Amen!

I use a cash back credit card, but would chuck it in a heartbeat for a cash discount. The lowest cost electricity supplier in my "deregulated" state requires payment by credit card! I use a rewards card for that too. As a matter of fact, I use a rewards card for almost everything these days.

The way things are set up now, a good credit rating is necessary for employment (in some cases it is so reported) housing (I was turned down for an apartment because I didn't have one) and to get a decent deal on any number of things.

A record of paying bills on time, cash in the bank, and sufficient income should be all it takes to have a good credit rating - it proves fiscal responsibility. More and more however, responsible people who pay cash are disadvantaged by the monopolistic credit industry.

I now earn rewards but I'm also now subject to identity theft. I resisted for as long as I felt it was practical, but if you think you might want to buy a house someday and don't want to pay an exorbitant interest rate, credit must be established. The only way I know to do that without actually paying anybody interest is to use a credit card for everyday purchases and pay the bill in full before the due date. One good thing - the credit card companies hate that.

That comment is way out of line, in my opinion. There is no logical or other reason why the author cannot write about any problems she wishes. Her source of income is not relevant.

Hoppy in Sacramento

The only way I know to do that without actually paying anybody interest is to use a credit card for everyday purchases and pay the bill in full before the due date. One good thing - the credit card companies hate that.

You would think that they would hate that, but I have been using a money-back credit card for 20 years (I use it to pay for everything I possibly can) and have never paid one penny in interest; I get solicitations from credit card companies on a daily basis, as well as offers for more credit and low-interest checks from the cards I have. 

 I am left with the impression that their take on it is that if they hook me in, I may succomb to buying more than I can afford and get in on the never-ending spiral of credit card debt.  Either way, they make money off me.  That is all they care about. 

Jan

While I agree that people should be able to post about whatever issue no matter what their current income level is or no matter at what prestigious institution they happen to work, I understand the frustration that leads to a comment like this.

Think about it... it's a reaction to a society where the rich or better connected folks get to make and debate policy for the rest of us.

I'm going to give him a decent rating, just to counter some of the down ratings.

You're both right that things are better when people with some stature are willing to post here. But I also see the frustration that led to this comment -- that people without money or connections just lack a voice and they react to that in a variety of legitimate ways.

The post here struck me as being an outburst. But, an understandable outburst.

thosethingswesay.blogspot.com

So, I guess you figure that the only people who can write about the health insurance problems are those who don't have coverage; and that the people who are getting ripped off by pay-day loan companies are the only ones who are authentic enough to give voice to that injustice, and on and on.  Well, those people may be too busy trying to make ends meet to come here and speak their minds, never mind trying to be heard by those who have power.  So everyone else should just be quiet.

Well, that will do wonders for our democratic system.  The republicans will run their rich white men, and we will wait for some welfare recipients, and some of our bankrupt  citizens (broke from medical bills) to write op-eds and run for office to right the wrongs of our society. 

And all the people who aren't hungry but care about those who are; those who have health care but care about those who don't; those who don't suffer discrimination but believe that we are all equal should be relegated to the room where the hypocrites go.  Is that what you believe?

The post here struck me as being an outburst. But, an understandable outburst.

It struck me as a woefully misplaced outburst.  Why not blast those who are responsible for unfairness instead of those who are trying to correct it?

Jan

Other than that, I have no opinion one way or the other about Edwards...

Then you beg the question: Why such a negative opinion about Ms. Warren? Do you think she is richer than John Edwards, and therefore should not be allowed to "moan" about the poor when Edwards can moan speak for them?  Is it a "Harvard" thing?

Or is it just that you are the "Judge - Guy" and you get to sit back and say who is worthy to speak on a particular topic?  Maybe you should make a list.

Jan

just as she can write about any problem she wishes, I can make my own observations.

what made me laugh was her line:

"Shoot, I'm glad any time a family can save a dime."

as a lawyer/havard professor, I hardly think that's on her mind.

like, if I buy 10 gallons of gas, that's only 5 cents a gallon out of $3.50 and hardly noticible-- nothing to lose sleep over. (that's assuming a 50 cent transaction fee)

Now, as Jan noted, if you have a "cash back" credit card, then you'd get a refund of 70 cents (2%).

so, as the clever math professor would say: the "NPC Innovation" isn't that great and the credit card option can actually be better!

for example, if you have an SUV with a 15 gallon tank, then you'd actually make about 55 cents by using a credit card instead of using the "NPC innovation" since 2% of $52.50 is $1.05!

Better yet, ride your bike, walk or carpool and save a whole lot more! And, if you have to drive, then get a Prius and cut your gasoline bill by 75%! (60 mpg versus 15)

as they say, "don't sweat the small stuff," something that a lot of "professor types" should repeat to themselves.

To boldly go...

I formed my opinion based on a mathematical analysis of the situation and posted it and that's why I decided that the discussed issue was insignificant to everyone.

I truly appreciate your vote of confidence and hope that my analysis backs up my frustration.

And, based on the articles on the web, the gas station business is a "low margin" business.

For garages that do repair work, that's where they make their money-- the gas is simply a calling card.

To boldly go...

...a well paid professional who loves big fees.

And you know this because...?  You seem to me like a cynical and quite unpleasant spoiled brat who enjoys picking good people apart.  I will not waste any more effort responding to your childish posts in which "you claim to have no opinion on...(this one or that one)" and then go on to write an opinionated screed. 

BTW, I don't think you are as smart as you think you are (or as we say down in the South:  "I'd like to buy you for what you're worth and sell you for what you think you're worth." 

Oh, and since I will not respond to any more of your posts, I just want to say that your  --> To Boldly Go... fits in really well with all my previous comments about your false superiority complex.  Maybe Scottie will beam you somewhere that is good enough for you, but I doubt it.

Jan

While you may be justified to ask for some evidence for the cost of a transaction, the supposition that a transaction of less than $50 or about $50 for one or two items would be around 85 cents is relatively nutty.  If the merchant didn't need a cashier on hand, the transaction cost would be a fraction of a penny.  That is also the cost to the bank supplying the credit card, which has automated millions of such transactions.  It's only real cost is the float on money for people (like me) who pay off their credit cards every month.

Also, you are confusing things to mix pure transaction costs with public goods issues.  If you think that cash transactions increase the risk of off-books economy, then their are simpler solutions than transferring a huge part of the business's profit to corporate banks.  Random audits would likely cost a lot less.

It's the hook, and also the fees. I easily make 30+ transactions a month, and that's about $20 in fees. Many banks also charge banking fees on top of that. Then there are ATM withdrawal fees, and monthly POS service fees.

All told, they're getting about $30-40/month from probably about a hundred million consumers or so! From some a lot more. Hence the $57 billion in fees.

Pretty shocking when you consider a competitive company could do it for 1/5 the cost. Of course Visa and MC have anti-trust agreements. Of course they're not going to compete for costs if it reduces their profits currently inflated by 500%!

Then there is the moral cost of a society where many of the wealthiest and most powerful individuals often make their living my essentially ripping off hundreds of millions of people a buck at a time. Feudal Barons never had it so good.

the supposition that a transaction of less than $50 or about $50 for one or two items would be around 85 cents is relatively nutty.

I'd claim that this is only a "modern attitude." credit cards are amazing because, for example, when I was in europe, I was able to use my credit card and didn't have to buy traveler's cheques-- that was really convienient.

If you've used traveler's cheques before, you know it's hard to predict how many you need.

And, based on the "Congressional FCU," it currently costs 2% of face value to buy traveler's cheques (source) so, even before credit cards were widely used, transaction fees were part of the equation.

I shudder to think that, like kings, we'd still have to carry bags of gold around!

That is also the cost to the bank supplying the credit card, which has automated millions of such transactions.

do credit card companies make money off the transaction or the interest? I'd argue that, without doing the research, they make their money off the interest. Heck, even the late fees, which are often over $20 an incident, make transaction fees look cheap.

FYI, in the mid '90's, I worked for CompuServe and they helped create the networks which handled the credit card transactions.

before that point in time, I worked for k-mart, as a cashier, and we had to look up each credit card number in a book to see if it was valid or not. as you can imagine, that forced stores to hire more clerks because it took a lot of time to look up credit card numbers. the "personal check" situation was no better. each check had to be personally approved by the manager.

in my mind, the credit card companies aren't guaranteed a bright future. for example, companies like PayPal are working on ways of using your cellphone to pay off your bills by "texting money" to people!

as credit card companies transition to the web and outsource their labor, their fees will probably go down.

Random audits would likely cost a lot less.

I tend to think that data analysis is a great way to quickly audit everything and a way to finger cases which need more attention.

To boldly go...

(1) Do you think professors have any impact whatsoever on those "university fees"?

yes I do and, specifically, I recently had to pay a fee (several hunderd dollars) for a special "technology lab" that had limited hours during the day-- when I worked and, if the lab was open in the evening, the professors/adjucts liked using it for their night courses.

(2) Do you have any insight into what the university uses the fees for?

yes, so university presidents, coaches, etc.. can use the general budget for high salaries ($1,000,000+), great pensions, etc... and for building big, unneeded buildings. at the university of arizona, the "building utilization" was less than 30% or so.

The professor doesn't get this money, it must be misspent.

the last time I looked at the national payscales, public university professors were getting paid over $120,000 and those numbers didn't include the money they make from private consulting.

small businesses, for example, don't have the same access to college libraries and other resources w/o having to include it in their budget.

To boldly go...

All told, they're getting about $30-40/month...

do cable subscribers get any more service for their money?

In the last 15 years, I paid only one ATM withdrawl fee and whatever credit card "transaction fees" the vendors pay.

Why don't you talk about the people who save money from credit card transactions?

For example, I can "PayPal money" from my credit card for less than a buck, instantly!

That same service, via the Post Office, would cost me $15.00 (overnight mail), a paper check and 30 minutes at the post office!

So, based on your numbers, after three PayPal transactions, I save $15.00 already!

Even if I paid by check, I'd have to pay for a stamp (40 cents), an envelope (5 cents) and a check (??) which is 45 cents.

And, as you know, time is money. In the old days, I had to buy checks and reconcile my checkbook each month.

These days, I can view my transactions online whenever I wish. I can also, instantaneously, import that data into Quicken w/o any extra work!

And, unlike traditional banks, my credit card company is open 24/7 and handles the problems I have!

To boldly go...

Why shouldn't the consuming nations have a consumption weapon?

do you really think this is a practical way to do it? Other countries have simply put in bus service along with heavy subsidizes.

in america, we're wasting our money on things like ethanol and sprawl.

To boldly go...

So you clearly understand absolutely nothing about universities. 

As to your second point, you are off topic.  As to your first, your "claim" is irrelevant.  So, apparently you don't actually have anything to say.  But you can take a lot of space saying nothing.

Hey John,

I think the situation is less dire than you imagine. As I posted lower in the thread, MCS had an understandably frustrated reaction to the situation at hand.

It's odd that in this case I find myself in disagreement with you and a lot of other posters who I've interacted with in the past.

But my take is that the thread hasn't been hijacked or anything. MCS didn't put the issues the way I might have, but I see where he/she has been coming from.

Also, MCS has been a valuable and active member of the community. I say let's let this little disagreement lie and move on.

thosethingswesay.blogspot.com

I'm just giving you the customer's perspective. certainly employees will feel a lot more sentimental.

from a tax payers perspective, university fees and costs are rising much faster than inflation and so they'll have to survive on their ability to convince the next generation to take on more debt.

To boldly go...

we'll just have to disagree on wether ms. warren's post has anything to do with middle class politics. I just don't think so.

if it's the best issue she could bring up, than our country is doing pretty well.

To boldly go...

no, I stirred things up because I thought that Ms. Warren was misinforming people about the relative merits of credit card use for payment.

consider this from McDonalds: (source)

"But new technology has made it possible to speed credit cards through faster than cash, possibly opening up a new profit stream for the fast food restaurant industry."

another (source):

"But McDonald's has come up with a series of popular new products in recent years, including spicy chicken sandwiches and better coffee. It also features longer hours, new-look restaurants and credit card readers that allow customers to pay for their hamburger with plastic."

And look at how expensive that transaction is (source):

With a traditional credit-card system, restaurants pay a set fee of around 15 cents to 25 cents per transaction, plus a percentage of the transaction. That means a $5 lunch charged to a credit card costs a restaurant about 30 cents

which is far below Ms. Warren's estimate of 65 to 85 cents!

And how does this compare to a cash transaction using an ATM? (source)

"Although estimates of the difference vary, 36 cents for an ATM transaction versus $1.06 for a comparable teller transaction is typical."

So you decide! Am I being dumb?

To me it looks like credit cards could be much cheaper for the customer since, at McDonalds, I can swipe my own card without the help of a cashier.

In the future, customers might even be allowed to punch in their own orders too! Yeah! That'll keep costs down even more.

In general, I like credit cards because, for an additional 40 cents per transaction-- when compared to ATM's, my money becomes protected!

in 1998, when someone stole my credit card-- and charged $2500.00 on it, I didn't have to pay a single dime.

if I lost this money in cash, however, I would have been out of luck.

to put this loss into prespective:

"if my credit card company makes 40 cents a transaction, then it would take them 6250 transactions to cover this loss."

based on everything I get, I think that the current system is a bargain!

call me verbose and chatty but my point is still: the middle class is better off using credit cards because the transaction costs are cheaper.

I don't usually quote myself, but this was pointed when I said it to mcs... "You are, after all, merely paying for the professor to somehow harangue you out of your ignorance. "

You are OFF TOPIC.  But I want to straighten you out one more time.  There is no clear evidence that the COST of college education has increased at ALL over the past two decades.  Considering what is going on in class size, I would guess the COST of college education is going DOWN.

The PRICE of college education, as experienced by the individual buyer is going UP, because between 1950 and 1990 (and possibly before from the charitable sector) there was a substantial discount.  The discount has eroded beginning around 1975 and continuing (accelerating) until this day. The source of the discount in the 50s was the federal government. The states and the federal government provided quite good discounts in the 60s through the 70s.  Now they have backed out.

The retail PRICE is up because the DISCOUNT is gone.  Actually, it isn't completely gone, but it will be unless you go back to your various legislatures and fight it out.

This is NOT A COST ISSUE. 

While I understand your frustration, I think Destor is right in a way.  mcs deserves to be cut some slack, and I say this as someone who has tussled with him more than once.  He has a thing about universities and university professors... Recognizing that nothing I can say will change his mind about that, I simply don't engage him when he goes on that particular tangent:  responding just assists in kidnapping the thread.  He's not the only person around here with a well-ridden hobby horse.  I try to just let them ride away and read around them.

aMike

Not worth it.  Don't waste your money on an education, you are possibly trainable, but beyond the reach of education.

I use my credit card at the grocery store, retail stores, at restaurants, and KMart.  When I check out I have never once not enountered a cashier.  Are you saying that once fast food places start accepting credit cards this will be the norm:

But then, since you didn't need a cashier-- to handle the cash, your meal was probably more than 10 cents cheaper and you broke even.

So, if you charge it at McDonalds (never mind that there will always be cash customers) they can reduce the humans who were former cashiers....yeah.  So there will be a cash line and a credit line -- at McDonalds?  Right.

Jan

"So you decide! Am I being dumb?"

Uh-huh, you are. Here's why.

Most of your silly McDonalds scenario has been adequately stomped by others. I will address a small part of it and then turn to some of your other howlers.

"To me it looks like credit cards could be much cheaper for the customer since, at McDonalds, I can swipe my own card without the help of a cashier."

That's super. They get you to do the work, but they still have to charge you enough extra so they can make their money even after paying the credit card company its rake. You don't save, you lose. Further, you will "save" money at McDonalds (compared to the costs of a traditional credit card) only if their new micropayment plan, which aggregates transactions before they are presented to the credit card company, is in effect. And that plan requires the customer to sign up for charge account privileges, taking up your valuable time and giving themselves even more info about you than they get from your credit card-- but even under micropayment plan, you have to pay more because the business still has to pay the credit card companies, the add-on is just less.

"in 1998, when someone stole my credit card-- and charged $2500.00 on it, I didn't have to pay a single dime."

Right, but you and all of us paid beaucoup to make the banks whole while thieves ran up millions of such charges on the many thousands of stolen credit cards, most of which could be avoided by a picture requirement.

"the middle class is better off using credit cards because the transaction costs are cheaper."

Not necessarily. In every case, when credit cards are used, the merchant pays 2%, regardless of the actual transaction costs. These are the same on a $500 purchase as on a $5000 purchase, so why should the percentage of the fee not drop?

Let's recognize mcs is simply a troll, making much ado over nothing throughout all his/her comments.

Jim Anderson

The Truth About Credit

Facebook Profile

Have you ever considered going back to that class you didn't take where they advise you that brevity is the soul of wit?

GeeZusChrist! You cannot even say no in fewer than 100 words.  MCS, get an editor.

Ok, I'd love an editor. but what about MJ? he's a very popular blogger on tpmcafe.com and look at his word counts:

• JUST IN! Five Presidential Candidates Offer Their Positions On Israel and Its Relation With the USA

  words 2415, sentences 106;
  

• Congress Celebrates The '67 Arab-Israeli War!

words 1700, sentences 83;

if the rebel rousing M.J. can't cut down verbage, what hope is there for me? especially since his bio claims that "in the early 1980s, [M.J. Rosenberg] was [the] editor of AIPAC's weekly newsletter 'Near East Report'."

like dogs, who sqat until done, many writers write the same way!

wordcount source: "http://wordscount.ezpublishing.com/beta.html"

To boldly go...

With a traditional credit-card system, restaurants pay a set fee of around 15 cents to 25 cents per transaction, plus a percentage of the transaction. That means a $5 lunch charged to a credit card costs a restaurant about 30 cents

which is far below Ms. Warren's estimate of 65 to 85 cents!

Except that you are comparing apples to oranges. A tank of gas will cost at least $30 at current prices. I would expect a McDonald's meal of $5 to be a lower fee.

Satellite Sky Blog

Find the Truth. Do Justice.

You have convinced me that in your particular case, some of the vices of credit cards are mitigated by your smart tactics. Which card gives you 2% back with no limit and on all types of purchases at all types of retailers, if that is what you are saying?

But your personal experience with credit cards really doesn't address any of the points in Warren's discussion, and even you have to admit that cash-back cards are a middle- and upper-middle class perk paid for by all the people who pay interest on monthly balances. You will also have to admit that if every credit card were a cashback card, the industry would disappear.

You're completely missing the point. Yes charging via plastic is a useful service. Yes they provide a useful service, but they do so at grossly inflated prices and are immorally anti-competitive. They're a net burden on society compared with what a truly efficient and competitive company could do.

The point is a competitive company could do it for a small fraction of the cost, by Visa and MC have a lock on the market and anti-trust agreements to fix prices.

As an analogy, water is obviously a useful commodity. Water utilities are regulated and prevented from charging you five times or more what people currently pay, which is exactly what some greedy SOB would do otherwise, as water barons do in the 3rd world.