Not being able to indebt yourself is THE major advantage of debit card. Not everybody in this world is reasonable when it is about spending and finance management.
In some European countries with a more conservative mindset related to debts (Germany, France, ...), people will tend to have the exact opposite stance :
"Why would I ever need a credit card ? It is dangerous. My debit card is accepted everywhere"
Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due.
In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money.
The latter interpretation makes it seem irresistible to me.
The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash:
- eliminates cash theft - always a chronic problem for business.
- reduces costs of transporting/dealing with cash
- improves bookkeeping and paper work
and it gains revenue by dealing with people who don't use cash. A large number of customers don't make routine purchases with cash, and these are higher income customers.
So the choice isn't "pay 3% on X or don't pay 3% of X" The choice is "pay 3% on X" or "don't pay 3% on .9X".
Using a credit card is borrowing money. Interest rates have to be disclosed.
So the fees plus the grace period are a way of making it look like typical card users are not paying a lot of interest.
People getting cash back are actually paying low interest rates, because the market dictates it.
If the fees were prohibited, then not much of substance would change, except the numbers would all be higher.
Yes, someone is paying for my 2% cash back card but it’s still a net benefit to me.
