Gift credit cards...Biggest scam ever?

Discussion in 'Fred's House of Pancakes' started by GreenGuy33, Jan 13, 2010.

  1. GreenGuy33

    GreenGuy33 Active Member

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    You know those Visa, Mastercard, and American Express gift cards you see everywhere (and may have received one as a gift).
    Do you think it's the biggest scam going?
    They charge you $4.95 to buy the card, then the receiver of the gift will get hit with some charges too.
     
  2. Bobsprius

    Bobsprius BobPrius

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    Yeah I hear you. They have a decent upfront charge but that's the cost of getting them I guess...

    You do have to be careful and read the print, about the duration of time BEFORE they start charging or reducing the face amount on the card.

    Some have a year others 6 months...so just be aware.
     
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  3. TheForce

    TheForce Ron Paul 2012

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    What charges does the receiver get? The cards I bought did not have any other charges that I could find.
     
  4. zenMachine

    zenMachine Just another Onionhead

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  5. GreenGuy33

    GreenGuy33 Active Member

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    My boss asked me to pick up lunch for him and a few others. He gave me a $25 visa gift card. The bill came to $23.70. The employee swiped the card and found that the new $25 card had insufficient funds. He then tried $19.70 and it went through.
     
  6. Darwood

    Darwood Senior Member

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    "It’s possible that the poor pay subsidies to finance the rewards of the affluent... "
    That's a dubious accusation. (though with a kernal of insight on the true nature of capitalism)

    CC companies get a % of EVERY transaction. Typically 3%. They make money just through the use of their cards (not just on interest and fees). Rewards are intended to increase the usage of the card regardless of the wealth of the card user. The more sales that happen through the card, the more sales they get that % of. This has nothing to do with the wealth of the card holder.

    I don't think it's fair to say that people who don't pay their balances are paying for my rewards. The merchants I buy from are doing that, through the % they are charged by my CC company.

    If not for the rewards, I'd probably pay cash for everything. In fact, when buying from a merchant I really like, I typically WON'T use my CC so that they don't get dinged for the 1-3%.
     
  7. moxiequz

    moxiequz Weirdo Social Outcast

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    Not that I'm particularly fond these Visa and similar credit-gift cards but are you sure your boss didn't pick up a coffee or something with that card? In other words, how do you know you were dinged a fee vs the balance not being $25 in the first place?
     
  8. GreenGuy33

    GreenGuy33 Active Member

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    I just took his word for it when he said this was a new card he got for Christmas and he hadn't used it yet.
     
  9. daniel

    daniel Cat Lovers Against the Bomb

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    Why the floozing bunny is it considered unacceptable to give cash as a gift, but it's okay to give a card, which is exactly the same as cash except that a bank takes a cut??? It's obvious why banks and card companies want you to give gift cards. But you have to be a complete and utter moron to imagine that when you give a card you are giving something other than cash. :mad: :mad: :mad: !!!

    BTW, AFAIK the card always starts out with its face value on it. After some specified time, that amount is reduced gradually. Credit and debit cards are a colossal scam. You pay more interest than you would for a cash loan, and the bank gets a percentage from the merchant besides.

    Now, with interest rates on CDs around 2% and below, and checking accounts ranging from a tenth to a half a percent, a local bank here is offering a checking account with 4% interest on the first 25 grand, on condition that you use the associated debit card at least 12 times per month.
     
  10. GreenGuy33

    GreenGuy33 Active Member

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    Excellent point!
     
  11. macmaster05

    macmaster05 Senor Member

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    Gift cards are also kind of a scam. What happened to good ol' fashioned cash??
     
  12. MJFrog

    MJFrog Active Member

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    I had a similar situation and finally figured out what happened. I was given a $50 gift card for Christmas. I took my wife out to dinner and the bill came to exactly $38.

    The waiter, in addition to running the $38 charge through, also had the system print out remaining available balance. That came to exactly $4.40. The question is...what happened to the missing $7.60?

    A quick bit of math shows that $7.60 is exactly 20% of $38. So what must have happened is that the restaurant register (or maybe even the waiter...but I doubt it) reserved a 20% tip on the card even though I didn't authorize it.

    The waiter wound up with a $4.40 tip instead of the $6 tip I would have given him if those shenanigans hadn't been pulled. About a week later, the $7.60 showed up as available on the card again.
     
  13. fuzzy1

    fuzzy1 Senior Member

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    Those inactivity fees are illegal in Washington State. Urge your legislature to adopt the same law.
    As MJFrog points out, the preauthorization places a hold for a larger amount to accommodate a tip. These oversize holds can be a problem on regular cards too, for people running near their credit or debit limits. They also arise from other businesses that preauthorize charges before the total is known, such as fuel stations, hotels, and car rentals.
     
  14. zenMachine

    zenMachine Just another Onionhead

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    The "rewards" aren't free (of course) and must be paid by "somebody".

    In our case, our reward points aren't usually enough for anything substantial, so we end up using them mostly for magazine subscriptions. Our recycle bin really takes a beating for it.
     
  15. The Electric Me

    The Electric Me Go Speed Go!

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    Gather round the campfire kiddies and I'll tell you a story. Once upon a time there was this thing called cash. We used it for goods and services and it was accepted almost everywhere and anywhere.

    I'm with Daniel on this, I don't understand Gift Credit cards or Gift cards in general. Why not just give someone cash? I especially don't understand most Gift Cards. It's like giving someone cash, but saying...here's $30...you MUST spend it at this store. Just give me the Cash.
     
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  16. TheForce

    TheForce Ron Paul 2012

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    I use rewards for one thing and one thing only. To credit the account. I never buy any of the crap they try to sell with the rewards. All that crap is marked up 200%-1000% or more.

    Since I pay off the balance of my reward cards every month the credit card company is actually paying me to use their card. You cant beat that!
     
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  17. Darwood

    Darwood Senior Member

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    No they are not. The merchants you buy from are.
     
  18. TheForce

    TheForce Ron Paul 2012

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    Either way I'm still getting money back.
     
  19. daniel

    daniel Cat Lovers Against the Bomb

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    What's actually happening is that merchants have to pay the card companies a percentage. But they also have to sign a contract that says they will not charge card users an added charge for using a card. So they raise their prices for everyone. Thus people who pay cash are subsidizing people who use cards. But the card users are only getting a small part of the extra cost of goods back. So we are all giving money to the banks and card companies, for the right to use a card, whether we use one or not.

    We all pay more for everything, because cards exist. We use cards because they are convenient, or because we like to use credit to buy things we cannot afford, or because the bank offers to refund us 1% of our total spending. Or in the case of this local bank, you use a card because the bank pays you 4% on your checking account provided you use the card 12 times a month.

    They are a scam. But they work because we buy into it, and most of us do so with our eyes open. It's a situation where we'd all be better off if we all refused to cooperate, but each one of us individually would be worse off if only that individual refused to cooperate. In America we've made a religion of individualism, but individualism, like all religions, is destructive of the social fabric.

    But they are not the biggest scam ever. Lots of scams are bigger. Leveraged buyout is a bigger scam: A fat cat buys a company on borrowed money; then uses the company to borrow money to pay off the loan. Now the fat cat owns a company that cost him nothing because the company has taken on the debt. Now he sells the debt-ridden company, which usually ends up bankrupt, and he walks away with a bundle of cash.

    Or the sub-prime crisis, which left us in the present condition, and left a lot of business crooks filthy rich.

    Gift cards, and credit cards, are a very small scam compared to those and many others. Gift cards are just a scam that capitalizes on the colossal stupidity of the average American.

    I propose an alternative: On a 3 X 5 card or a scrap of paper, write down the sum of money you would spend on a gift for a peer. Someone who regularly gives you gifts of similar value. Give that person the paper. That person does the same and gives you his paper. Next year, you give him his paper back and he gives you yours back. This proposal is based on the observation that nobody ever gives you anything you want, and nobody ever wants the gifts you give them. This will save you hundreds of dollars every year, and you won't have to fill your closets and attic with unwanted gifts that it would be rude to throw away.
     
  20. zenMachine

    zenMachine Just another Onionhead

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    The new cashless economy does have its downside. Our society will not go back to cash unless something truly catastrophic occurs in the financial sector. As things stand, we're all paying more for the "convenience" of cards.

    Individuals with a choice to use either cash or credit can choose to use cash in certain cases, and credit cards in others.

    Those who have no choice but to use cash (i.e. no/bad credit etc.) are getting the short end of the stick. A lot of things are more expensive in brick & mortar stores (where cash is accepted) as opposed to online stores such as amazon.
     
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