[macintologist]

I just read this on wikipedia and found it very interesting

http://en.wikipedia.org/wiki/Credit_card

Credit card companies do not want merchants to charge credit card users more than they charge other customers, even though the merchant pays a fee of 2 to 3 percent to process credit payments. In some countries this fee may be significantly more. If customers were responsible for this fee, it would often discourage credit card usage.
In many places, governments have passed laws (at the urging of the credit card industry) to make this illegal. Despite this, some retailing sectors flout this regulation, especially in areas of very competitive, commodity products such as personal computers, where the fine print of an advertisement states "prices already cash discounted -- surcharge for credit card". Other retailers offer incentives or bonus coupons for using cash, such as Canadian Tire Money.

Some critics have observed that this results in what is effectively a hidden tax on all transactions conducted by merchants who accept credit cards since they must build the cost of transaction fees into their overall business expense. The end result is that cash consumers are essentially subsidizing credit card holder purchases. The cost of the convenience enjoyed by card holders and the profits taken from transaction fees by the card industry (which has come to rely increasingly on this revenue stream over the years) is partially offloaded onto the backs of the cash consumer. Critics go on to say that further compounding the issue is the fact that the consumers most likely to pay in cash are the least able to afford the additional expense (card holders are more likely to be affluent, non-card holders less so). Australia is currently acting to reduce this by allowing merchants to apply surcharges for credit card users. In the United Kingdom, merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method, but few merchants do so (the most notable exceptions being budget airlines and travel agents).

That is absolute bullsh**. It is one thing when individual merchants choose to charge all payment methods the same price, but it's another thing when the government passes a law that forces merchants to not add a surcharge to purchases made with a credit-card.

I happen to believe that a merchant should be free to charge an extra 1-2% on purchases made with a credit card to make up for the fees involved. There's no excuse that cash customers should be forced by law to subsidize credit card companies with every single purchase they make.

[The Godfather]

When I received payment for my iBook, I was unhappy to know that VISA took 2.9%, Paypal 1%, and eBay 3%. A whopping $40 towards the monopoly.

[Eug Wanker]

Canadian Tire rocks... errr... rolls?

P.S. Wrong forum?

[Dakar]

I stopped using cash a looooong time ago. I manage to carry $50 on me for about 3 things... Vending machines, bars, and emergencies.

[Person Man]

Originally Posted by The Godfather

When I received payment for my iBook, I was unhappy to know that VISA took 2.9%, Paypal 1%, and eBay 3%. A whopping $40 towards the monopoly.

Now you see why I don't accept PayPal as payment for my auctions unless the buyer whines about it.

[Dork.]

Well, if there was a visible fee associated with credit card use, then fewer people would use credit cards. This can be good or bad, depending on your point of view.

Personally, I don't have a problem with the credit card companies charging fees to merchants -- after all, credit is a convenience for the consumer, and offering credit is a service that the merchant provides to its customers. And cash customers shouldn't necessarily be entitled to a discount, just because they decline to pay on credit. But I never understood why these fees are percentage based. Is it really 100x more expensive for the credit card companies to clear a transaction for a $1100 MacBook then it is to clear a $11.00 transaction for lunch?

I know plenty of local merchants who have had to give up taking credit cards because the fees were too excessive. Of course, their businesses don't depend on the large purchases that people are more likely to insist on using credit for....

[ghporter]

I know a lot of vendors that price UP for credit card payments, but allow a "cash discount" that just happens to be pretty close to their credit card service fee rate. Hmmmm.

The issue I see is the credit card companies forbidding vendors from disclosing their fees. This would be especially bad for American Express, which charges vendors something like 4%. It's just a bad idea to "forbid" anyone doing business with you from doing anything that is not blatantly damaging to either party. Or is it that the credit card companies KNOW that disclosing these fees will hurt them?

[macintologist]

Originally Posted by Dork.

Well, if there was a visible fee associated with credit card use, then fewer people would use credit cards. This can be good or bad, depending on your point of view.

Personally, I don't have a problem with the credit card companies charging fees to merchants -- after all, credit is a convenience for the consumer, and offering credit is a service that the merchant provides to its customers. And cash customers shouldn't necessarily be entitled to a discount, just because they decline to pay on credit.

That's all fine if we were talking about merchants being able to make these choices about their store independently. But they don't, the law forces them to charge all payment methods the same price. That is my principle complaint.

[ghporter]

I can't agree with the "tax" argument, though. It's a surcharge established by an industry, not by a government. Sure, governments help enforce the gag on merchants telling customers about it, but it's still not a tax. It's a fee for doing business using credit cards, and while they're often dispicable, the credit card companies still have to make money or they wouldn't offer their services.

[SVass]

Some credit cards offer a rebate or mileage or some other bonus for using them so the issue is more complex than stated. sam

[Dakar]

I do find the idea laughable, considering anywhere a credit card is accepted it does the credit card company loads more money than the store. (i.e., interest)

[macintologist]

Originally Posted by ghporter

I can't agree with the "tax" argument, though. It's a surcharge established by an industry, not by a government.

It's established by an industry and codified into law by government. The government makes it illegal to charge difference prices for cash vs. credit card payments.

That's why I think it's reasonable to call it a tax.

[The Godfather]

Last year, when gas prices were crossing the *gasp* $3.00 line, I saw 1 or 2 gas stations offering 10-cents off the price for cash customers. It shouldn't be illegal, they are just trying to be competitive.

[sabrejim]

In Jersey, they used to always have different prices for cash and credit card at gas stations. LAst time I remember seeing that was like 8 years ago though.

[production_coordinator]

Originally Posted by macintologist

It's established by an industry and codified into law by government. The government makes it illegal to charge difference prices for cash vs. credit card payments.

That's why I think it's reasonable to call it a tax.

Actually, it's part of the contract you sign to accept credit cards. We make LARGE 30K plus CC transactions, and we get hit HARD by these penalties. We are not permitted to tell our clients that we could charge less if they would pay by check.

[Dork.]

Originally Posted by production_coordinator

Actually, it's part of the contract you sign to accept credit cards. We make LARGE 30K plus CC transactions, and we get hit HARD by these penalties. We are not permitted to tell our clients that we could charge less if they would pay by check.

If they ask whether they can get a discount by using cash or a PO, are you forced to lie to them? Just wondering....

[sabrejim]

I can't believe my college lets me charge my tuition. It's crazy but free "cash back" points wheee.

[PurpleGiant]

Over here quite a few places offer a discount for cash. Or have a surcharge for credit card.

Many places now accept VISA and Mastercard with no surcharge, but pass on the 4% surcharge if you use AMEX or Diner's Club cards.

[eeeaa]

Originally Posted by macintologist

I just read this on wikipedia and found it very interesting

http://en.wikipedia.org/wiki/Credit_card



That is absolute bullsh**. It is one thing when individual merchants choose to charge all payment methods the same price, but it's another thing when the government passes a law that forces merchants to not add a surcharge to purchases made with a credit-card.

I happen to believe that a merchant should be free to charge an extra 1-2% on purchases made with a credit card to make up for the fees involved. There's no excuse that cash customers should be forced by law to subsidize credit card companies with every single purchase they make.

The financial industry has powerful lobbyists that ask for these laws, and the Congress gives them whatever they want because Americans don't pay attention. Frankly, they really can't pay attention to every law that is passed or debated, because there isn't enough time in a day. Even the members of Congress have no idea what goes into many of the laws that they pass on a daily basis (case in point was the Patriot Act, which most members didn't even have time to read). This is typical, and, yes, it's BS.

[The Godfather]

I wonder what if I go to the Apple store and tell the manager: if I pay for my lappie with cash, may I get 2% off? It would be a win-win proposition.

[davesimondotcom]

Keep in mind how many things people buy on credit that they wouldn't be able to afford in cash, even if they were given a 3% discount.

Credit card debt sucks, but it makes the economy go...

[Spliffdaddy]

People buy things on credit that they can't afford to pay cash for?

hmm.

Why don't they simply save the money a little at a time? Seems like they have the money to repay the credit card company a little at a time....

Anyhow, there is life without credit. I'm living proof.

[davesimondotcom]

Originally Posted by Spliffdaddy

People buy things on credit that they can't afford to pay cash for?

Duh!

[Benton]

When Apple issues a credit card I will apply. See my signature.

[production_coordinator]

Originally Posted by Dork.

If they ask whether they can get a discount by using cash or a PO, are you forced to lie to them? Just wondering....

We aren't lying when we say no. We can't offer two prices as we only are permitted having one price.

[turtle777]

Originally Posted by davesimondotcom

Duh!

Seconded.

-t

[Railroader]

Originally Posted by Spliffdaddy

People buy things on credit that they can't afford to pay cash for?

hmm.

Why don't they simply save the money a little at a time? Seems like they have the money to repay the credit card company a little at a time....

Anyhow, there is life without credit. I'm living proof.

2nded!

Ironically the davesimondotcom doesn't realize you are actually able to buy more because you actually have more money to spend because you aren't paying banks interest!

You can hold back and buy something more expensive later because you won't pay interest on it, or you can buy it now with credit and be able to buy less later because you are paying credit card payments and plus the interest rate becuses you have no self control.

How complicated is that?

[turtle777]

Originally Posted by macintologist

I just read this on wikipedia and found it very interesting
...
That is absolute bullsh**.

Well, then change the article on Wiki

-t

[turtle777]

Originally Posted by Spliffdaddy

Anyhow, there is life without credit. I'm living proof.

Yeah, but also a life w/o credit history, which is a BAD thing in the US.

Remember, not everyone maxes out their credit just because they can.

-t

[Railroader]

Originally Posted by davesimondotcom

Keep in mind how many things people buy on credit that they wouldn't be able to afford in cash, even if they were given a 3% discount.

Credit card debt sucks, but it makes the economy go...

... down the toilet.

How is giving Visa 2-3% of every purchase (plus the interest on the balance 90% of all people carry over each month) you make that causes you to be able to buy less later causing the economy to move in a good direction? Does Visa employ more people than manufacturers, logistics, wholesale, and retail employ?

How is paying interest only and not even paying principal on a mortgage good? Overvalued real estate markets anyone?

[Railroader]

Originally Posted by Benton

When Apple issues a credit card I will apply. See my signature.

Nice spam.

[Railroader]

Originally Posted by Person Man

Now you see why I don't accept PayPal as payment for my auctions unless the buyer whines about it.

You don't pay an extra fee unless you accept credit card purchases. You can do bank to bank transfers nearly free*.












*If not completely free.

[turtle777]

Originally Posted by Benton

When Apple issues a credit card I will apply. See my signature.

RR, seconded.



-t

[Person Man]

Originally Posted by Railroader

You don't pay an extra fee unless you accept credit card purchases. You can do bank to bank transfers nearly free*.

*If not completely free.

I wish it was that simple. Most of the whiners want to pay by credit card. And the stupid eBay system is set up such that people can leave negative feedback for me if I refuse to sell to them when they don't read my auction rules.

I hardly ever sell anything any more, especially because people can't read the "will sell only to the US" part. And usually after making an eBay transaction I start getting spam because the other party has a PC infected with some virus.

[medicineman]

Credit cards have pretty much replaced in-store or in-house credit. A business would offer credit terms if: a) they sold high ticket items more easily bought in installments, or, b) the customer did not have the cash with him at the moment, or, c) it was easier for the cusomer to pay for accumulating transactions all at one time. The merchant then had a constant amount of outstanding, uncollected sales. There was a definate cost involved. Manpower, accounting, postage and the cost of money itself. If only the cost of money was 5%, and a company offered to relieve you of that burden for 2 to 3%, it was in the interest of the merchant to accept that deal. That credit cost is no different than insurance cost, tax costs, rent or mortgage cost, or any other fixed business expense. All those costs are built into the price of the product whether or not the customer avails himself of those services. It would be as if you said, I'll pay cash, don't wrap or bag it, don't deliver it, and therefore, give me a discount. I don't see the argument.

[Spliffdaddy]

Originally Posted by what_the_heck

Yeah, but also a life w/o credit history, which is a BAD thing in the US.

Remember, not everyone maxes out their credit just because they can.

-t

You don't need a 'credit history' unless you use credit.

My mother has never been employed and never used credit. Her credit score is 830.

In no way is the lack of a credit history 'BAD'.

[whgoodman]

Originally Posted by Spliffdaddy

You don't need a 'credit history' unless you use credit.

My mother has never been employed and never used credit. Her credit score is 830.

In no way is the lack of a credit history 'BAD'.

I have to disagree here. You cannot get a decent rate on a used car loan or even a mortgage if you don't have a decent credit history. You also cannot rent a car w/o a credit card. You can pay for a rental with cash, but in general you must have a credit card to reserve.

[Railroader]

Originally Posted by whgoodman

I have to disagree here. You cannot get a decent rate on a used car loan or even a mortgage if you don't have a decent credit history. You also cannot rent a car w/o a credit card. You can pay for a rental with cash, but in general you must have a credit card to reserve.

Why do you need to get a credit/loan to buy a car or a house? Can't you save for such a thing?

I assure you, you can rent a car without a credit card. I have done it many times. You do pay a deposit, but you get it back. And you can have a super crappy credit score and still get a credit card to reserve a rental a car.

[turtle777]

Originally Posted by Spliffdaddy

You don't need a 'credit history' unless you use credit.

My mother has never been employed and never used credit. Her credit score is 830.
In no way is the lack of a credit history 'BAD'.

Your mother must have credit history, otherwise, you don't get a score like that without. She might have been a co-signer on loans or mortgages. Income is NOT necessary for a good credit score, a track-record of making payments in time does. Educate yourself about the American credit system.

And you are wrong, a lack of credit history is bad. It can make the difference of more than 1% in your mortgage interest rate. Yes, almost everything else you can pay cash, but with a house, in most cases, it is not an option. So a good credit score helps.

-t

[turtle777]

Originally Posted by Railroader

Why do you need to get a credit/loan to buy a car or a house? Can't you save for such a thing?

Buy a house with cash ? Where do you live, and how long did you have to save for that ?

In most places in the US, buying a house cash is NOT an option. Unless you want to wait until you are 50 years old.

-t

[davesimondotcom]

Originally Posted by Railroader

... down the toilet.

How is giving Visa 2-3% of every purchase (plus the interest on the balance 90% of all people carry over each month) you make that causes you to be able to buy less later causing the economy to move in a good direction? Does Visa employ more people than manufacturers, logistics, wholesale, and retail employ?

How is paying interest only and not even paying principal on a mortgage good? Overvalued real estate markets anyone?

I don't see how my stating an observation makes me the one who is lobbying for the credit card industry.

Are you and Spliff denying that people use debt to buy things they can't afford? If so, you are blind.

How many ads do you see on TV that sell home equity loans or re-fis? Why do you think people are "cashing out equity?" To buy things they don't have cash for, or to pay off credit card debt for buying things they couldn't pay cash for.

If you don't have credit card debt, good for you. But you would be ignorant to pretend that the rest of the world doesn't use it like that?

[davesimondotcom]

Originally Posted by Railroader

2nded!

Ironically the davesimondotcom doesn't realize you are actually able to buy more because you actually have more money to spend because you aren't paying banks interest!

You can hold back and buy something more expensive later because you won't pay interest on it, or you can buy it now with credit and be able to buy less later because you are paying credit card payments and plus the interest rate becuses you have no self control.

How complicated is that?

Hey, now, davesimondotcom realizes that people drown in credit card debt.

And I agree that if you can afford to pay cash for everything you are better off. But people don't save up to buy things anymore. Good thing or not, people use credit to buy things now and afford them in the long term.

If you can't see that, you are blind to the way things work in the real world. In an ideal world, maybe eveeryone has cash to pay for everything. But they don't.

[turtle777]

Originally Posted by Railroader

How is paying interest only and not even paying principal on a mortgage good? Overvalued real estate markets anyone?

Yes, it can be good in certain situations.

If you know you are going to be in an area only for 2-3 years, an ARM might make more sense, especially if you know that the real estate market is slow and won't appreciate.

I know people that got great mortgage rates (3.5% for 30 years), and then, 3 years later, had to move. Talk about down the toilet, especially those mortgage points that they purchased...

-t

[whgoodman]

Originally Posted by Railroader

Why do you need to get a credit/loan to buy a car or a house? Can't you save for such a thing?

I assure you, you can rent a car without a credit card. I have done it many times. You do pay a deposit, but you get it back. And you can have a super crappy credit score and still get a credit card to reserve a rental a car.

Okay. Call up the rental car company of your choice and reserve a car w/o a credit card. Basically you'll be told that they will have a car there for you, but they cannot hold the class of vehicle that you want to rent. So, you run the risk of having to rent a car a couple of classes above what you can afford. Hope there's an ATM close by. Or, carry the $700 cash it takes to rent a car [in this case an SUV] for a week while you're on vacation or on a business trip. While it may be possible, it certainly is a PITA to accomplish the task. And, to your other point, a 'super crappy' credit score will achieve you an even more crappy credit limit. When you reserve a car the rental company will put a reserve of sorts on the credit card for the anticipated amount of the rental + a little bit more for overages. If your 'supper crappy' credit score gives you a 'super crappy' credit limit and the rental is greater than your limit then you're out of luck.

On the flip side, while I do agree that most credit card companies are loan sharks with a more PC name, they do provide some services for you. i.e. MasterCraft furniture just went chapter 7 in this area. If you had paid [edit...a deposit] by credit card then you'll get your money back. If you paid by cash or check then you're SOL as there are many other creditors that will be in line first [i.e. credit card companies] before the bankrupcy court gets to the lowly customers that were wronged.

[Railroader]

Originally Posted by davesimondotcom

I don't see how my stating an observation makes me the one who is lobbying for the credit card industry.

Are you and Spliff denying that people use debt to buy things they can't afford? If so, you are blind.

How many ads do you see on TV that sell home equity loans or re-fis? Why do you think people are "cashing out equity?" To buy things they don't have cash for, or to pay off credit card debt for buying things they couldn't pay cash for.

If you don't have credit card debt, good for you. But you would be ignorant to pretend that the rest of the world doesn't use it like that?

Oh, I know that a majority of the world pays people extra for something because they don't have the self control to wait until they can actually afford it. Are you defending that practice? Buying what you can't afford?

Just because you can do it doesn't mean it's the right thing to do. I can stand on a street corner and tell everyone passing by that they must accept Jesus as their personal saviour. Is it the right thing to do? No. Just because a company advertises something or some service doesn't mean you have to buy it.

[Railroader]

Originally Posted by davesimondotcom

Hey, now, davesimondotcom realizes that people drown in credit card debt.

And I agree that if you can afford to pay cash for everything you are better off. But people don't save up to buy things anymore. Good thing or not, people use credit to buy things now and afford them in the long term.

It's a bad thing. You can actually buy more if you pay for it with cash. Why would you want to pay interest? Do you like giving your money away?

Originally Posted by davesimondotcom[b

]If you can't see that, you are blind to the way things work in the real world.[/b] In an ideal world, maybe eveeryone has cash to pay for everything. But they don't.

C'mon... I never said that. But we can get closer to the ideal world.

[Railroader]

Originally Posted by whgoodman

Okay. Call up the rental car company of your choice and reserve a car w/o a credit card. Basically you'll be told that they will have a car there for you, but they cannot hold the class of vehicle that you want to rent. So, you run the risk of having to rent a car a couple of classes above what you can afford. Hope there's an ATM close by. Or, carry the $700 cash it takes to rent a car [in this case an SUV] for a week while you're on vacation or on a business trip. While it may be possible, it certainly is a PITA to accomplish the task. And, to your other point, a 'super crappy' credit score will achieve you an even more crappy credit limit. When you reserve a car the rental company will put a reserve of sorts on the credit card for the anticipated amount of the rental + a little bit more for overages. If your 'supper crappy' credit score gives you a 'super crappy' credit limit and the rental is greater than your limit then you're out of luck.

On the flip side, while I do agree that most credit card companies are loan sharks with a more PC name, they do provide some services for you. i.e. MasterCraft furniture just went chapter 7 in this area. If you had paid [edit...a deposit] by credit card then you'll get your money back. If you paid by cash or check then you're SOL as there are many other creditors that will be in line first [i.e. credit card companies] before the bankrupcy court gets to the lowly customers that were wronged.

Do it a few times a year. I always get the car I want and sometimes I get free upgrades. And incidentially, if you didn't use credit you wouldn't have any problem carrying $700+ with you at any given time. My brother pays more than that in interest on his mortgage each month.

[whgoodman]

Originally Posted by Railroader

Do it a few times a year. I always get the car I want and sometimes I get free upgrades. And incidentially, if you didn't use credit you wouldn't have any problem carrying $700+ with you at any given time. My brother pays more than that in interest on his mortgage each month.

I gotta throw the BS flag on that one. I've had far too many experiences with co-workers not able to get a vehicle w/o a credit card. And $700 in intrest on a mortgage isn't uncommon in my area. Well, it is uncommon for it to be that low. [A single family fixer-upper around the burbs of DC will run you somwhere between 500K and 1 mil.] I just prefer not to carry that in cash around with me as a matter of safety. Mainly mine. There are far too many people that are willing to kill for a happy meal let alone a wad of cash.

Oh, and someone asked why you would need a mortgage? If you have 500K burning a hole in your pocket then I've got a bridge that I would like to sell you.

Now, back to the original posters stmt. I knew a guy at work who had let his credit approach his limit on a CitiBank card. They [CitiBank] properly applied the interest, but that put him over his credit limit so they applied an overlimit fee. He paid the minimum which included the fees, but the same thing happened over the next two months at which point he had three infractions in a row. His percentage rate immediately went to 24% on existing and new charges. Even if he paid it down and was a good customer the rate on the existing balance would remain at 24%. There's the real robbery that the credit companys get away with. And I can barely get 3% on a long term CD.

[Spliffdaddy]

I use a Visa debit card. So, no, you don't need a credit card for anything. You don't need credit for anything.

Every other commercial is trying to brainwash you into believing you need credit in order to survive. Apparently it's working.

Debt is slavery.

After I became debt-free, the feeling of freedom was amazing. Try it, you'll never go back.

No, I'm not interested in buying a $500,000 bridge. But, I could afford a house in DC. Not that I'd be dumb enough to invest in the overinflated housing market at the retail level. I'd be more likely to build *you* a house so you could spend the next 30 years paying for it - while I put $200,000 in my pocket.

[turtle777]

Originally Posted by Spliffdaddy

I use a Visa debit card. So, no, you don't need a credit card for anything. You don't need credit for anything.

Well, good for you.

Me, for my part, I take good credit w/o debt. It is possible, too.

-t