Banks love math. It's how they do their thing. But banks very very much want you to HATE math. Why? Crap like this:

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Sounds great. Who doesn't like money for nothing? But what's this, you're going to give me free money for almost everything I buy? What!? Shut up and take my signature! Here's the thing. They are tricking you because you sit there and think, "well 1% is great, 2% is cool, but wait 3% on gas? Gas is so expensive! I will make tons of money!" It preys on people's inability to estimate, aversion to math, and inability to calculate a percentage quickly.

It gets especially worse when you consider that they limit your gas and grocery cash in to $1500 worth of purchases. In fact, you'll make more money with the $100 they give you for signing up. But there is a lucrative 10% bonus if I'm an existing Bank of America customer. That's got to be good, right? Slow down. For funsies, I crunched the numbers on my personal spending where 1,2,3 represent totals for what would earn the corresponding reward rate (things like rent, savings deposits, bill payments, etc I assume do not count):

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So assuming I use my credit card for every last transaction in a given month, Bank of America will happily hand me a check for $16. That's like a nice entree at Chili's. "No fair!" you say, you're just a single guy, you don't have kids to feed. Them kids are expensive! Well, yes. Let's assume you spend the $1500 you're allowed to on groceries and gas. If you split it as $1000 for food (not unreasonable for a big family) and $500 on gas, you'll get $35 for your trouble. Which, if you're a family of 4-6, does about as much as someone handing me a $20 bill and asking for change. In fact, the $16 I earned might go further than $35 will for 4-6 people. What's that, 3 movie tickets?

Wait, wait! I forgot about the 10% bonus! So if I were an existing Bank of America customer and I had this fancy credit card, my 10% bonus ups my reward to $17.93. Now we're talking!

The people that devised this "rewards" program know that it sucks. But they know people hate math and love getting something for nothing. But they saved the best for the fine print:

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For being a loyal CashRewards™ member, you get slammed with a huge interest rate if you miss a payment or can't pay your balance in full. They'll happily hand you $35 for your $1500 credit card bill when it means a potential $300 in interest earnings for them.

I really wish there was a section of state testing that focused on "how not to be a sucker." It's arguably more worthwhile than determining if someone can interpret a logarithm.

Posted
AuthorJonathan Claydon