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We just got new windows installed in our house. It cost about $10,000 and I paid by credit card. Result: the window company had to pay a $200 fee to Visa for a transaction that probably cost about a dollar (credit risk included) and Wells Fargo rebated about half that back to me in the form of reward points that I will eventually convert into cash. In other words, I was just paid a bonus of $100 to use a credit card instead of paying with cash. Someone please explain a sane economic theory under which this makes sense.

But the windows look nice.

UPDATE: Commenter 98th Story spells things out:

I don’t understand what’s hard to understand here. Visa made out by netting $100 on the transaction. You made out by conveniently using a credit card and scoring $100 in rewards. And the window company made out by scoring a $10,000 dollar job, part of which included handling a $10,000 transaction in a smooth and covenient way. Maybe you wouldn’t have gone with another company just because this one didn’t take a credit card, but I’m positive a percentage of their customers would. Especially if they didn’t quite have $10,000 to spend on windows this month, but wanted to get it done anyway. This is called a win-win-win, and it happens in capitalism all the time.

Check, check, and check. The question is, is this sane? Is it sane to aggressively incentivize people with cash discounts to buy things on credit even if they can’t afford them “this month”? I’d argue that it’s not, even though every individual in this transaction might come out ahead in the short term. If the financial implosion of 2008 didn’t convince us of that, then I guess we deserve whatever follow-on financial collapse we get in the future.

Plus, keep in mind that I’m not opposed to credit card interchange fees. I just want them to be transparent. If everyone really is a winner from the current state of affairs, I very much doubt that Visa and Mastercard would prohibit my window installer from charging me a fee for using a credit card. So why not find out? If he did have that right, and chose not to charge me extra, it would be a strong indication that the fee is worth it to him. But if he had that right and chose to pass it along to me, it would be a strong indication that someone was trying to make a bit of monopoly rent at his expense. Why not let every merchant choose whether or not to pass along interchange fees to their customers and see what happens?

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This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

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