Credit Card Charges pay for your free stuff

Posted: Wednesday, October 5th, 2011 at 4:26 pm

Credit Card Charges pay for your free stuff Image

Ever wonder how credit card companies give you all that free stuff, plane tickets, cash back or funky dishes.  I looked not long ago at my credit card statement, the monthly sheet that breaks down how much the Trail Head paid for the privilege of taking all the various credit cards we do.  Yikes, last year alone, I paid more in fees and discounts for the right to take cards than I was able to draw in salary.   I was complaining to a friend who runs a great little business that he refuses to succumb to the lure of taking cards, he laughed and said well do you use one?  Yep damn right I do,  I pay invoices for inventory and expenses the store accumulates every month and use the accumulated points to fly to trade shows and other work related trips I need to attend.  He said SEE you are as much a part of it as anyone,  quit complaining.

Yeah but is he a Luddite for not having a card?  Is he operating a simpler way of life, does he hate banks and credit card companies so much he is willing to make his life more difficult?  You tell me.  Either way Id like some of that of money I pay every month and to get it I would stop using my personal and store cards.  What do you think my customers would think if I offered a 3% rebate for cash or check?

Then of course there is the whole topic of debit cards vrs. credit.  Most debit cards will also run as a credit card, so one day when a customer who is also the president of a local bank gave me his debit card, I asked can I run it as debit.  He said run it as credit please, when I asked why he simply said because we make more as a bank.   So when we ask credit or debit, we like debit, it costs us less.  Banks love debit cards, they get to charge me more than taking a check, and then they do not have to process all that paper.  We should get a discount for using debits and pay a fee to take checks, what a novel idea.  In any case in today’s world cash might still be king, but it feels a bit like a king who is on the way to getting beheaded.