Best cash back credit cards.

[Barry Karnes]

I have one card that gives me 5% on groceries. One for 5% gas anywhere, 3% dining. And my catch all at 2% for everything. And a 4th one that give 5% rotating categories. Never paid interest on any of them. Never bought anything because of the cash back. If I need to buy something, why not get cash back? Before I got old, I'd take all the rewards money/interest every month and invest it into my stock brokerage account. Did that for 25 plus years.

 

[Ed P]

...credit card companies still make money off cardholders, even with all those perks. The main sources of revenue for credit card companies are interest income and interchange income...

• Interest income is earned when customers keep a revolving balance and pay interest.
• Interchange income is from fees paid by merchants when a transaction is carried out. Credit card companies charge this fee because they take on risk and process transactions. These fees vary.
• Cash advance fees are paid by customers when they borrow cash against their credit limit.
• Annual fees are yearly payments that keep a customer’s account open.
• Penalty fees are imposed when a customer makes a late payment.
• Enhancement income comes from services that can come with a user's card or are available through it, such as insurance products.

...Credit card companies posted $176 billion in income in 2020, down from $178 billion in 2018. Interest fees accounted for $76 billion and interchange fees accounted for $51 billion in 2020.

SOURCE: https://www.fool.com/the-ascent/research/credit-card-company-earnings/

Even if you don't pay any of the other fees, that $51 billion in interchange fees is passed on to us as consumers in the form of higher prices. Why not get cash back? We're all going to pay for it anyway, regardless of whether we pay by cash or check or electronically.. Prices would be much lower if we all didn't make so much use of credit cards, but that's not going to happen any time soon. It's paradoxical to complain about rising prices and then speak about how much was made in cashback points.

 

[Bruno]

It’s 2022 you need to have some type of cards, Barry and others have the right idea. Might as well maximize what you can. Big banks suck, big money sucks but what the hell you gonna do?

 

[Ed P]

Let me try this another way: you buy something with a credit card for $10. The merchant makes money, the credit card company makes money, and you get cashback rewards, all out of that $10.

Q: Whose pocket did those cashback rewards come out of?

 

[Brett-EDH]

Let me try this another way: you buy something with a credit card for $10. The merchant makes money, the credit card company makes money, and you get cashback rewards, all out of that $10.

Q: Whose pocket did those cashback rewards come out of?

Yet you have zero say in their game. The only place I shop that is basically cash transactions (no credit cards taken) is Winco supermarkets. Yet many of their prices are higher than Costco (most meats and foul).

So I have no choice but to shop where my money goes furthest and that’s a Costco. And Costco has rigged a cash back plan that get me my money back.

So I can complain or make some money back from my economic activity. I’ll choose cash back 100% of the time.

 

[Ed P]

Yet you have zero say in their game. The only place I shop that is basically cash transactions (no credit cards taken) is Winco supermarkets. Yet many of their prices are higher than Costco (most meats and foul).

So I have no choice but to shop where my money goes furthest and that’s a Costco. And Costco has rigged a cash back plan that get me my money back.

So I can complain or make some money back from my economic activity. I’ll choose cash back 100% of the time.

I do the same. There's not much else to do other than to hope that a discount for cash or debit card is offered someday, but even then I think most people would opt for the rewards.

 

[Ed P]

Many years ago, I worked at a print shop that supplied Costco with computer paper. They dictated everything...price, quantity, and delivery, and really squeezed the margins on the company, but they were such a big customer that we couldn't afford to lose them. That company got bought out, and to better the bottom line, the new company started shorting the quantity in the boxes. I had left by that time, but I heard Costco found out and blacklisted the new company, and that company folded not too long afterwards.

I like the selection at Winco. Costco quantities can be a little too much if you want to try something new. The rewards are a tool to keep you coming back and spending your money there.

 

[Shane - glitchy]

Let me try this another way: you buy something with a credit card for $10. The merchant makes money, the credit card company makes money, and you get cashback rewards, all out of that $10.

Q: Whose pocket did those cashback rewards come out of?

The bank/credit card company charges the business a fee. Usually 2-3 percent, I believe. In today‘s world it’s just a cost of running a business, meaning we all pay more. Cashback rewards cost the credit card company and people that are good with credit make them very little. However, those that keep balances and pay 12-24% interest make them tons. If most people didn‘t carry balances all the time, the companies would not offer so much cash back. There’s a war to get as many of those interest paying customers as possible, hence the offers.

 

[JSaus]

The bank/credit card company charges the business a fee. Usually 2-3 percent, I believe. In today‘s world it’s just a cost of running a business, meaning we all pay more.

In the past, many merchants carried their own credit accounts. It cost them in billing and accounting. The costs and risk have just been shifted. The end consumer pays, and has always paid all costs and expenses.

 

[Brett-EDH]

In the past, many merchants carried their own credit accounts. It cost them in billing and accounting. The costs and risk have just been shifted. The end consumer pays, and has always paid all costs and expenses.

i remember the days of having 5 gas cards in a wallet, 2-3 department store cards and a few different credit cards. i'm glad those days are long gone. look at the efficiencies us, as consumers have gained, by having fewer cards, fewer bills to track and pay, and wide acceptance of payment cards. it's easier to travel with less cash and lower risk than years ago. there are pluses and minuses to the credit card scheme the big players have levied on consumers. but if you're a smart consumer, there's benefits to be had for paying off your monthly bills with all these features attached to the cards.