Credit cards. Outdoor rewards.

[Jigger]

Can someone explain to me how credit cards work in general? My wife and I were discussing this and neither one of us are certain. For example, I signed up for the Bass Pro Shop Outdoor Rewards card. We both have one and we put gasoline and other purchases on it. It is a no interest (if you pay within 30 days, I think) and no annual fee. The more we charge, the more "rewards points" we get to use toward purchases at BPS. I ordered a couple of hundred bucks worth of gear from BPS a few days ago and the lady said I could deduct $65 from the purchase price because of "rewards points". I was pleasantly surprised because we haven't had the card that long.

Now for the questions:
1.In general, how do credit cards work? How does say, Visa, make its money? Interest, I know is one way but does Visa also charge a fee to the merchant or does Visa pay a fee to the merchant when the card is used.
2.What does BPS get from the deal that induces them to give me "rewards points".
3.Who is benefitting from our transactions when we pay no interest since we always pay within the 30 day period and we pay no annual fee??

Thanks for educating me.

[barkelypup]

Originally Posted by Jigger

Can someone explain to me how credit cards work in general? My wife and I were discussing this and neither one of us are certain. For example, I signed up for the Bass Pro Shop Outdoor Rewards card. We both have one and we put gasoline and other purchases on it. It is a no interest (if you pay within 30 days, I think) and no annual fee. The more we charge, the more "rewards points" we get to use toward purchases at BPS. I ordered a couple of hundred bucks worth of gear from BPS a few days ago and the lady said I could deduct $65 from the purchase price because of "rewards points". I was pleasantly surprised because we haven't had the card that long.

Now for the questions:
1.In general, how do credit cards work? How does say, Visa, make its money? Interest, I know is one way but does Visa also charge a fee to the merchant or does Visa pay a fee to the merchant when the card is used.
2.What does BPS get from the deal that induces them to give me "rewards points".
3.Who is benefitting from our transactions when we pay no interest since we always pay within the 30 day period and we pay no annual fee??

Thanks for educating me.

Hi,


1. the Visa comp. gambles on people who don't pay thier bill on time which most don't so they get to cash in on that huge interest rate.
2. BP gets people buying more outdoor stuff and that just goes to show you how much of a mark up is on that wonderfull stuff. (I have more than my Fair share).
3. You are benifitting from not having to pay the interest with the 2 to 3 percent you earn towards free fishing/hunting gear.

Just my 2 cents.

bP

[Nitro911]

The card issuer also charges a fee to the merchant for the use of the card. Remember the cash/credit prices at the gas pumps? That was the retailer's way of trying to offset some of those fees. Those are making a comeback here, but that is off topic.

And Visa isn't gambling that people won't pay on time. They KNOW they don't pay on time. The small percentage that they don't make any money on is more than offset by the vast majority that carry a balance from month to month. The credit card industry spent more than 3 billion dollars last year mailing out all of those offers you get in the mail. I am sure that includes printing costs in addition to postage, but that should give you an idea how much profit they are raking in.

[Lilmoosecountry]

As a banker i have some advice. Your best best bet. Cut them cards up. Pay off a what you own nevor use one again.

[Fish4food]

Originally Posted by Lilmoosecountry

As a banker i have some advice. Your best best bet. Cut them cards up. Pay off a what you own nevor use one again.

I was 36 years old when I got my first credit card. If it wasn't for the fact it gives me some leverage when I have to deal with a not so customer service oriented store, I would have gotten rid of it already.

[Rebbasser]

They don't like me. With one or two exceptions in the past few years I pay them off every month. Truth be told about the only thing I use them for is internet purchases.