Why Using Credit Could Cost You More, But Likely Won’t

A new court ruling makes it possible for merchants to charge customers more money if the customers pay by credit card, reports Time magazine.

The decision allows merchants to pass along the cost of a seldom-talked-about phenomenon called the “interchange fee.” That’s the amount credit card companies charge businesses to process the transactions. It’s normally somewhere in the 2-3% range of the total amount charged.

Yes, those craft credit card companies are masters of making money, burning the candle at both ends as they charge the shopper in interest and the merchant in fees.

Beginning today, a merchant may charge its customers up to four percent to recoup the fees it has to pay the credit card companies. It’s worth noting that the decision is facing appeal, so the fight isn’t over, yet.

Bad idea? Definitely.

Who’s going to do business with a company that charges customers more to pay by credit card, particularly in a society where credit and debit cards are so prevalent? The answer, as far as I’m concerned, is no place I’d be willing to do business with.

One answer, the article suggests, would be to use your credit card as a debit. The problem with that idea is that most banks now charge a debit fee for doing so, and you could potentially face a different set of buyer protection rules by not allowing the seller to process the sale as credit.

The article points out what ought to be a relief to most shoppers: even credit card companies are warning merchants that research shows customers aren’t willing to embrace such surcharges. One possible result would be that people would simply not use credit cards if it’s a good or service they really want; unfortunately, research also shows that customers likely spend more when using credit because they know they can, even if they also know they shouldn’t.

Any business that’s willing to ignore all that to dodge what has long been simply a cost of doing business deserves what it will likely get.

The only way I can see it working is if stores did it the way gas stations do: they keep prices the same, but give a slight discount for people paying by cash. The discount might be enough to get more people to pay by cash, but even then, stores would end up losing money because people wouldn’t spend as much knowing they’d have to stick to the budget of whatever cash they have on their person.

Your Turn
Would you pay up to 4% more to use your credit card at businesses? Are there any goods and services you’d actually be willing to pay more for just to be able to use your credit card?


  1. I would not. I can see them doing this on services etc, but how would it work on product at a store. Would they have two different prices listed on a product? One with credit card/ one without? lol I only use one card now and it’s just to get the money back on it. We pay it off each month. So if that is not an advantage, we’d stop using it anyway

  2. No, no way! I felt the same as you when I discussed it with my Fiance. No business in their right mind would do this unless they really want me to pay by check. I hate to be that person in the checkout lane, but I totally would be. There are other ways for businesses to recoup the 4% (hide it in the price) so it just not good business or good customer service.

    1. Michelle_Mazur I think “hiding it in the price” is going to be the way most businesses have always done it. Of course, that’s unfair to customers who pay by cash, but from the customer’s standpoint, at least it’s simpler to understand rather than having to juggle multiple prices on every item depending on how you wish to pay.

  3. Nope!  I wouldn’t pay that to use my credit card. No way!  I’d pay cash or use my debit card.
    I’m surprised to hear that banks charge for debit card transactions.  My bank doesn’t do that. (or… do you mean they charge you something if you use your credit card as a debit card?)  It might simply have to do with the fact that I use a small locally-owned bank that hasn’t signed on for most of the ridiculous fees I hear about now days.

    1. Cathryn (aka Strange) No, it’s that if you use your debit card AS a debit rather than credit, some banks charge you the same fee they charge for doing an ATM transaction at some other bank’s ATM rather than one of their own. I don’t know that all banks charge such a fee, but some definitely do.

      1. patricksplace Cathryn (aka Strange) Oh, alright.  No.  My bank doesn’t charge that fee. (and hopefully never does!  I’ll go back to using cash if that happens!)

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Patrick is a Christian with more than 28 years experience in professional writing, producing and marketing. His professional background also includes social media, reporting for broadcast television and the web, directing, videography and photography. He enjoys getting to know people over coffee and spending time with his dog.