Why no Vanguard 2% cash back Visa card?

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anon_investor
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Re: Why no Vanguard 2% cash back Visa card?

Post by anon_investor »

student wrote: Wed Apr 13, 2022 6:40 am
Northern Flicker wrote: Tue Apr 12, 2022 11:34 pm
student wrote: Tue Apr 12, 2022 11:23 pm
Northern Flicker wrote: Tue Apr 12, 2022 11:20 pm
Rainier wrote: Wed Aug 28, 2013 11:43 am Fidelity most likely loses money on a 2% cash back card. It is just a vehicle to earn other income.
It's an Elan card. It just has Fidelity's name on the plastic.
Doesn't Fidelity subsidize in some way?
Possibly, but why should I assume that? Does Citi Group subsidize their 2% cashback card? Does Paypal?

Citi's doesn't even require depositing with Fidelity-- even gives you 1% as a purchase discount, and the other 1% as a statement credit.
Citi Group uses the 2% cashback to attract customer to its other business. Elan has no other business to attract customers too. If Fidelity does not subsidize it in anyway (whether in fixed cost or in variable cost), how do you think it works? There are three basic possibilities. (1) no money change hands between Fidelity and Elan, (2) Fidelity pays Elan or (3) Elan pays Fidelity. I don't think it is (1).

Using Schwab as an example, it used to have a 2% card issued by FIA, then it terminated it https://www.forbes.com/sites/neilweinbe ... 6523cf6b09 In particular "the brokerage is taking a $20 million charge to wind down its card operation." So there was a cost for Schwab and it is reasonable to assume that there is a cost for Fidelity.
The arrangement is more complicated. Elan must make some money off interest when card holders don't pay off their entire balance every month. I would guess that Fidelity and Elan probably have some arrangement where money may changes hands but it is based on how many active card users and how much revenue is generated via credit card interest/transaction fees. Credit cards are profitable for companies (not sure if it is Elan or Fidelity here), otherwise they wouldn't offer them.
student
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Re: Why no Vanguard 2% cash back Visa card?

Post by student »

anon_investor wrote: Wed Apr 13, 2022 6:47 am
student wrote: Wed Apr 13, 2022 6:40 am
Northern Flicker wrote: Tue Apr 12, 2022 11:34 pm
student wrote: Tue Apr 12, 2022 11:23 pm
Northern Flicker wrote: Tue Apr 12, 2022 11:20 pm
It's an Elan card. It just has Fidelity's name on the plastic.
Doesn't Fidelity subsidize in some way?
Possibly, but why should I assume that? Does Citi Group subsidize their 2% cashback card? Does Paypal?

Citi's doesn't even require depositing with Fidelity-- even gives you 1% as a purchase discount, and the other 1% as a statement credit.
Citi Group uses the 2% cashback to attract customer to its other business. Elan has no other business to attract customers too. If Fidelity does not subsidize it in anyway (whether in fixed cost or in variable cost), how do you think it works? There are three basic possibilities. (1) no money change hands between Fidelity and Elan, (2) Fidelity pays Elan or (3) Elan pays Fidelity. I don't think it is (1).

Using Schwab as an example, it used to have a 2% card issued by FIA, then it terminated it https://www.forbes.com/sites/neilweinbe ... 6523cf6b09 In particular "the brokerage is taking a $20 million charge to wind down its card operation." So there was a cost for Schwab and it is reasonable to assume that there is a cost for Fidelity.
The arrangement is more complicated. Elan must make some money off interest when card holders don't pay off their entire balance every month. I would guess that Fidelity and Elan probably have some arrangement where money may changes hands but it is based on how many active card users and how much revenue is generated via credit card interest/transaction fees. Credit cards are profitable for companies (not sure if it is Elan or Fidelity here), otherwise they wouldn't offer them.
I agree with your assessment. It is likely a complicated formula. I tried to include this point across by saying Fidelity is subsidizing it in fixed cost or in variable cost. I guess my point was I don't think the statement "it just has Fidelity's name on the plastic" is accurate. It makes it sounds like Fidelity has no financial involvement.
enuff
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Re: Why no Vanguard 2% cash back Visa card?

Post by enuff »

HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
I think you misunderstand the purpose of cash back cards then. Nobody is trying to get rich or retire off of the rewards, it’s simply a way to earn a few bucks every month for no effort at all. Given all the benefits of credit cards over debit cards, if I am going to reach for a credit card I might as well reach for one getting me 2-5% back. It’s a no brainer.

As for “preying upon the financially uneducated” what’s your point? Using that logic, all forms of banking, interest, and financing are “preying” on someone. It’s not like you are going to be able to reverse it by abstaining from using a cash back card.
fourwheelcycle
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Re: Why no Vanguard 2% cash back Visa card?

Post by fourwheelcycle »

We used to have a Vanguard Advantage checking account with a Vanguard Visa debit card that was linked to our settlement account. We only used the debit card to get no fee, interest-free cash advances at local banks if we needed more cash while we were on vacations. We stopped using the Advantage account because at that time Vanguard did not allow direct deposits of our paychecks. Now we use our linked BoA account and BoA's cash back Mastercard. I think we average more than 2% cash back.
sycamore
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Re: Why no Vanguard 2% cash back Visa card?

Post by sycamore »

student wrote: Wed Apr 13, 2022 6:59 am
anon_investor wrote: Wed Apr 13, 2022 6:47 am
student wrote: Wed Apr 13, 2022 6:40 am
Northern Flicker wrote: Tue Apr 12, 2022 11:34 pm
student wrote: Tue Apr 12, 2022 11:23 pm

Doesn't Fidelity subsidize in some way?
Possibly, but why should I assume that? Does Citi Group subsidize their 2% cashback card? Does Paypal?

Citi's doesn't even require depositing with Fidelity-- even gives you 1% as a purchase discount, and the other 1% as a statement credit.
Citi Group uses the 2% cashback to attract customer to its other business. Elan has no other business to attract customers too. If Fidelity does not subsidize it in anyway (whether in fixed cost or in variable cost), how do you think it works? There are three basic possibilities. (1) no money change hands between Fidelity and Elan, (2) Fidelity pays Elan or (3) Elan pays Fidelity. I don't think it is (1).

Using Schwab as an example, it used to have a 2% card issued by FIA, then it terminated it https://www.forbes.com/sites/neilweinbe ... 6523cf6b09 In particular "the brokerage is taking a $20 million charge to wind down its card operation." So there was a cost for Schwab and it is reasonable to assume that there is a cost for Fidelity.
The arrangement is more complicated. Elan must make some money off interest when card holders don't pay off their entire balance every month. I would guess that Fidelity and Elan probably have some arrangement where money may changes hands but it is based on how many active card users and how much revenue is generated via credit card interest/transaction fees. Credit cards are profitable for companies (not sure if it is Elan or Fidelity here), otherwise they wouldn't offer them.
I agree with your assessment. It is likely a complicated formula. I tried to include this point across by saying Fidelity is subsidizing it in fixed cost or in variable cost. I guess my point was I don't think the statement "it just has Fidelity's name on the plastic" is accurate. It makes it sounds like Fidelity has no financial involvement.
I don't know the details of Elan and Fidelity's relationship.

But there are ways for a company like Elan to make a profit even if Fidelity isn't paying them directly or indirectly. Elan has access to "big data" of zillions of transactions that it can mine for whatever marketing purposes it or a third-party can dream up. I don't know if the Fidelity card's terms & conditions allow for that sort of thing, but it certainly is the kind of thing that many organizations talk about doing.

Whether they actually make a profit doing it is another matter.
percolate
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Re: Why no Vanguard 2% cash back Visa card?

Post by percolate »

When NYTimes covered this in 2015, Fidelity was subsidizing the card.
Still, skepticism is warranted with 2 percent cards, since many other banks have tried these deals and failed. So I asked the issuers I have mentioned in this column if their cards were profitable. Fidelity readily admits that it pays for some of the rewards.
Interchange rates have gone up since, but I'm guessing it's still a loss leader for them.
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Re: Why no Vanguard 2% cash back Visa card?

Post by retired@50 »

lhl12 wrote: Wed Aug 28, 2013 11:40 am Since Fidelity is able to offer a 2% cash back Visa card (1.5% on the first $15,000 of spending) with automatic direct monthly deposit into a Fidelity account, why can't/won't Vanguard do the same? Perhaps Vanguard could do even better given their not-for-profit status?
Frankly, I'm glad Vanguard doesn't offer a credit card, or checking accounts, or any of the other financial products that can be found elsewhere for free.

The last thing I want to do is increase the workload for their customer service reps or their computer systems.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
bltn
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Re: Why no Vanguard 2% cash back Visa card?

Post by bltn »

Certainly Elan has to make money on the Fidelity card. I m surprised Fidelity has to subsidize that card. I would think that the benefit to Fidelity would be the increase in assets under management from the card rebates. And the benefit to Elan would be the 1.5% merchants pay for card charges and the 16-18% charged on monthly balances to the card holders.
MrJedi
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Re: Why no Vanguard 2% cash back Visa card?

Post by MrJedi »

I don't know Elan-Fidelity relationship. But I do know some basics about store co-branded cards which I suspect are similar.

For example Costco and Citi co brand. Citi runs the actual card and lends the money. Costco gets a kickback from Citi for new cardholders as a customer acquisition commission. This is why stores are quick to push applications for their co branded credit card.

Citi does all of the money handling and servicing of the card. So Citi receives interest payments, transaction fees, lends the money, etc. They work an agreement with Costco to share some of the interest payments. This is part of the reason why co branded cards tend to have much higher interest rates. The reward structure is also a shared expense with its own agreement.

My speculation: My guess for Fidelity-Elan is that Fidelity pays for half of the 2% reward when redeemed into a Fidelity account, and this may be why you need to redeem it that way to get the full value. Fidelity may not want to pay the full reward when it's not put into a Fidelity account. This may be what they are referring to when they say Fidelity subsidizes the product. I would guess they get a portion of interest payments like other co-branded cards. But perhaps it is not a substantial amount. If I had to guess, I would think the average Fidelity cardholder probably pays less in interest than say the average Costco or Amazon cardholder.
Northern Flicker
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
UpperNwGuy
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Re: Why no Vanguard 2% cash back Visa card?

Post by UpperNwGuy »

Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
Your speculations are too narrowly focused on the 2% cash back card offered by Fidelity. The vast majority of 2% cash back cards are offered by banks and credit unions where the ERs of money market funds is not part of the equation.

Full disclosure: I have two 2% cash back cards and one 1.75% cash back card. All three cards are from credit unions. I have another that gives me 3% cash back on gas, groceries, and restaurants, also issued by a credit union. I have accounts at both Vanguard and Fidelity, and I will never use a credit card from either because I like to keep my banking separate from my investing.
egri
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Re: Why no Vanguard 2% cash back Visa card?

Post by egri »

HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
While I'm not going to get rich off of cashback and rewards points, they have added a couple thousand to my investments this past year, from spending I would have had anyway, that I otherwise would have missed out on. It isn't much in the scheme of things, but it isn't nothing, either. And I pay my balances in full every month so I'm not paying for someone else's rewards. If someone wants to subsidize my rewards, that's on them, and as the cards are here to stay, might as well use them. And other than some gas stations, I'm not aware of any places that charge lower price for using cash.
student
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Re: Why no Vanguard 2% cash back Visa card?

Post by student »

bltn wrote: Wed Apr 13, 2022 12:05 pm Certainly Elan has to make money on the Fidelity card. I m surprised Fidelity has to subsidize that card. I would think that the benefit to Fidelity would be the increase in assets under management from the card rebates. And the benefit to Elan would be the 1.5% merchants pay for card charges and the 16-18% charged on monthly balances to the card holders.
Yes. I would guess that that Fidelity card holders maybe more affluent than the general public so there maybe more deadbeats (paying off balance each month) so Fidelity has to sweeten the pot.
student
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Re: Why no Vanguard 2% cash back Visa card?

Post by student »

percolate wrote: Wed Apr 13, 2022 11:12 am When NYTimes covered this in 2015, Fidelity was subsidizing the card.
Still, skepticism is warranted with 2 percent cards, since many other banks have tried these deals and failed. So I asked the issuers I have mentioned in this column if their cards were profitable. Fidelity readily admits that it pays for some of the rewards.
Interchange rates have gone up since, but I'm guessing it's still a loss leader for them.
Thanks. I guess your google-fu is better than mine, I was unable to locate a reference other than the one for Schwab.
student
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Re: Why no Vanguard 2% cash back Visa card?

Post by student »

Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
Where do you see the 2% after the first $15k purchases? I have the card and I get 2% right away as long as I deposit in my Fidelity account. https://www.fidelity.com/cash-managemen ... ature-card
marcopolo
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Re: Why no Vanguard 2% cash back Visa card?

Post by marcopolo »

Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
i Am not sure where the "first $15k of spending" is coming from. I have Fidelity Visa cards and get 2% back from the 1st dollar.

I think you are being a bit naive if you think merchants would simply lower their prices if the transaction fees were lowered.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Northern Flicker
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

UpperNwGuy wrote: Wed Apr 13, 2022 12:49 pm
Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
Your speculations are too narrowly focused on the 2% cash back card offered by Fidelity. The vast majority of 2% cash back cards are offered by banks and credit unions where the ERs of money market funds is not part of the equation.
Well, I was focused on the title and subject of the thread. But your comment was my point. There is no reason Vanguard needs to be in the credit card business.
Northern Flicker
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

marcopolo wrote: Wed Apr 13, 2022 2:53 pm
Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
i Am not sure where the "first $15k of spending" is coming from. I have Fidelity Visa cards and get 2% back from the 1st dollar.

I think you are being a bit naive if you think merchants would simply lower their prices if the transaction fees were lowered.
Over time, competition for business would lead to prices stabilizing at whatever level they may be at. But it is true that once foolishness like cash back cards get started, it is difficult to unwind it. I do prefer it to being given S&H Green Stamps with purchases.
Last edited by Northern Flicker on Wed Apr 13, 2022 3:50 pm, edited 2 times in total.
Northern Flicker
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

marcopolo wrote: Wed Apr 13, 2022 2:53 pm
Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
i Am not sure where the "first $15k of spending" is coming from. I have Fidelity Visa cards and get 2% back from the 1st dollar.
From the OP. Regardless, you can get 2% cash directly in your pocket with other cards.
egri
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Re: Why no Vanguard 2% cash back Visa card?

Post by egri »

marcopolo wrote: Wed Apr 13, 2022 2:53 pm
Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
i Am not sure where the "first $15k of spending" is coming from. I have Fidelity Visa cards and get 2% back from the 1st dollar.

I think you are being a bit naive if you think merchants would simply lower their prices if the transaction fees were lowered.
It looks like the 1.5% on first $15k came from a post in 2013; my guess is Fidelity has since dropped the spending requirement.
sobogled
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Re: Why no Vanguard 2% cash back Visa card?

Post by sobogled »

I'm a frequent reader of this forum, registered to respond to this thread out of some genuine concern.

Vanguard does indeed have media advertisements, including television. The recent 'become an owner' campaign is an example of such spend, data on other campaigns is available through searches.

Fidelity's Index funds have a lower expense ratio than those of Vanguard, across the board (https://www.fidelity.com/mutual-funds/i ... ndex-funds)

Fidelity does not offer common index ETFs, due to a partnership with iShares. For common assets like total market (VTI vs ITOT), expense ratios are similar between Vanguard/iShares with tradeoffs to either.

On a personal observation, Fidelity has never attempted to directly market an active product to me. Vanguard regularly emails / targets pop-ups when signing in to encourage advisory services. Experiences may differ here, but this is mine.

I am not trying to disparage Vanguard or promote Fidelity, but believe part of the passive investing philosophy is following the truth in performance. If active were better, then we should promote that. The facts here are important.

The the OPs question, for all we know, Vanguard is negotiating a deal right now. My personal belief is similar to other posts here regarding Vanguard's core competencies and their movement away from bank-like services over recent years. To me, it's a loss for Vanguard, the stickiness on such offerings can be significant, but easy to say looking in from the outside when they are trying to move such a large ship forward (no pun intended :wink: )
psteinx
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Re: Why no Vanguard 2% cash back Visa card?

Post by psteinx »

I would rather see a clear, widespread distinction between cash price and credit card price, with the latter marked up (or the former marked down) to ~account for fees the store/restaurant pays to the CC companies.

But, that doesn't seem to have happened/be happening. And in the absence of that, using a 1.5% or 2.0% cashback card is not all that dissimilar, for either the consumer or the retailer, from that same customer simply paying in paper bills with a comparable discount.

In general, I think I'd like to see Vanguard ease up on the low-cost focus and be a bit more service-oriented, like Fidelity. But, traditional brokers like Fidelity subsidize a lot of customer service with higher fees made in other areas. Vanguard, in general, does less of charging high markups HERE to subsidize stuff THERE.

I'm not sure if a 2.0% cashback card effectively requires subsidies from the card issuer (in turn, reimbursed by Fidelity), but I wouldn't be surprised if that were the case. And just because a few other places offer 2.0+% cards doesn't mean that it's a profitable or even breakeven business model. The other places may be subsidizing the cards from expected revenues elsewhere.

Just because a casino offers you free drinks, doesn't mean that the cost to the casino is zero. They expect to make it back elsewhere, in general, even if they don't make it back from every single customer...
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Re: Why no Vanguard 2% cash back Visa card?

Post by marcopolo »

Northern Flicker wrote: Wed Apr 13, 2022 3:30 pm
marcopolo wrote: Wed Apr 13, 2022 2:53 pm
Northern Flicker wrote: Wed Apr 13, 2022 12:28 pm
UpperNwGuy wrote: Wed Apr 13, 2022 4:54 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
That will not happen. The cash back cards are extremely popular with the public.
Well of course they are popular. People will do what gets them the best net price with the system as it is. If a merchant offered you a 2% discount not to use a credit card, would you use a 1.5% cash back card?

Cards that provide 1.5% cash back are very common, so I will guess that may be the neutral amount. Fidelity offers 2% cash back if funds are invested at Fidelity, after the first $15K of purchases. I will speculate that Fidelity is maybe covering up to 0.5% cashback after $15K of purchases are made.

Maybe they could lower the expense ratios on their money market funds to match Vanguard instead? Then you could get 2% cash back from a CitiCard and get a low ER on a money market at the same time. Oh, wait, you alteady can do that at Vanguard.
i Am not sure where the "first $15k of spending" is coming from. I have Fidelity Visa cards and get 2% back from the 1st dollar.
From the OP. Regardless, you can get 2% cash directly in your pocket with other cards.
What card puts cash directly in your pocket?!?
I would find that a bit disturbing, to say the least!

Our Fidelity cards automatically deposits the 2% rebate into our Cash Management Account, which serves as our main checking/spending accounts. The monthly credit card bills are also automatically paid in full out of this same account. Tough to get much simpler than that.
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Re: Why no Vanguard 2% cash back Visa card?

Post by Artful Dodger »

sobogled wrote: Wed Apr 13, 2022 3:36 pm I'm a frequent reader of this forum, registered to respond to this thread out of some genuine concern.

Vanguard does indeed have media advertisements, including television. The recent 'become an owner' campaign is an example of such spend, data on other campaigns is available through searches.

Fidelity's Index funds have a lower expense ratio than those of Vanguard, across the board (https://www.fidelity.com/mutual-funds/i ... ndex-funds)

Fidelity does not offer common index ETFs, due to a partnership with iShares. For common assets like total market (VTI vs ITOT), expense ratios are similar between Vanguard/iShares with tradeoffs to either.

On a personal observation, Fidelity has never attempted to directly market an active product to me. Vanguard regularly emails / targets pop-ups when signing in to encourage advisory services. Experiences may differ here, but this is mine.

I am not trying to disparage Vanguard or promote Fidelity, but believe part of the passive investing philosophy is following the truth in performance. If active were better, then we should promote that. The facts here are important.

The the OPs question, for all we know, Vanguard is negotiating a deal right now. My personal belief is similar to other posts here regarding Vanguard's core competencies and their movement away from bank-like services over recent years. To me, it's a loss for Vanguard, the stickiness on such offerings can be significant, but easy to say looking in from the outside when they are trying to move such a large ship forward (no pun intended :wink: )
Some of what you’re seeing is due to this being a recycled post from 2013 which was prior to Fidelity’s lower and in some cases zero fees. Many of their advisory services are now comparable to Vanguard, ie their PAS fee of.4%.
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Re: Why no Vanguard 2% cash back Visa card?

Post by Gort »

lhl12 wrote: Wed Aug 28, 2013 3:19 pm
gkaplan wrote:Vanguard is in the mutual fund business, not the credit card business.
No, Vanguard is in the financial services business. Mutual funds are one of those services, but there are many others that Vanguard provides today -- Institutional Money Management, ETF's, brokerage accounts, trust services, investment consulting services, donor advised funds, etc. There's no reason credit cards couldn't be another, IF they are additive to Vanguard's offering and if they allow customers a better overall deal.
My credit union is in the financial services business. Does that mean they should offer brokerage services?
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

sobogled wrote: On a personal observation, Fidelity has never attempted to directly market an active product to me. Vanguard regularly emails / targets pop-ups when signing in to encourage advisory services. Experiences may differ here, but this is mine.
Yes, mine was different. I opened a new account at Fidelity recently, and within 2 weeks received a phone call with an aggressive sales pitch for their advisory service.
Last edited by Northern Flicker on Wed Apr 13, 2022 6:32 pm, edited 1 time in total.
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

marcopolo wrote: Wed Apr 13, 2022 4:32 pm
What card puts cash directly in your pocket?!?
I would find that a bit disturbing, to say the least!
Citi Double Cash Back Card applies a 1% discount directly to the purchase, and applies 1% to the next month's statement. I don't know how product returns work.
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Re: Why no Vanguard 2% cash back Visa card?

Post by afan »

Note that the statements in the article about Fidelity subsidizing the card concerned an American Express product, not the Visa.

As with all credit cards, as best I can tell the profits come from interest customers pay on their accounts. For some of the high fee cards, I assume there is profit from that. I have no idea how much Fidelity makes from having the money deposited into its accounts. I have no idea how many people do this or what they do with the money. Leave it at Fidelity? Transfer it elsewhere? Spend it?

In contrast to Vanguard, I have gotten many solicitations from Fidelity to buy active funds, hire them to manage my money, or both. They would even call me on the phone, wasting my time and interrupting me at work. After years of complaints and threats to leave, they finally believed that I was not going to buy. They still spam me with email but at least they have stopped calling
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Re: Why no Vanguard 2% cash back Visa card?

Post by student »

egri wrote: Wed Apr 13, 2022 3:33 pm It looks like the 1.5% on first $15k came from a post in 2013; my guess is Fidelity has since dropped the spending requirement.
This was probably when they had a partnership with FIA. Interestingly, if memory serves, Fidelity had two cash back cards at the time, one was VISA/MC with 1.5% cashback (then probably with spending requirement, became 2%) and one was AMEX which had 2% on all purchases (with deposit to Fidelity account).
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Re: Why no Vanguard 2% cash back Visa card?

Post by marcopolo »

Northern Flicker wrote: Wed Apr 13, 2022 5:54 pm
marcopolo wrote: Wed Apr 13, 2022 4:32 pm
What card puts cash directly in your pocket?!?
I would find that a bit disturbing, to say the least!
Citi Double Cash Back Card applies a 1% discount directly to the purchase, and applies 1% to the next month's statement. I don't know how product returns work.
So, not actually cash directly in your pocket. Glad to hear that.
Seems more complicated than having money automatically deposited into checking account. Hard to see how one is clearly better than the other.
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Re: Why no Vanguard 2% cash back Visa card?

Post by mickeyd »

I would rather have free TurboTax like back in the day.
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Re: Why no Vanguard 2% cash back Visa card?

Post by Northern Flicker »

marcopolo wrote: Wed Apr 13, 2022 6:34 pm
Northern Flicker wrote: Wed Apr 13, 2022 5:54 pm
marcopolo wrote: Wed Apr 13, 2022 4:32 pm
What card puts cash directly in your pocket?!?
I would find that a bit disturbing, to say the least!
Citi Double Cash Back Card applies a 1% discount directly to the purchase, and applies 1% to the next month's statement. I don't know how product returns work.
So, not actually cash directly in your pocket. Glad to hear that.
Seems more complicated than having money automatically deposited into checking account. Hard to see how one is clearly better than the other.
If you don't have a Fidelity checking account, having cash rewards deposited there would be inferior. I prefer not to entangle financial products with unnecessary dependencies. Where I choose to bank, where I choose to invest, and who supplies payment cards to me are independent decisions.
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Re: Why no Vanguard 2% cash back Visa card?

Post by MikeG62 »

lhl12 wrote: Wed Aug 28, 2013 11:40 am Since Fidelity is able to offer a 2% cash back Visa card (1.5% on the first $15,000 of spending) with automatic direct monthly deposit into a Fidelity account, why can't/won't Vanguard do the same? Perhaps Vanguard could do even better given their not-for-profit status?
Did Fidelity change their card from 2.0% on every dollar from dollar one?

It was our general purpose card before we got the BofA Premium Rewards card (2.625% - 3.50% cash back).
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Re: Why no Vanguard 2% cash back Visa card?

Post by anon_investor »

MikeG62 wrote: Thu Apr 14, 2022 3:46 pm
lhl12 wrote: Wed Aug 28, 2013 11:40 am Since Fidelity is able to offer a 2% cash back Visa card (1.5% on the first $15,000 of spending) with automatic direct monthly deposit into a Fidelity account, why can't/won't Vanguard do the same? Perhaps Vanguard could do even better given their not-for-profit status?
Did Fidelity change their card from 2.0% on every dollar from dollar one?

It was our general purpose card before we got the BofA Premium Rewards card (2.625% - 3.50% cash back).
I believe they did switch to 2% off everything (if redeemed into a Fidelity account). That original post mentioning the minimum spend was from many years ago.
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Re: Why no Vanguard 2% cash back Visa card?

Post by MikeG62 »

I did not even notice that :oops:
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Re: Why no Vanguard 2% cash back Visa card?

Post by Croesus »

I’d get this card on day one if I could have the rewards deposited directly into an investment account like a Roth IRA. Really, anything that removes the level of effort to add money to an investment account is a good thing on my book.
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Re: Why no Vanguard 2% cash back Visa card?

Post by fourwheelcycle »

sobogled wrote: Wed Apr 13, 2022 3:36 pm ... Fidelity's Index funds have a lower expense ratio than those of Vanguard, across the board (https://www.fidelity.com/mutual-funds/i ... ndex-funds)
I am not in a position to say who is right or wrong, but Think Advisor posted this on April 26, 2023:

"Vanguard Group, long known as a low-cost index mutual fund pioneer, faces real price competition for certain individual investment products today but continues to lead the industry overall as a low-expense provider, a Morningstar analyst says.

Looking at Vanguard’s entire lineup, the fund giant “definitely” deserves its reputation as the industry’s low-cost provider, Alec Lucas, Morningstar’s director of manager research and lead Vanguard analyst, said in a recent video interview on the research firm’s website."

https://www.thinkadvisor.com/2023/04/26 ... -provider/
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Re: Why no Vanguard 2% cash back Visa card?

Post by tetractys »

lhl12 wrote: Wed Aug 28, 2013 11:40 am Since Fidelity is able to offer a 2% cash back Visa card (1.5% on the first $15,000 of spending) with automatic direct monthly deposit into a Fidelity account, why can't/won't Vanguard do the same? Perhaps Vanguard could do even better given their not-for-profit status?
Wow—that would be so UN-Vanguard. The cash back game is a profit boosting gimmick costing the majority of card holders with even more interest and fees. Rather than cash back, CC companies could just charge less across the board.

Charging less across the board is Vanguard’s gimmick; but they aren’t a CC company.
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Re: Why no Vanguard 2% cash back Visa card?

Post by EnjoyIt »

HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
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Re: Why no Vanguard 2% cash back Visa card?

Post by 6bquick »

EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
It's no secret I'm a diehard fan of actual, paper cash money... but I agree wholeheartedly with EnjoyIt. For money we're going to spend anyway, and in cases I see no benefit, tangible or otherwise, in using paper money we use the Fido card exclusively. Gas, groceries, sundries, any bill they'll allow me to put on a CC, etc. Basically, if it's greater than a $40-50 spend, there's a decent chance it's going on the card. The dealer I got my truck from allowed up to $5k on a cc, so I put $5k on the fido card. Why wouldn't we do this? with the caveat its spending that was happening either way, it's free money! with the added benefit of someone else tracking and aggregating the 'savings' for me which can then be put into a taxable account instead of lost in the shuffle of a million individual transactions.

as far as the ethics of it? you're not wrong; TANSTAAFL. But, meh. I don't care. There are much bigger ethical dilemmas in the world than some folks voluntarily paying CC interest. :sharebeer
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Re: Why no Vanguard 2% cash back Visa card?

Post by Doctor Rhythm »

Quite the zombie thread, dying twice in 10 years only to rise again. There are plenty of 2% back cards, so it shouldn’t really matter what Vanguard does (nor are their reasons for doing so known or actionable).
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Re: Why no Vanguard 2% cash back Visa card?

Post by HMSVictory »

EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
I choose not to play these games.

I use my own money and focus my effort on my income and portfolio where the real return is.
Stay the course!
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Re: Why no Vanguard 2% cash back Visa card?

Post by HMSVictory »

6bquick wrote: Wed May 31, 2023 10:31 am
EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
It's no secret I'm a diehard fan of actual, paper cash money... but I agree wholeheartedly with EnjoyIt. For money we're going to spend anyway, and in cases I see no benefit, tangible or otherwise, in using paper money we use the Fido card exclusively. Gas, groceries, sundries, any bill they'll allow me to put on a CC, etc. Basically, if it's greater than a $40-50 spend, there's a decent chance it's going on the card. The dealer I got my truck from allowed up to $5k on a cc, so I put $5k on the fido card. Why wouldn't we do this? with the caveat its spending that was happening either way, it's free money! with the added benefit of someone else tracking and aggregating the 'savings' for me which can then be put into a taxable account instead of lost in the shuffle of a million individual transactions.

as far as the ethics of it? you're not wrong; TANSTAAFL. But, meh. I don't care. There are much bigger ethical dilemmas in the world than some folks voluntarily paying CC interest. :sharebeer
TANSTAAFL - you got that right.

I choose not to have the 28% interest Sword of Damocles hanging over my head and just use my own money. YMMV.
Stay the course!
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Re: Why no Vanguard 2% cash back Visa card?

Post by cowdogman »

HMSVictory wrote: Fri Jun 02, 2023 11:30 am
I use my own money and focus my effort on my income and portfolio where the real return is.
I use only various 2%, 2.5%, 3% and 5% cash back cards.

I generally, not always, put the cash redemptions in a Fidelity bond fund used solely for that purpose. I've been doing this for about three years. As of this morning, the fund's value is a little over $11,000 (and that's with the declining per share price over the last year or so). Just in the last month we replaced furnaces, AC units, hot water heaters and dishwashers; I put everything on cards and received about $2,000 in cash back.

Your comment reminds me of a conversation I had with a former boss. I had bought a new Landcruiser (back in the 1990s) and he liked it and so he bought one. I asked him what kind of deal he got--because I had negotiated the heck out of my purchase. He said "I just paid the sticker price. I don't waste time with that stuff."
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Re: Why no Vanguard 2% cash back Visa card?

Post by smooth_rough »

Doctor Rhythm wrote: Wed May 31, 2023 7:36 pm Quite the zombie thread, dying twice in 10 years only to rise again. There are plenty of 2% back cards, so it shouldn’t really matter what Vanguard does (nor are their reasons for doing so known or actionable).
Looks like easily duplicated product, unless vanguard has some unique offering of its own.
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Re: Why no Vanguard 2% cash back Visa card?

Post by EnjoyIt »

HMSVictory wrote: Fri Jun 02, 2023 11:30 am
EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
I choose not to play these games.

I use my own money and focus my effort on my income and portfolio where the real return is.
I don’t understand where there is any effort. Get 1 credit card that pays 2.625%.

I don’t know how you focus on your portfolio, but I do nothing in that realm other than keep my asset allocation. Regarding income, I can understand putting in effort on working hard, improving skill set and looking for promotions or building up your own business. This I agree is where most time should be spent with regards to building real wealth.

But again where is the effort in paying everything via 1 credit card that earns 2.625%?
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Re: Why no Vanguard 2% cash back Visa card?

Post by 6bquick »

HMSVictory wrote: Fri Jun 02, 2023 11:48 am
6bquick wrote: Wed May 31, 2023 10:31 am
EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
It's no secret I'm a diehard fan of actual, paper cash money... but I agree wholeheartedly with EnjoyIt. For money we're going to spend anyway, and in cases I see no benefit, tangible or otherwise, in using paper money we use the Fido card exclusively. Gas, groceries, sundries, any bill they'll allow me to put on a CC, etc. Basically, if it's greater than a $40-50 spend, there's a decent chance it's going on the card. The dealer I got my truck from allowed up to $5k on a cc, so I put $5k on the fido card. Why wouldn't we do this? with the caveat its spending that was happening either way, it's free money! with the added benefit of someone else tracking and aggregating the 'savings' for me which can then be put into a taxable account instead of lost in the shuffle of a million individual transactions.

as far as the ethics of it? you're not wrong; TANSTAAFL. But, meh. I don't care. There are much bigger ethical dilemmas in the world than some folks voluntarily paying CC interest. :sharebeer
TANSTAAFL - you got that right.

I choose not to have the 28% interest Sword of Damocles hanging over my head and just use my own money. YMMV.
It's only hanging over your head if you spend money you don't have. If that is a meaningful struggle for you, kudos! for removing the temptation. Otherwise, it's literally free (to me) money.
If your outgo exceeds your income, your upkeep will be your downfall
Golf maniac
Posts: 1359
Joined: Wed Dec 27, 2017 1:02 pm
Location: Florida

Re: Why no Vanguard 2% cash back Visa card?

Post by Golf maniac »

I moved my accounts from Vanguard to Fidelity, not because of the 2% cash back which is a nice perk, but because Vanguard has a clunky website that is difficult to use and not customer friendly. Vanguard also had really slow customer service often taking an hour to get a live person and then being transferred several times to get to the right area for something simple.
EnjoyIt
Posts: 8272
Joined: Sun Dec 29, 2013 7:06 pm

Re: Why no Vanguard 2% cash back Visa card?

Post by EnjoyIt »

HMSVictory wrote: Fri Jun 02, 2023 11:48 am
6bquick wrote: Wed May 31, 2023 10:31 am
EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am
Northern Flicker wrote: Tue Apr 12, 2022 11:25 pm Cashback cards are a cancer. Merchants traditionally paid a higher transaction fee when one is used. They raised prices to compensate. Because they cannot charge different cardholders different prices, they ended up raising prices more than may be needed.

Today, cash back cards are ubiquitous and transaction fees are lower. Just get rid of the cash back card nonsense and lower the transaction fees and/or purchase prices.
+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
It's no secret I'm a diehard fan of actual, paper cash money... but I agree wholeheartedly with EnjoyIt. For money we're going to spend anyway, and in cases I see no benefit, tangible or otherwise, in using paper money we use the Fido card exclusively. Gas, groceries, sundries, any bill they'll allow me to put on a CC, etc. Basically, if it's greater than a $40-50 spend, there's a decent chance it's going on the card. The dealer I got my truck from allowed up to $5k on a cc, so I put $5k on the fido card. Why wouldn't we do this? with the caveat its spending that was happening either way, it's free money! with the added benefit of someone else tracking and aggregating the 'savings' for me which can then be put into a taxable account instead of lost in the shuffle of a million individual transactions.

as far as the ethics of it? you're not wrong; TANSTAAFL. But, meh. I don't care. There are much bigger ethical dilemmas in the world than some folks voluntarily paying CC interest. :sharebeer
TANSTAAFL - you got that right.

I choose not to have the 28% interest Sword of Damocles hanging over my head and just use my own money. YMMV.
What is this 28% you speak of?
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
Croesus
Posts: 13
Joined: Sun Jun 25, 2017 6:36 pm

Re: Why no Vanguard 2% cash back Visa card?

Post by Croesus »

EnjoyIt wrote: Fri Jun 02, 2023 1:48 pm
HMSVictory wrote: Fri Jun 02, 2023 11:48 am
6bquick wrote: Wed May 31, 2023 10:31 am
EnjoyIt wrote: Wed May 31, 2023 10:01 am
HMSVictory wrote: Wed Apr 13, 2022 6:45 am

+1 - I can normally negotiate a discount for paying..... cash. Yes that paper with Presidents faces on it! Crazy I know.

When you spend $50k a year to get $1k back..... cash back cards don't excite me. Credit cards also prey upon the financially uneducated and there is no free lunch - someone is paying for those rewards. Still haven't seen a post that my rewards or cash back set me financially free!
If you can make $1k a year with minimal effort wouldn’t you?
$1k a year for 30 years at 5% compounded yearly comes out to $70k.
2% cash back on 3/4 of one’s purchases using a 4% withdrawal rates takes you down to 3.94%.

Is it life changing? No, is it a no brained to do, absolutely.

Outside of our mortgage, health insurance and taxes, we put everything on cards earning between 2.625% to 7.5%. And that excludes credit card sign on bonuses which provide an even better return. I’m going to guess it averages out to close to 3.5%, maybe even more. Using your $50k example that is $1750/yr for minimal effort.
It's no secret I'm a diehard fan of actual, paper cash money... but I agree wholeheartedly with EnjoyIt. For money we're going to spend anyway, and in cases I see no benefit, tangible or otherwise, in using paper money we use the Fido card exclusively. Gas, groceries, sundries, any bill they'll allow me to put on a CC, etc. Basically, if it's greater than a $40-50 spend, there's a decent chance it's going on the card. The dealer I got my truck from allowed up to $5k on a cc, so I put $5k on the fido card. Why wouldn't we do this? with the caveat its spending that was happening either way, it's free money! with the added benefit of someone else tracking and aggregating the 'savings' for me which can then be put into a taxable account instead of lost in the shuffle of a million individual transactions.

as far as the ethics of it? you're not wrong; TANSTAAFL. But, meh. I don't care. There are much bigger ethical dilemmas in the world than some folks voluntarily paying CC interest. :sharebeer
TANSTAAFL - you got that right.

I choose not to have the 28% interest Sword of Damocles hanging over my head and just use my own money. YMMV.
What is this 28% you speak of?
Seriously. That is a payday loans level of interest!

Me. I already use a 2% rewards card for purchases and many bills, pay it off in full each month, and redeem the rewards. Why not have the rewards go directly into and investment account instead of my have to transfer it?

My spending habits won’t change, but I’ll invest more than I do now.
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