"Ethics" of credit card spending

ircE

I'd be interested to see what conclusions, if any, OP has drawn from this discussion.

As a previous poster alluded to, whilst there may or may not be direct consequences of you using a specific credit card in a specific way, there is a more general question of 'feeding the beast' of predatory financial capitalism; the financial institution issuing the card makes money from the borrowers who fail to repay on time. I don't like that, but I try not to think about it as I cash in my cashback rewards from my own credit card usage as well as hopefully some benefit to my credit history and S.75 protection in case things go wrong. 

I currently hold credit cards with financial institutions considered more 'ethical' than others - Co-operative Bank and Nationwide Building Society - as well as one not so ethical - Barclays. I got the Barclaycard Rewards card this year as I was seeking a cashback credit card for overseas spending and ultimately thought Barclays wouldn't derive any profit from me given how I intended to use it. In fact I've actually made a fair bit of money from them thanks to buying LNER tickets through their separate rewards programme. That programme is dying evolving at the moment so I'll wait and see what comes of it and see what the competition is at that point...

WillPS

ircE said:

Barclays wouldn't derive any profit from me given how I intended to use it. In fact I've actually made a fair bit of money from them thanks to buying LNER tickets through their separate rewards programme. That programme is dying evolving at the moment so I'll wait and see what comes of it and see what the competition is at that point...

Bad assumption there - the way these schemes work typically is that only part of the commission, half typically, goes to the customer. The rest is shared by the issuer and the affiliate marketing company that provides the scheme. The commission will come from the brand in question, not Barclays.

Barclays will certainly have made something from this; likely more than any other UK spend you've done.

Incidentally this is why issuers are pushing these "on-card cashback" schemes so hard, they represent one of the only ways they can make money from UK consumers who do not pay interest. (Another is overseas spend, hence the rapid rise in the zero FX category!)

SonOfPearl

I found this discussion thread while researching this topic. I am in a similar position as the OP in that I have used an Amex credit card for many years which pays cashback of around £50 a year to me, but I also have a Nationwide Visa credit card which I use much less often because it doesn't offer cashback. 

Now, it occurred to me that from Amex's point of view, for the low price of £50 they are getting lots of interchange and other fees all to themselves. Since £50 is a small amount to me in the grand scheme of things, I am considering using my Nationwide Visa credit card as my default payment option so that at least Nationwide gets a cut of the fees (and the rest to Visa) rather than Amex getting the lot.

I'm considering this because I like Nationwide (they have been my primary "bank" for over 20 years) and I'd rather that some money goes to them, and stays in the UK, than it all go to Amex. 

I'd welcome any further insights and opinions!

surreysaver

SonOfPearl said:

I found this discussion thread while researching this topic. I am in a similar position as the OP in that I have used an Amex credit card for many years which pays cashback of around £50 a year to me, but I also have a Nationwide Visa credit card which I use much less often because it doesn't offer cashback. 

Now, it occurred to me that from Amex's point of view, for the low price of £50 they are getting lots of interchange and other fees all to themselves. Since £50 is a small amount to me in the grand scheme of things, I am considering using my Nationwide Visa credit card as my default payment option so that at least Nationwide gets a cut of the fees (and the rest to Visa) rather than Amex getting the lot.

I'm considering this because I like Nationwide (they have been my primary "bank" for over 20 years) and I'd rather that some money goes to them, and stays in the UK, than it all go to Amex. 

I'd welcome any further insights and opinions!

I wouldn't allow personal feelings to come into it. They're all faceless companies. Don't have any loyalty towards them, as they would quickly screw you over if they wanted to 

Theleak250

The only ethical question is how credit card companies are able to exploit people by offering them large amounts of credit, allowing them to build a debt pile they can never re-pay.

It happened to my father, but I have several credit cards which I pay off in full each month and hardly ever pay interest. Amex provides rewards so it’s a positive for me to use them. My father lost everything due to credit cards, but they are just a tool in life like anything else. 

Another ethical question is for the stores which take credit cards, I was in Sweden last year and it was very difficult to find shops which took Amex, one of the shops told me it’s because if they take an Amex payment, it takes ages to receive the money and cost more in fees, so the stores are also being exploited to an extent with some providers. 

I could not care less if my bank or visa/mastercard are not getting fees due to using Amex, nor the corporate chains having to pay more. I would perhaps try and not use them in small shops, but Amex approaches the issue with the “shop small” policy.

https://www.americanexpress.com/en-gb/life-with-amex/shop-small/

I get about £100 in converted Avios points in the form of Necter points I spend each summer on something. 

If Europe were to create their own payment processor (I think they should) then I think it would be popular. 

I remember the dual Barclaycard I used to have, Amex and Mastercard linked to one account! I know muslims who have Amex also. 

MyRealNameToo

Theleak250 said:

I was in Sweden last year and it was very difficult to find shops which took Amex, one of the shops told me it’s because if they take an Amex payment, it takes ages to receive the money and cost more in fees, so the stores are also being exploited to an extent with some providers. 

Given Sweden is in the EU and therefore AmEx there is subject to the same interchange fee caps (exc their metal cards) it sounds like the shop workers are just repeating the old urban myths. 

If you look at modern payment solutions like Dojo, Zettle, SumUp etc there is no difference in fees for AmEx (inc their metal cards) nor settlement times. You can accept AmEx without going directly to AmEx and its your merchant bank provider that sets the settlement timescales not exclusively the card network. 

Theleak250 said:
 I know muslims who have Amex also. 

Thats a very odd thing to feel the need to point out, each of the card networks offer a murabaha based credit card in islamic territories. 

The old chargecards in the UK would also be halal but 1) AmEx has withdrawn them for new customers and 2) both Visa and Mastercard can also be used for charge cards but its down to the issuer if they structure them as charge or credit. There arent many options for charge cards full stop these days but a few private banks (eg Handelsbanken) offer them unlike AmEx

Nasqueron

Theleak250 said:

The only ethical question is how credit card companies are able to exploit people by offering them large amounts of credit, allowing them to build a debt pile they can never re-pay.

It happened to my father, but I have several credit cards which I pay off in full each month and hardly ever pay interest. Amex provides rewards so it’s a positive for me to use them. My father lost everything due to credit cards, but they are just a tool in life like anything else. 

Credit card companies give limits based on credit profile, they are also a choice of the holder to spend on, this argument doesn't wash, no-one is exploited as they choose to pay on the card, they can ask for a lower limit if they cannot manage and refuse any increases

lon_don

If you look at modern payment solutions like Dojo, Zettle, SumUp etc there is no difference in fees for AmEx (inc their metal cards) nor settlement times. 

Maybe you have been able to negotiate special conditions with Sumup, but Sumup charges my business about 2.5x  more in fee to take Amex payment vs Visa/MC payment, and the payout takes 1-2 days longer with Amex.
(Payment taken via Apple Pay/Google Pay is even more costly, though)

MyRealNameToo

lon_don said:

If you look at modern payment solutions like Dojo, Zettle, SumUp etc there is no difference in fees for AmEx (inc their metal cards) nor settlement times. 

Maybe you have been able to negotiate special conditions with Sumup, but Sumup charges my business about 2.5x  more in fee to take Amex payment vs Visa/MC payment, and the payout takes 1-2 days longer with Amex.
(Payment taken via Apple Pay/Google Pay is even more costly, though)

On their PAYG model all cards are charged the same. 

On their Plus model standard personal cards are at a discounted rate but business, international and "premium" cards are on the same rate as PAYG. All AmEx cards count as premium but so do things like World Elite Mastercard and Visa Infinite. There's no comment about GooglePay being more expensive 

There's also their custom fees for larger sellers and that will come down to a negotiation. 

We only do markets a few times a year so just use their PAYG model, international cards are certainly slower paying out but never noticed AmEx being any slower. 

lon_don

On their PAYG model all cards are charged the same. 

On their Plus model standard personal cards are at a discounted rate but business, international and "premium" cards are on the same rate as PAYG. All AmEx cards count as premium but so do things like World Elite Mastercard and Visa Infinite. There's no comment about GooglePay being more expensive 

I think I get it now. We don't have a subscription (no Plus) but we're not on the standard PAYG model either. Given our volume we have negotiated (more than once in fact) a bespoke (and slightly complex) fee structure, with the lowest fee indeed for domestic personal Visa/MC, then corporate Visa/MC, then personal Amex, then corporate Amex & various premium cards as you point out. And I have noticed that our*Pay fee is the most expensive, higher than even Amex's.