Monday, January 28, 2013

Another reason to pay cash or use only debit cards

Starting on Sunday January 27 2013 , shoppers  might have to pay more to use credit cards. Wow!  Makes me glad that I rarely ever use a credit card. I think anyone that uses credit cards for rewards programs for points etc will have to rethink that strategy.

Stores and restaurants  who accept MasterCard and Visa will soon be able to tack a surcharge onto your bill of up to 4%.  Well a few dollars here and there won't seem to be a lot if you use your credit card alot those fees could be over $100 a month. You would be better off paying cash.

The surcharge is fallout from a class-action settlement reached last July that ended years of legal battles between merchants on the one hand, and banks and credit card companies on the other.

Ever seen a “cash only” sign at a mom and pop store or small restaurant ? All retailers have to pay a percentage of their profits to credit card companies in order to process in-store credit card payments. Smaller merchants who don't want to take this transaction fee out of their profits might institute a “cash only” policy. Other stores establish an unofficial minimum for credit card purchases or factor the transaction fee into their prices.

The surcharge proposed by last year’s settlement is supposed to be equal to the cost of processing a credit card transaction, which usually comes out to about 1.5 to 3 percent of the purchase. According to the settlement, merchants can’t charge consumers more than 4 percent. They also won’t be able to add extra fees to debit card transactions. 

Despite the changes, few merchants seem willing to add to their customers’ costs. 

No comments: