[sliverstorm]

Maybe from the mile-high view, but the reason cash rewards work is because the credit card company is essentially sharing part of the fee they extracted from the vendor with the customer. Fundamentally different than interest on savings.

[rkalla]

I wish to god I had the link handy, but I saw the "Rewards" programs explained in painful detail before and actually shows that the card companies do no sharing of the profit margin, the 1% or 2% comes out of the retailers pocket on the backend when the transaction is processed.

In this particular article it talked about that being the reason why some retailers discouraged processing charges with certain cards that have typically higher rewards.

Sorry for the hand-waving, I know that is the worst way to make a point... "This guy I know told me that his friend said..." :(

[X-Istence]

It is just interesting seeing it at work. I get 1% cash-back on all purchases, and 2% on some others. I've already save up quite a bit on my cash-back, more-so than I have earned in interest on my savings account with 10k+ in it.

I am not even spending an absurd amount, just what I need to survive, and bills.