Between rent and school payments, I am paying quite a lot over ACH and am wondering if there’s any way to also get some benefits back from these payments.
There are cards out there like the “Fold” card that will give back up to 1.5% in BTC for ACH transactions, but that’s contingent on you spending a lot on other transactions and the card also has a $100 annual fee.
I don’t care if the rewards are USD, BTC or booster packs of Pokémon cards. I’d just like something back from these transactions.
Credit cards pay out rewards using money they charge merchants on the transaction. The cards discourage merchants from offering a discount for people who pay in less expensive ways, but if you ask you can often get a discount for cash. Typically the cards charge merchants 3% and give you back 2%. Cards are worth it to a merchants such as gas stations but usually not worth it for companies accepting rent. If you rent from an individual, you might get a discount for giving them cash or check, but a company with hundreds of units probably prefers paying the small ACH fees to avoid dealing with physical payments.
There are cards out there like the “Fold” card that will give back up to 1.5% in BTC for ACH transactions, but that’s contingent on you spending a lot on other transactions and the card also has a $100 annual fee.
Look up “there ain’t no such thing as a free lunch” from Robert Heinlein.
Generally speaking, if you’re getting given something, there is some sort of mechanism by which the card issuer is going to get more than the thing they are giving you. Otherwise they wouldn’t do it. Sometimes they will offer incentives where you can actually make some small profit, because they want to bootstrap the usage of some new service by bribing people to use it for their real-world big transactions. But that will generally stop as soon as the new thing is established. Sometime they will give you a piece of some cut that they’re getting (they charge 3% to the merchant as a processing fee, then they give you 1% in rewards as your cut, so you’ll use the card more and their 3% will be higher). But, in general, you won’t really be able to beat the house by more than a miniscule amount.
They’re looking to bring money in, not give it away to you.
Yeah, but these are also sometimes a numbers game. For example, rewards credit cards can offer their rewards because they make more than what they are worth in interest + annually fees for the cards. It is possible to make this work for you if you never carry a balance on your card, and make back some amount > the annual fee.
You’re right though, these companies aren’t just giving money away for free. You have to be very strategic to make these things work in your favor.
rewards credit cards can offer their rewards because they make more than what they are worth in interest + annually fees for the cards
That’s not precisely true. Generally, the rewards are paid for out of that 3% merchant fee that they take in. Usually if you do the math, the rewards will always add up to a healthy chunk below that number, being high enough to be attractive, but low enough that they’ll make a comfortable profit no matter how much rewards they wind up paying out. As you noted a lot of people use their cards in a way where they make way more in rewards than they pay in interest and fees.
You’re right though, these companies aren’t just giving money away for free. You have to be very strategic to make these things work in your favor.
Yeah. Especially if you find new services that are trying to run at a loss to get going. I don’t have specific ideas for an answer to your question but that’s where I would try to look: Some just-launched service or paradigm that’s having to bribe its customers to build up interest (of both varieties).
We pay many bills via credit cards, which we then pay in full every month. The credit cards offer something like 2% cash back that can be applied to pay down the balance of the card at some point in the future.
It’s not much, but it’s essentially giving us a 2% break on the bill. Of course if you carry a balance, the interest will far outweigh any gain. So you have to be disciplined and careful. The cards we have do not have an annual fee, either.
The card company still does it even without charging us interest because they make money on the transaction - they charge the vendor a fee.
Exactly what I do as well. Unfortunately some things like tuition and rent only accept ACH :/
ACH?
Ah, thanks! Corrected
Wasn’t sure if that’s why you’re having trouble finding something that gives rewards.
I wouldn’t expect too many ACH rewards to exist, though. ACH is lower cost than credit card fees but my understanding is it usually still isn’t free. Credit card fees paid by the merchant mostly go to the card issuer (bank) who in turn offers a portion of that fee to the card holder as a reward to incentivize them to use the card more. I think the ACH fees mostly go to the clearing house, usually the Federal Reserve in the U.S., so they’re not turning around and handing any portion of those fees to consumers. The fee can also be paid by the sender or the recipient, so that further reduces the opportunity to supply a reward incentive.
Gotcha, that makes sense. The only cards I see offering this are Fold and Bilt, and I’m not sure Bilt would handle anything other than rent (as that’s all they advertise). Thank you for the reply
