Thursday, August 21, 2008

Credit Cards and Ribbis

Friends occasionally ask me to buy stuff for them online.  Today, I thought of an interesting question.  Am I charging them interest?

All of my credit cards have cash back rewards.  Depending on where the purchase is made and with which credit card, the cash back is as high as 5%.  Let's say I order something for $100.  I'll charge the person I'm buying the item for, $100.  Here's the problem though, I'll get $3 back from the credit card, so the actual cost is not $100, but $97.  Even worse, Chase Freedom gives you 3% back on top 3 categories for that month and 1% back for the rest.  As far as I remember, there's no way to check which purchases are in the top 3.
Posted by at 1:37 AM

20 comments:

  1. No. It's not Ribbis. They are not paying you anything. And you are not asking for anything. Just because you happen to be doing someone a favor and are getting something for it from someone else doesn't imply ribbis in any way. I could be wrong though, you may be michuyav to give up the money back and turn Chase Freedom into a chase for bondage.
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  3. Bank of America on Overstock.com. They have different point values for online retailers. I think they give even more points for some.
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  4. Otherwise, everything's 1%. They're having a summer program right now, 3% back from groceries. Also unlimited cash back. Usually, the card is pretty useless because store purchases are only 1%.
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  5. Ask your local Orthodox Rabbi or a higher authority. I don't think blog advice in this area is relevant.
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  6. Just throwing the idea around. I think if I'll ask a higher authority, they'll ban credit cards with reward programs. :-P
    Not that I care but some people might.
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  7. True, Moshe, I didn't think of that eventuality. Rachmana litzlan, they make evoke Chsam Sofer's (zecher tzadik livracha): "chadash asur min hatorah" ("novelties are prohibited from the Torah").
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  8. True, Moshe, I didn't think of that eventuality. Rachmana litzlan, they make evoke Chsam Sofer's (zecher tzadik livracha): "chadash asur min hatorah" ("novelties are prohibited from the Torah").
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  9. Moshe: It's not interest cause your not getting anything from the people themselves. It's like if stores sell products at a higher price than they got it for, it doesn't mean their charging you interest. Although there their not loaning anything, but still same concept.

    Alan: You have to remember it also says "Ain chadash Tachas Hashemesh" So if there are no new things, then there are no new things to make assur.
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  10. Yeah, one of my friends told me same, it's a sale, even when you give your friends a payment plan.
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  11. Actually we asked Rabbi a similar question about a year agot. Let's say something costs $100 and you buy it with 1% cash back. They ask how much they owe you. What do you say $100 or $99. My Rabbi said that as long as they are aware that you bought it with cash back CC you may ask for $100, otherwise it falls under the category of stealing.
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  12. If you're "selling" it, it doesn't matter what the original cost was.
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  13. 1. In this case you are not selling it. You are buying for them and then collecting your money.

    2. In Gemorah there is a whole section of how much one may charge for a product when they own a store. According to Gemorah it cannot be more than 10%. But in today's world if all store owners charged only 10% they would be on welfare. My rabbi thinks there is somekind of a loophole or a different opinion, but since we don't have store owners in our shul (well, among regular members) he never looked into it.
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  14. I don't think it's so simple. Perhaps if they give you money beforehand and tell you specifically that this money is to buy that object.
    People usually ask "How much do I owe you?", that doesn't mean how much it cost, it means how much are you charging.
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  15. Well, depends how you understand that question. I understand it as how much did you end up paying for that object?

    But I guess you can view it as how much you want to charge me for it?
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  16. In gemarah, the phrasing is crucial and tense and words used change the legal meaning. Saying it the way your rabbi did is not very responsible. I think the only case where it would be stealing is when your friend, using this exact phrase, would ask you "how much did it cost you?"

    How much did you pay means how much did you pay now, dividends are added to your account only when you get your statement. How much do I owe you, doesn't mean how much the object cost about how much you're charging for it. You can probably even charge for time spent ordering and receiving and the product because all of these things figure into how much money you spent on ordering the product.
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  17. Mlevin: its like if you go out to lunch with a friend, and one person pays with a credit card that gives rewards, while the other person pays you back. Now the rewards belong to you because you used the card. The other person isn't going to pay you less because you get something out of it.
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  18. First year at college I would buy textbooks for my friends using the amazon rewards card, which is either 1% back in the college bookstore or 3% back on amazon.

    I made a few dollars :-). ANd my friends were totally aware of it. I even told them to open up their own card, but they decided not to because "its too much of a hassel"

    I made money off their laziness/stupidity. I'm happy. :-)

    Anyway I had a similar question. I occassionaly use a credit card to give tzedekah. If i get 1% back, do I fulfill the mitzvah of maaser?
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  19. People, with all due respect, all these 1%, 3%, 5% cash back bonuses - while nice - are not going to make a serious impact on your budget or lifestyle. The way to do it is to get good paying jobs, try working on your own business, make careful investments in the stock market, get more education to transition to a field/career better paying than one currently has and, of course, how can I forget playing lotto on the side?
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  20. Alan, these people are talking halacha (spiritual matters) which play a part in success. In your "How to get rich" piece over here you don't mention G-ds help even once?
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