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New credit card fees may be passed on to consumers
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Deciding between cash and credit is becoming more complicated this week. As of yesterday, merchants in 40 states can charge you more to swipe your card.
Thats because every time you pay by credit card, the store has to pay a fee. These vary from about 1.5 percent to much more for fancy rewards cards. Under a new rule, stores can pass that on to you. The change stems from a settlement last year that alleged price-fixing between the major credit card companies.
"Consumers are the ones who lose," says Curtis Arnold, the founder of CardRatings.com. "The retailer can pass on the fee but the likelihood of them reducing what they're charging for goods and services is historically pretty unlikely."
Despite the rule, experts don't expect many retailers to tack on the surcharge.
"Small business are really terrified that theyll discourage customers," says Nancy Folbre, an economics professor at UMass Amherst.
And in today's economic climate, that's the last thing they want to do.
It's small businesses that generally feel the most pain from these so-called swipe fees, making them less competitive, whether they pass on the fee or not.
Why are the retailers charged any fees? Since the credit card companies are the ones who make the money on charges, isn't that enough? Oh, I forgot enough is never enough when it comes to the almight buck. What is next? Are we going to receive a bill because we carry a credit card in our pocket - damn forgot again, a number of banks already do that. I wonder what would happen to the credit card industry if no one used a credit card for one week - let's set a date, from February 4 though February 8, no one should use a credit card for anything. Let's see if the credit card companies get the message that enough is enough.
