how do credit cards work -- does the cc company get $ every time I use it?

[yg17]

Yep. I use Discover first, M/C as a backup. Doesn't AMEX require you to pay the balance in full each month? I've heard or read that before, and always wondered how they make a profit. Is their only revenue stream the membership fee?

Some of their cards are like that. Others are more like traditional credit cards. I have an Amex Clear card that allows you to carry a balance, not that I do though.

 

[duncanapple]

Also the same reason a lot of places to not accept american express.
My primary card is an American express that gives pretty nice cash back. for the first $6500 I spend in a year I get 0.5% on everything and 1.5% on gas, drug, and food. After 6500 it goes up to 1.5% and 5%.

Now something a lot of people do who carry AMEX or discover as a primary card we all have a VISA/Master card as a backup card. AMEX is my primary card and if a place does not take that I pull out my VISA.

I pay off my cards in full every month so I never pay interested on them. I personally use them to track my spending more than anything else.

Yep, thats pretty much my strategy as well. I pay my discover in full every month. I have a VISA debit card that I use in the very few cases where discover isn't taken. I know discover charges merchants a little more, but it can't be that significant - other cards offer rewards too and I find very few places that don't take discover. Only two or three come to mind - a dry cleaner I used to go to, and the cafeteria in my office. I think part of the reason the rewards are higher is I have heard the interest rates on your unpaid balances with discover are higher. I have never compared them really though because I havent ever left a balance or shopped that part out.

On a side note - I'm not convinced the credit card fees drive the price of goods/services up. True it's a cost the merchant has to recoup, but on the other hand because people have such convenient access to instant credit, they likely purchase more, spend more, etc (now if they SHOULD be doing that is a whole other thread). Higher sales lower their overhead costs per unit. Even with paying off my balance every month (ie only spending what I have) I STILL buy more than I otherwise would using cash just because with cash you can be caught off guard without any. With the card, its always there. I may not impulse buy a computer, but little stuff like a hat, drinks, etc. And when it comes to the large stuff, who wants to walk around with a wad of cash (unsafe) or have to cut a check every time? My #1 annoyance in a checkout line these days is people who bust out a check book and have to write out a check. If they have a checking account, don't they have a debit card?! Why bother?

 

[notjustjay]

If I was a small merchant, I'd offer a free lollipop or a sticker to everyone who pays with a debit card or cash. If they asked why, I'd explain.

That's a cool idea. A lot of the local computer parts shops offer a 2% discount for cash or debit. I don't know if that's common all over, but it's a popular trend here in my town.