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To: Wyätt Gwyön who wrote (26379)	1/1/2005 7:10:13 PM
From: Elroy Jetson	Respond to of 306849

You never know what the contract is between a large merchant and a credit card issuer, but it has become very complex - especially for an exclusive deal where only one card is accepted. A typical deal looks like this. The merchant often pays the going rate for credit card processing fees on credit card sales, but . . . . the card issuer pays for advertisements which include mention of the exclusive card acceptance. The advertising allowance might range from 25% of the cost of the ads to a 100% reimbursement. In the case you mention, Costco, where Amex reimburses a percentage of the purchase price (which is the majority of their processing fee) Amex is certainly paying out more than they bring in as a promotion to enroll more card members. (Amex advertises only a 2% rebate with Costco and other merchants) www124.americanexpress.com When Visa was "the only card accepted by the Olympics", they processed the Olympic credit card charges for free and gave the Olympics a payment of something like $25 million. In return they got to advertise their exclusive arrangement. Like the rest of the banking system, the credit card industry is heavily subsidized by the Federal Reserve through the annual creation of nearly free money. Monetarists call this heavy tax on savers "price stabilization" which is why Monetarists like Milton Friedman continually try to frighten the public about "the dangers of deflation". From a classic market perspective, there is little about the industry which makes sense. .

To: Wyätt Gwyön who wrote (26379)	1/1/2005 7:30:09 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Earning "Up to 2% cash back" on purchases with the American Express card. I found this commentary, which I assume still reflects the actual contract with Amex. * * * * * * From $1 to $2000 its 0.25%. Then we go from $2,001 to $4,999 and get 0.5%. Anything in excess of $5,000 will yield 1.5% in cash back. The keywords here are "Up to 2%". If you carry a balance on any given month, you’ll earn that extra 0.5%. This my friend, is not a good thing, regardless of how low the interest rate is, even at the 3.9% introductory rate. Let me see . . . carry a balance, earn an extra 0.5% no, I think I’ll pay the entire balance thank you. * * * * * * I find a straight 1% on all purchases a better deal. .