Explain that to me?
How does using cash finance your “points”?
How is using a credit card cheaper?
My local gas stations DO NOT have separate cash and CC prices. Both are the same. If I pay with CC for gas, I get between 1% and 5% back in cash at the end of the billing cycle. If I pay with cash, that's it...transaction over.
Normally my "reward points" are 1%, however Chase Visa runs promotions that will return 5%. For gas, that has been the case during the first quarter of the year for the last several years. During other quarters they will promote grocery stores or pharmicies or clothing stores, etc.
>>Explain that to me?
>>How does using cash finance your “points”?
>>How is using a credit card cheaper?
Credit card companies pay their users kickbacks for using their cards. Usually 5%, though it might also be in free airline miles or other benefits. Currently mine pays me back 5% of any money I spend between now and June 30th at grocery stores or drug stores. Then from July 1 to September 30th it will be when I use it at restaurants. By “pay back” I mean to say that they will apply that money to my balance, subtracting it from what I owe.
Since I NEVER carry over a monthly balance, I NEVER have to pay them any interest. So I just get my kickback every two months.
Since merchants pay credit card companies in order to be able to accept those cards for payment, those business costs incurred by the merchants end up being paid for by higher prices for everyone. Thus some small percentage of the cost of paying with cash is funneled from the cash payer to the credit card payer via the 5% kickback to the credit card payer.
I’m not saying it’s right or wrong. I’m only saying that it’s a real thing and that it saves an individual money to do it. Additionally, a person’s credit rating is bolstered by this long term credit management showing up in their credit history. Thus when one buys a house or a car one gets the best interest rate available, garnering further savings.