"Ethics" of credit card spending

cantbelieveit23

Cashback and Rewards (and higher interest rates) are, of course, just incentives banks use to encourage customers (mainly new ones).  It's a game in which the banks never really lose, and the smart customers do their best to gain a little through their purchases etc., and switch accounts to maximise that.  Who pays?  Anyone who borrows money in a planned way (e.g. mortgages, loans), and to a greater extent, those who have unplanned overdrafts, credit card debt, or default on mortgages.
As in most situations, the rule is that those who have money (whether through hard work or inheritance) make more, and those who have little risk losing some of what they do have.  Is that totally fair....any moral point....depends on your view.
Interesting angle on the cash discussion.  A number of businesses here in Spain prevent employees handling cash: they have a machine on the counter into which those who wish to pay by cash feed their notes and coins, and (if appropriate) receive cash in change.  Not sure if that occurs in the UK?

GeoffTF

cantbelieveit23 said:

A number of businesses here in Spain prevent employees handling cash: they have a machine on the counter into which those who wish to pay by cash feed their notes and coins, and (if appropriate) receive cash in change.  Not sure if that occurs in the UK?

The self service checkouts that accept cash in my local Asda work like that.

zagfles

MattMattMattUK said:As a business cash is more expensive to use for multiple reasons. If you talk to most businesses from the one man band coffer shop to the multinational they do not want cash, they want card. You will notice that most of the proponents  of "cash is king" are in industries well known for fraud and tax evasion. If you want to look at morality and ethics the death of cash will be good because it will remove a large chunk of different types of tax fraud.

Yup. Virtually the only reason any trader prefers cash these days is because they're a fraudster wanting to dodge tax. Customers often are aware and go along with it because they think prices are cheaper as a result, but the overall impact on "greater society" is that we all pay more taxes as a result.

So really if you want to consider the ethics always pay by card, or perhaps by bank transfer to a business account for a trader who doesn't take cards. Don't do business with anyone who insists on cash. But most people don't care and tax avoidance is almost not seen as a crime, a bit like benefit fraud, it's only the govt, they'll waste it anyway etc etc.... Then they moan when their taxes go up. 

MSE_ForumTeam5

elsien said:

You’re aware that this forum is intended to be for specific questions and it’s not a discussion forum?  The discussion bit got closed down a long time ago – you need to go elsewhere for that. 

There's no problem with slightly broader questions about ethics and attitudes to money - those threads can be very interesting - the main test for whether something is suitable for this forum is whether it's money-related or not. Politics and world affairs, on the other hand, are unlikely to be suitable for this forum. There are a couple of boards (eg covering property and benefits) where we do encourage people to stick to asking about specific situations rather than more abstract discussion. 

MattMattMattUK

MSE_ForumTeam5 said:

elsien said:

You’re aware that this forum is intended to be for specific questions and it’s not a discussion forum?  The discussion bit got closed down a long time ago – you need to go elsewhere for that. 

There's no problem with slightly broader questions about ethics and attitudes to money - those threads can be very interesting - the main test for whether something is suitable for this forum is whether it's money-related or not. Politics and world affairs, on the other hand, are unlikely to be suitable for this forum. There are a couple of boards (eg covering property and benefits) where we do encourage people to stick to asking about specific situations rather than more abstract discussion. 

Thanks for the clarification. 

MyRealNameToo

lr1277 said:

Depends on your ethics and morals.
However it is believed Amex charge more to suppliers/retailers, hence they get less. This could mean prices are put up for every customer.
Some will say retailers/suppliers can get a deal with `Amex that is almost at parity with their deal with Visa/Mastercard. No retailer/suppliers publishes their deal with the card companies, so I don’t how much of what I have said is correct.
Amex do tend to offer more/better rewards than Visa/Mastercard and these have to be funded from somewhere.

The likes of Zettle and PayPal treat all card equally on their standard tariffs 

Mastercard/Visa are also not a singular rate, commercial credit cards are typically much higher fees than personal ones. The likes of Visa Infinity or Mastercard World Elite similar can have higher fees, particularly outside of the UK/EU where interchange fees arent legally capped. In the US in particular these cards come with similar benefits to AmEx. 

AmEx in the UK can do more than other banks because the interchange fee cap doesnt apply to the cards they issue in their own name. 

CaveDweller2024 said:

Are there any ethical or moral concerns when it comes to credit card spending?

If you use reward cards for example and do all your spending on these (paying back in full each month of course) is there any net negative either to yourself, or the greater society?

Depends on your ethical or moral views... obviously if you are of a islamic belief then paying interest on debt is haram however some argue they are fine as long as you never actually pay interest and that credit card companies make money from the fees so the interest baring debt isnt fundamental to the proposition. 

Those with a more ecological view point may argue that cards that give flight based rewards, particularly as they tend to be "better" for higher class air travel are immoral as a first class flight someone has a horrendous CO2 per seat level and how many would be flying first were it not for the fact that points were covering 90%+ of the fees. 

I suspect most others will argue on what the bank then does with the profits is the most likely cause of concern. 

WillPS

MyRealNameToo said:

AmEx in the UK can do more than other banks because the interchange fee cap doesnt apply to the cards they issue in their own name. 

To be clear - issuing a card in their own name is not sufficient to avoid the interchange fee.

The card must bear only their brand name and no others, otherwise it is subject to the interchange fee cap. That means (from their current offer) the BA, Nectar, Vitality, Harrods and Marriott cards are all subject to the cap, but the Reward, Cashback, Gold and Platinum products are not.

How this works in practice I'm less sure - I've not seen reports of merchants being charged different amounts for some UK consumer Amex cards. Conversely there is a lot of evidence of merchants who historically didn't take Amex because of their high fees now accepting - recent examples include Savers, Farmfoods and B&M.

One would have thought that Amex would be keen to wind down their existing co-brand arrangements if they are so much less profitable for them than their proprietary offerings, but there's not much evidence of that happening. Since the cap came in to force there has been one departure (Costco - part of an international move by Costco away from Amex) and one arrival (Vitality).

flaneurs_lobster

WillPS said:

Since the cap came in to force there has been one departure (Costco - part of an international move by Costco away from Amex) and one arrival (Vitality).

To be clear, are you saying that Costco UK has/will follow Costco US and stop taking Amex cards?

WillPS

flaneurs_lobster said:

WillPS said:

Since the cap came in to force there has been one departure (Costco - part of an international move by Costco away from Amex) and one arrival (Vitality).

To be clear, are you saying that Costco UK has/will follow Costco US and stop taking Amex cards?

No, I'm saying Amex no longer offer a Costco cobranded card. If a new cobrand partner is found I imagine Costco will follow their international counterparts and go exclusive with whichever symbol that card uses (IIRC it's exclusively Visa in the US or Canada and exclusively Mastercard in the other of the 2!). But I don't think that's particularly likely.

There will have been significantly more than 1 merchant lost and gained in terms of acceptance!

It should be noted that some Amex cards earn at a lower rate in Costco compared to other merchants - certainly my Nectar card only earns 1 pt per £ in there as opposed to 2 pts everywhere else.

MyRealNameToo

WillPS said:

MyRealNameToo said:

AmEx in the UK can do more than other banks because the interchange fee cap doesnt apply to the cards they issue in their own name. 

The card must bear only their brand name and no others, otherwise it is subject to the interchange fee cap. That means (from their current offer) the BA, Nectar, Vitality, Harrods and Marriott cards are all subject to the cap, but the Reward, Cashback, Gold and Platinum products are not.

How this works in practice I'm less sure - I've not seen reports of merchants being charged different amounts for some UK consumer Amex cards. Conversely there is a lot of evidence of merchants who historically didn't take Amex because of their high fees now accepting - recent examples include Savers, Farmfoods and B&M.

One would have thought that Amex would be keen to wind down their existing co-brand arrangements if they are so much less profitable for them than their proprietary offerings, but there's not much evidence of that happening. Since the cap came in to force there has been one departure (Costco - part of an international move by Costco away from Amex) and one arrival (Vitality).

Was always a little surprised that the Harrods card was issued by AmEx itself rather than by Harrods Bank, but given they sold that off and for all intents and purposes closed it down it was probably for the better. 

Acceptance of AmEx has generally exploded thanks to the likes of Zettle, Square, Dojo etc who provide an all in one solution that accepts AmEx at the same rate as other cards for small merchants. Whilst this won't impact the likes of B&M directly you become much more an outlier when the ice cream van parked in your carpark can even take AmEx cards but you can't. 

There has been a lot of litigation over how the rules should be interpreted on co-branded cards where the co-brander is not actually the issuer of the card (see https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62023CC0549). Certainly AmEx was applying that the net fee must be 0.3% or less and so could discount off monies paid to the partnership brand to buy the airmiles etc. The courts have flip-flopped over how rules should be interpreted in a three party but cobranded card (rather than a traditional 4 party setup)