I’m a “deadbeat” who hasn’t paid interest on a credit card since the Reagan Administration. I make about $600 a year cash on my cash-back cards, and never buy anything that I would not otherwise have bought. (I also never use cash advances and thus pay no fees there either.) If my card issuers want to charge me $20 a year I’d still be $580 to the positive, so thinking about it unemotionally (the only way in which money should be thought of) I have no incentive to really shake things up.
OK, but what if it’s not your cards but just one of your cards? Would you shake things up a little by canceling the one with a fee and shifting your purchases to the others? I have three that all offer cash back. I would be perfectly happy (in an unemotional way) to drop one if they gave me a reason.
If I could find someone who could beat $580 back a year net, but I don’t (and getting multiples of the same cash back card is hard). I guess it is possible.
I wouldn’t yell at the poor person on the other end of the phone, but I would request that he/she take down and report my reason for dumping the card. So far, so good, though.
That statement I agree with - and it neatly summarizes the reason for our current mess. Banks considered reasonably safe businesses not profitable enough, and so went into increasingly risky ones, without enough capitalization (because that cuts down on the return.)
My daughter, who is in grad school in behavioral economics, has studied this. I do data-mining myself for work. It gives a lot of good information on behavior, but does not consider shifts in the economic climate. I mentioned their policy of trying to get consumers to keep the maximum balance below a default level - that is set by datamining.
We’ve had Discover from about the beginning, when it was still owned by Sears.
I’m old enough to remember when Diners Club was the only game in town. Gas stations have accepted credit for a very long time - but when I started driving, they only accepted their cards, just like the department stores. I used to have a large set of gas cards and department store cards.
I haven’t seen any campaigns from Discover requesting our help in adding merchants. It is rare when I have to use my (still free) Visa. In Europe, however, no one takes it.
When I started working for Western Electric, in 1980, Bell System policy was not to use credit cards on business trips, including personal ones. Air fare and rental cars were direct billed, and we got a cash advance for hotel and meals. Things were a lot different back then.
Hope you know a lot of math! Take a look at Data Mining by Mehmed Kantardzic, IEEE Press/Wiley. A bit old - Google was just starting when it was published - but a good book on the subject.
I have no problem using my supermarket loyalty card since it increases the chances of my getting a coupon I’ll actually use. Done well the store can keep inventory I’m interested in buying with less waste, which helps them both increase profits and lower prices. It is good stuff.
I don’t think anyone objects to the banks making a profit on cards that work well for them. I hope Discover is making a ton on me - I’m getting a ton of cashback from them with no fees and no interest payments.
What I do object to is raising fees to make up for losses on their high interest but risky accounts. I’ll walk, and get an account with a company that didn’t screw up. From what I read, this is the real reason behind the hiking of fees.
I am Senior Consultant (Advanced Analytics) at my company…yea…I likes da math 
I think I will check out that book. I do not work with real down-and-dirty data mining in my job…but I get REEEAAAALLLL close I think my current skills/experience would transfer well even to a senior-type position.
I see a few who don’t accept either Discover, AmEx, or both. Generally, they are small, independent operations who only begrudgingly accept Visa/MC. Putting on my smelly, ratty marketing hat, I’d say Discover has to be careful about getting customers to actively find stores not accepting their card. It might give the impression that their card is not worthwhile. They’ll probably use subscription numbers and demographics to sell the card to merchants.
At least, that’s how I’d do it, but I’m really lousy at sales and marketing.
The banks stopped competing just against each other, and started competing with the Morgan Stanley’s, Goldman Sach’s, etc. when the Glass-Steagall Act was repealed. Banks felt that the act unfairly restricted them in ways their international competition was not, and that the big investment houses were offering more bank-type products without having the same restrictions, reducing their ability to attract high net worth depositors. At the time, I agreed with the bank’s viewpoint. I was wrong.
There are interest charges, they are just paid by the merchant, not me. Typically 2% per transaction Interchange fee - Wikipedia
As you point out below, the term of the loan (if paid off monthly) is < month, or over 24% APR
If you call 24% APR or …
… a small fee, then more power to you. But stop repeating the old canard that CC companies don’t make money off people who pay their balances in full every month
hijack, but is your name Fear and you’re a turtle, or are we being instructed to fear the turtle? I’ve liked turtles heretofore but would like to know how to proceed.
Go back and read your wiki link. I did, and I’ve talked quite a bit about the merchant fees (up to $48 billion now). It’s a per transaction fee, not an interest charge. If you spend $100, then on average the banks make $2. Not 24% annually.
I’ve also noted that I don’t think that the operating costs, too which I’ll include funding all the rewards programs, amount to $48 billion, and that I don’t know what the profit margin truly is. I did see one place that said rewards programs are 40% of the fee, operating costs around 13%, and the remainder funds marketing and profits, but that was a merchant site trying to rally people against banks. Neither has the consumer’s best interest in mind.
As I said, re-read the wiki. It’s all there (ETA: interchange fees are transaction fees, not interest charges, that is). When come back, bring (humble) pie.
P.S.
Giraffe, that is why I sometimes feel it necessary to spell things out in small words. One would think the difference between fees and interest charges apparent.
D-Odds
Sorry if I wasn’t clear. I was posting quickly from work and had to rush. I didn’t mean to imply it was an interest charge - just to compare it to an interest charge.
You seem to be saying (and correct me if I’m misstating what you are trying to say) that if I buy something with a CC and pay it off at the end of the month - I’m getting an interest free loan from the CC company. My point was they are getting the equivalent of an interest payment from the merchant even if they don’t call it that. If I give you $100 and you repay me $104 next month (or if you repay me $100 and a 3rd party pays me $4), it doesn’t matter whether you call the $4 interest, a fee, or whatever - it is the equivalent of a 24% APR.
No need for anyone to bring humble pie - I think we are just talking past each other.
Oh - I agree the $30 billion I quoted was just the gross from the fees and not the net. But I doubt operating costs are $30B to process on time payments. I just threw the number out as food for thought
gigi - Fear the Turtle is a motto from Univ of MD.
And raise the rates on the all the rest who carry balances. They really want to just bleed everybody.
And posts like this are why you come across like a douchebag.
A friend of mine liked the cashback bonus he got on his Discover Card so much that he made a point of offering it first, even at stores that he already knew did not take it, as a (not so) subtle attempt to get them to consider taking Discover.
I’ve had a Discover Card ever since they were first offered, and have had very few complaints about their service. A few months ago my due date was changed from the 16th (which it had been since I got it) to the 12th. I was so in the habit of arranging to make my online payments shortly before the 16th that one month I forgot about the change until the night of the 12th. Even though the payment wasn’t posted until the 13th, the next month’s bill did not show a late charge or interest.
The constant use of the word “deadbeat” as a descriptor for low-profit customers who pay off their balances is a little grating.
I wonder if the term “deadwood” would be more useful.
Discover is my favorite credit card as well—far and away better than, say, Chase. I tend to prefer using it over my other cards whenever I make a purchase.
I do make exceptions for small businesses, though. I tried once to use my Discover at one of the local ones, and the proprietor told me he didn’t take Discover or AmEx. He also told me why—as has been noted upthread, their merchant fees are higher. I’m happy to use my less-liked Chase Visa at these places—it’s a reasonable compromise, after all, for not having to hunt down an ATM before visiting local businesses. On the other hand, I think McDonald’s, SuperValu, Chipotle, etc. are large enough companies that the higher merchant’s fee isn’t going to harm their bottom line one bit.
I’m probably going to start using my Discover more, since my Chase card no longer earns me certificates for Borders. I pay my cards off in full every month, so I never paid much attention to the interest rates on them (I checked earlier today and my Discover is 11.24% and my Chase is 19.24%). The Discover is my oldest card now, so for the sake of my credit rating I’m going to do my best to hang on to it.
I had my date changed, too, and missed my due date twice. (Fool me twice, won’t get fooled again.) Discover jacked me to the default rate (29% ish, I think). I called and asked if they would reconsider the rate jump. <clickety-clickety-clickety> “OK, Mr. Plexus, I am putting your account back to its previous rate and refunding your late fee.” Took about 2 minutes. Of course he then tried to upsell me some insurance, which took me five minutes to politely decline three times as I didn’t want to just hang up or tell him to f off.