their hearts. They're making truckloads of money; the benefits they offer you are a small slice of it.

I'm arguing that the interest payments are necessary for any actual loan because of the nature of loans. However, they're both making and losing on the loans whereas they only profit on transaction fees.

adjl posted...

This is not to say that you won't ultimately see a net personal benefit from the bonuses offered by credit cards if you're careful to avoid paying interest, but don't pretend that you aren't enjoying those benefits on the backs of people that are mired in debt.

I'm not "pretending" because that's not happening. Diners club cards -- the prototype for credit cards -- offered benefits, yet they didn't have a major debt-interest structure. The idea that the debt-interest structure is somehow essential to the benefits is a conflation of facts.

adjl posted...

A relatively small subset of people/companies buy up a relatively large subset of real estate, then rent it out at a premium they can only demand because of how little is left. Home ownership would be significantly more accessible if not for the rental industry driving up property prices and ensuring people spend too much on rent to be able to amass a down payment for a property they could otherwise afford. "Artificial scarcity" might not be the most accurate way to describe the situation, but it gets the point across.

The problem with that assessment is that a portion of the rental market were always unlikely to be homeowners so you can't blame the rental market for it. The larger issue is government driving up the costs of homes via regulation, zoning, fees, taxes, and everything else. And you can clearly see that when you don't have those government influences and the costs go way, way down to completely unbelievable levels. That said, *any* land in a major metropolitan area will have a lot of demand -- rentals or not -- so pricing will always be an issue. And the closer something is to the center of the area, the more it's going to be valued. That's a natural function of the market.

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