An interesting take on "Card Reward" programs...

**Greebo** · 01-13-2010, 09:43 AM

...and the damage they really do...

http://www.nytimes.com/2010/01/09/yo...s/09money.html

After all, the 1 to 3 percent or more of every transaction that merchants pay to accept the cards is a significant cost, and the small local retailers that make neighborhoods vibrant often pay a higher percentage.
Stores then build those fees into higher prices, so people who aren’t earning any rewards can end up subsidizing those who do. Many of these people have no credit cards because they’re financially troubled.
So the risk is that we perpetuate a sort of reverse Robin Hood problem, as Prof. Steven Semeraro of Thomas Jefferson School of Law in San Diego puts it. It’s possible that the poor pay subsidies to finance the rewards of the affluent.

**mombottoo** · 01-13-2010, 10:02 AM

Very interesting read Greebo! Although as the writer points out, even if everyone laid down their cards chances are retailers would keep the prices up & pocket the money, then the banks would turn around and charge higher fees...a lose, lose proposition for everybody.

As he points out, "There is no way for the consumer to win."

**monkeywrangler71** · 01-13-2010, 10:06 AM

The decrease in sales volume would negatively impact pricing far more than the merchant fees, if people stopped using/ merchants stopped accepting credit cards.

**Greebo** · 01-13-2010, 10:17 AM

Originally Posted by monkeywrangler71

The decrease in sales volume would negatively impact pricing far more than the merchant fees, if people stopped using/ merchants stopped accepting credit cards.

If it happened overnight, I agree. It won't happen overnight, however, and those of us who are out of debt (except the house) will be picking up the slack to some degree for those who are getting out of consumer debt.

**NcsstyBrdsIngnty** · 01-13-2010, 12:26 PM

Just a thought:

Does that mean I'm actually recouping some of the hundreds of dollars a month my family shells out in taxes subsidizing poorer people, that they then turn around and pay the slightly higher cost on products which comes back to me as a reward?

And the world makes sense again. . . .

**mombottoo** · 01-13-2010, 03:13 PM

Originally Posted by NcsstyBrdsIngnty

Just a thought:

Does that mean I'm actually recouping some of the hundreds of dollars a month my family shells out in taxes subsidizing poorer people, that they then turn around and pay the slightly higher cost on products which comes back to me as a reward?

And the world makes sense again. . . .

Ah, but the world doesn't make sense again...because you are paying the higher cost for products too...thereby negating any gain made by poorer people paying higher costs. See what I mean?

**frugalfranny** · 01-13-2010, 03:54 PM

"It's possible the poor pay subsidies to finance the rewards of the affluent."

Do you think he meant to say 'middle class'.....? I don't think the 'truly poor' are paying too many subsidies.

But isn't this the same, to some extent, for taxes too. Who pays a larger portion of their income in taxes?

**NcsstyBrdsIngnty** · 01-14-2010, 10:49 AM

Originally Posted by mombottoo

Ah, but the world doesn't make sense again...because you are paying the higher cost for products too...thereby negating any gain made by poorer people paying higher costs. See what I mean?

Lol, I thought about that too, I was being sarcastic about the world making sense - probably not best for an online forum.

It's a crazy financial world isn't it?

**Greebo** · 01-14-2010, 10:59 AM

Another point - SOME retailers certainly would keep prices higher.

Others would give the discount.

Thus the free-trade competition begins.

**Telephus44** · 01-14-2010, 07:41 PM

Originally Posted by frugalfranny

"It's possible the poor pay subsidies to finance the rewards of the affluent."

Do you think he meant to say 'middle class'.....? I don't think the 'truly poor' are paying too many subsidies.

But isn't this the same, to some extent, for taxes too. Who pays a larger portion of their income in taxes?

I think that the assumption is that people receiving rewards are "the affluent" and that the people who don't receive rewards are "the poor."

The was I look at it, people who receive rewards are not necessarily affluent, but have good credit scores (to qualify for that card) and probably pay their balances off each month since I don't know any programs that pay rewards on finance charges.

So this mean that intelligent people who are responsible with credit are rewarded, and people who are not responsible pay for it. That's fine with me in my book. About time the responsible got rewarded for something! Kind of like that quote about either receiving interest or paying it....