Yahoo has a great article on how to stay clear of Credit Card fees and late payments. It's a must read for any credit card user. Furthermore the article does not mention that you can get a free credit report by clicking here at no cost and no credit card is required.
Wednesday, March 14, 2007
Credit Cards: What You Need to Know!
Yahoo has a great article on how to stay clear of Credit Card fees and late payments. It's a must read for any credit card user. Furthermore the article does not mention that you can get a free credit report by clicking here at no cost and no credit card is required.
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There are some great tips in that article. Unfortunately, the credit card companies still get us all with one fee, interchange. I was reading up on this issue following Senator Levin's hearing last week on the credit card industry's rather deceptive practices, excessive fees, and predatory lending.
Anyway, I say we all are stuck bearing the cost of interchange fees because they make everything more expensive.
"Upfront fees aren't the only costs we face when paying with plastic. Chief among the others is the 'interchange fee,' the cost merchants and retailers incur for processing transactions made with credit and debit cards. Interchange fees are complex and even more difficult to understand than penalty fees; simply put, they increase the cost a merchant incurs in selling to a customer who uses a credit or debit card.
Interchange fees are often so high that merchants lose money on plastic transactions, particularly for 'micropayment' purchases such as food. Because retailers are barred from offering discounts for buying with cash, the end result is that prices go up for all the goods they sell, and consumers never know why.
Merchants also claim it's impossible to negotiate a more favorable fee, as Visa and MasterCard have colluded to use their market strength to set the bar at a level they prefer."
http://www.consumeraffairs.com/news04/2007/03/credit_card_reform.html
Thanks for the Yahoo article.
Actually that's only partially correct. I can say this personally because I'm very familiar with merchant services(credit card processing). there are many store who won't accept credit cards for less than 10 or 20 dollars (and rightfully so). If you are dealing with the right company you can get a great deal and not be locked into a contract either. The problem is however the reward cards. Many merchants are even unaware that they pay a higher fee for these cards as much as 2.5-3.5% of the transaction. It's also unfortunate that many credit card processors are not upfront about the real costs involve and constantly mislead the merchant about the rates that's were the retailers lose REAL money.
Thanks for the reply. I agree with you that the main problem seems to be disclosure and the general fog behind which the credit card companies set rules and rates.
Correct me if I'm wrong, but it's my understanding that merchants are actually prohibited under the rules of their agreement with the credit card companies from setting a minimum purchase amount when using plastic. This explains why the merchant either tells you this at the register or has a hand made sign that can be quickly removed.
True that most consumers and merchants likely have no idea about the varying fees between different cards, transaction types, merchant, etc.
It also seems puzzling, that interchange totals have doubled in the last five years as the volume of debit and credit purchases has skyrocketed and technological advancements have made processing a transaction faster and cheaper. I guess it's not puzzling as the card companies have simply turned this into a revenue stream to fund rewards card programs and marketing.
Anyway, I'm glad to see Senators Levin and Dodd taking an interest in this issue.
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