Everyone loves the idea of free money, especially if it involves not having to spend more than you already do. It’s why cash back and rewards programs, like the one offered by Fizz, are so popular. But what’s the catch? Is it really free money if you have to spend in order to get it?

At the end of the day, cash back and rewards programs don’t usually come with any sort of catch. When Fizz offers 3X points or 3% cash back on grocery store purchases, you really do get that amount for doing nothing other than spending money you may have been going to spend anyway. While some cards may have annual fees on certain cards, you’d be hard pressed to find any rewards program that makes you pay a fee to redeem your cash back or that falsely advertises their rewards program.

But everyone knows that there’s no such thing as a free lunch, so why does cash back make sense? Why would Fizz or any other credit card company offer free money? To answer all of these questions, we have to go back a little ways.

The origins of the payment industry

Some people still live and die by cash, but the vast majority of financial transactions today are facilitated by credit and debit cards. In theory, it’s an easier way for everyone to keep track of things. You don’t have to carry around wads of cash and the store you go into doesn’t have to count up your cash when you check out. Bookkeeping is easier, taxes are easier, disputes are easier.

But paying by card doesn’t just make things easier for all parties involved. It’s also a multi-billion dollar industry. Companies like Visa, Mastercard, Discover, and American Express make boatloads of money by creating and maintaining the payment infrastructure that we often take for granted. The fact that you can go into most stores and use any card you have in your wallet is thanks to payment processors like Visa and Mastercard.

This infrastructure, however, isn’t free to maintain. The aforementioned companies are each worth billions of dollars because they recognize how integral payment processing has become to the US and world economy. So, in exchange for building and maintaining the infrastructure and letting you swipe your card and pay for things, they each take a small percentage of your purchases from the stores that want to accept their cards. This concept is at the center of how the payment processing economy works.

Follow the money

As we’ve discussed, companies like Visa, Mastercard, Discover, and American Express make boatloads of money off of their payment processing networks. These companies make anywhere from 0.5% to 5% off of every purchase made by every person who swipes one of their cards, which adds up fast.

But the chain of profit doesn’t just stop right there. Visa and Mastercard are just payment processors - they don’t specialize in offering their own credit and debit cards. Instead, they partner with banks, airlines, retailers, and other companies who want to offer a card of their own - like Fizz! Visa and Mastercard work with these companies and organizations to help them create their very own cards. Then they agree on a revenue split of the money earned off of every transaction made using that card. Everyone takes a cut, and, in theory, everyone comes out ahead. Cardholders are able to use their cards in more places than they can cash, merchants and stores get a broader array of customers, payment processors get paid, and so do the card companies themselves.

Enter the world of cash back and rewards

While the payment industry powers ahead, consumers like us have also reaped the benefits of this financial evolution in the form cash back and rewards programs. Take Fizz, for instance, with its irresistible offers like 3X points or 3% cash back on grocery store purchases. You spend as you normally would, and in return, you receive tangible rewards.

But why do companies offer these rewards? Simply put, they are a way to attract customers and differentiate cards. If a credit card company is trying to attract frequent travelers, it might offer airline miles in return for using a certain card. Rewards programs are a sales pitch, and cardholders are the buyers.

It might seem like card companies are giving away money by offering cash back and other rewards, but it’s all a part of the business model. Without rewards programs, there would be less incentive for customers to actually open and use a certain credit card. By incentivizing people to become cardholders and spend money on a certain card, credit card companies are able to bring in more interchange revenue and keep their businesses afloat.

The hidden side of credit card rewards

While most credit card companies and banks offer some form of cash back or credit card rewards, there’s another piece of the puzzle worth remember: interest and fees. By attracting cardholders with cash back offers, card companies and banks are also counting on the fact that some cardholders will carry a balance, pay interest, pay fees, and go into debt.

Big banks and credit card companies won’t even make it clear that this a big a big part of how they line their pockets and fund their rewards programs. Even if you’re financially responsible and never pay fees or interest, your credit card rewards are being subsidized by someone not as lucky as you are. These are just more reasons why normal credit card companies are out to get you - and why they don’t stack up against Fizz.

Redefining rewards with Fizz

Fizz still works mostly like a normal credit or debit card. We partner with Mastercard so that you can use your Fizz card everywhere. And as you use your Fizz card to pay for things, Mastercard takes a percentage of each purchase and shares it with Fizz. We use this money to keep the lights on and to pay out cash back and other rewards.

But Fizz's story goes beyond the conventional script. While other credit card companies may charge annual fees or interest, Fizz breaks the mold by offering a transparent, fee-free experience. With Fizz, you enjoy the benefits of cash back rewards without the shackles of hidden costs or the implication  that other, less fortunate users are subsidizing your rewards. You spend, Fizz channels its earnings, and you're rewarded for your loyalty and spending prowess. This revolutionary approach ensures that your financial journey remains not only rewarding but also responsible and equitable. It’s all part of Fizz’s mission to be the financial ally of young adults.

Get a Fizz card today

If you're looking for the best rewards-earning debit card, look no further than Fizz. The Fizz debit card comes with amazing rewards and cash back opportunities. While most cards offer 1 or 2 points per dollar, Fizz does more. You can get up to 100 points per dollar at certain stores! You read that right: 100 points per dollar! Plus, you’ll be building credit and learning about financial responsibility the whole time. Other cards certainly can’t say the same.

So check out Fizz and see what great features you can use to build credit and take charge of your financial future. Download the Fizz app today to get started!