STOP this MS!
Oct 9, 2013 | 12:19 pm
#17
Original Member
Join Date: May 1998
Posts: 1,139
The problem is not that the article is amatueristic and sophomoric, as it clearly is since people intelligent and energetic enough to do manufactured spending are capable of calculating that paying 15% interest is not worth it if the MS earnings on a 5% rebate card is around 3.5% or so after fees and gas (and anyone floating a balance probably has a 0% teaser rate card). The problem is that the more mainstream articles that float around, the sooner that the credit card companies, the issuers of prepaid cards, a very big box retailer, some smaller retailers, and perhaps even the regulators in the government's financial system move to shut it down. And let's face it, it would not be very hard to shut it down. Although we probably should not spell those steps out, lest the writer from Yahoo, who probably got all of her information from FT and FW, will have her next idea for an article.
Oct 9, 2013 | 12:24 pm
#18
Join Date: Apr 2010
Posts: 519
Yes, please be green recycle your GC and VR.
Oct 9, 2013 | 4:28 pm
#20
Join Date: Jun 2013
Posts: 556
I mean, aren't we still making a profit for the CC companies even if we don't carry a balance? With the exception of Chase-issued GCs, the 3% or so they get from the merchant is nothing to sneeze at. Plus we're much, much less of a default risk.
Oct 9, 2013 | 5:26 pm
#22
Join Date: Mar 2013
Location: Down South, The Desert
Programs: Marriot Rewards, Southwest Rapid rewards, Emerald Club, Avis Preferred
Posts: 1,871
Idk, I kind of agree with the writer. A lot of people are not smart and fall easily into debt. If you carry credit card debt, you are more likely to be sloppy with your MS, and create more debt. I'd say its safe to say that the vast majority of the people on here don't carry CC debt, but I could always be wrong...
Oct 9, 2013 | 6:09 pm
#23
Join Date: Mar 2013
Posts: 809
There is no way the merchant has to pay 3% swipe fee on VR/GCs. I mean I could be wrong, but that'd be a huge loss for the store. I wouldn't see why any place would allow VR/GC purchases with CC if they have to pay a full swipe fee...
Oct 9, 2013 | 6:38 pm
#24
Join Date: Dec 2012
Location: JFK
Programs: *$ Gold :)
Posts: 1,061
- "card itself"/activation fee - $4.95 (+-$1-2)
- "debit load" - $500
The latter might transacted differently in Visa network, lower fees if any...
Oct 9, 2013 | 6:48 pm
#25
Join Date: Mar 2013
Posts: 809
I wish we knew exactly how the money was split. Someone is losing (other than the CC company giving rewards).
Oct 9, 2013 | 6:53 pm
#26
Join Date: May 2012
Location: New England
Programs: DL PM, HH Gold, the rest come and go
Posts: 313
Quote:
Originally Posted by PaulMSN
But the caution is not specific to MS. The writer could more logically connect it to not buying that fancy sound system or as a caution not to use a CC at all.
I agree 100%.
The warning from the writer is not specific to MF at all. It's specific to any rewards credit card.
Take the Citi Forward card for example that offers 5 points/dollar (5% cashback if redeemed for certain rewards) at restaurants, among other places.
Some people mightend up spending more at restaurants just to get the extra rewards (thinking 'I'm going to eat something anyway, might as well go to a restaurant'), but here's a simple example that shows this is a terrible idea. We all know it's cheaper to eat food from the grocery versus food at a restaurant:
Restaurant
Deli sandwich and drink at local cafe = $10
5x bonus points = 50 points or $.50
Net Cost = $10 - $.50 = $9.50
Grocery
Deli sandwich and drink at grocery = $8
1x bonus points = 8 points or $.08
Net Cost = $8 - $.08 = $7.92
Result
Even though you got 525% ((50-8)/8) more points in this oversimplified example, you saved 17% ((9.50-7.92)/9.50) by eating food from the grocery instead of a restaurant even after you take into account the rewards points.
I know this is an oversimplified example but I think it makes it obvious that you should think twice before blindly spending money just because of the credit card rewards.
Originally Posted by PaulMSN
But the caution is not specific to MS. The writer could more logically connect it to not buying that fancy sound system or as a caution not to use a CC at all.
I agree 100%.
The warning from the writer is not specific to MF at all. It's specific to any rewards credit card.
Take the Citi Forward card for example that offers 5 points/dollar (5% cashback if redeemed for certain rewards) at restaurants, among other places.
Some people mightend up spending more at restaurants just to get the extra rewards (thinking 'I'm going to eat something anyway, might as well go to a restaurant'), but here's a simple example that shows this is a terrible idea. We all know it's cheaper to eat food from the grocery versus food at a restaurant:
Restaurant
Deli sandwich and drink at local cafe = $10
5x bonus points = 50 points or $.50
Net Cost = $10 - $.50 = $9.50
Grocery
Deli sandwich and drink at grocery = $8
1x bonus points = 8 points or $.08
Net Cost = $8 - $.08 = $7.92
Result
Even though you got 525% ((50-8)/8) more points in this oversimplified example, you saved 17% ((9.50-7.92)/9.50) by eating food from the grocery instead of a restaurant even after you take into account the rewards points.
I know this is an oversimplified example but I think it makes it obvious that you should think twice before blindly spending money just because of the credit card rewards.
Now, if that's NOT true, if you end up spending more than you save (on interest, or junk you don't need, or whatever), then you should rethink what you're doing. Juggling dozens of cards with different bonus categories isn't for everyone, but fortunately we also have flat 2% CB cards like the FIA.
Oct 9, 2013 | 8:30 pm
#27
Moderator: Manufactured Spending
Join Date: Jul 2011
Posts: 6,709
The problem is not that the article is amatueristic and sophomoric, as it clearly is since people intelligent and energetic enough to do manufactured spending are capable of calculating that paying 15% interest is not worth it if the MS earnings on a 5% rebate card is around 3.5% or so after fees and gas (and anyone floating a balance probably has a 0% teaser rate card).
Oct 9, 2013 | 8:42 pm
#28
Join Date: Oct 2009
Location: Land of the parrots and parrotheads
Programs: Several dozen
Posts: 4,820
Oct 9, 2013 | 11:05 pm
#30
FlyerTalk Evangelist
Join Date: Aug 2011
Location: Austin, Texas
Programs: Airline nobody. Sad!
Posts: 26,062