AirPoints and Credit Card Surcharge

Question

1. Assune 1 AirPoints is equivalent to \$1.
2. Assume for every \$100 spent on a particular AirPoints credit card, the credit card owner will earn 1 AirPoints

If a vendor charged a 2% surcharge to use the credit card, then a \$100 purchase would become \$102 -- and earn 1.02 AirPoints (or the equivalent of \$1.02). It feels like the credit card owner paid the \$2 surcharge to earn \$1.02, which is a loss of \$0.98.

Is the above correct? If so, does it mean that the credit card owner would always be at a loss if a vendor ever charged a surcharge?

Answer 1

There would be a net loss for the credit card user if, as in your example, the surcharge exceeds the value of the AirPoints (or other benefits) obtained. If the surcharge is less than the value obtained, then the credit card user comes out ahead.