Share   
Consolidated Credit
Is the Department of Justice Trying to Save You Money?
Thursday, October 7th, 2010

By April Lewis-Parks

Here’s the real skinny… Most shopper know that stores pay fees to Visa and MasterCard every time you pay for something using a credit or debit card. These interchange fees usually are between 1 to 3 percent of your total bill each time you use the card. The justice department has sued American Express over allegations of anti-competitive policies, after reaching a settlement offer about the same issues with Visa and MasterCard. The card industry as a whole collects $35 billion a year from these fees, which are passed on to you in the form of higher prices. Of all three companies, American Express charges the highest fees.

One of the biggest problems seem to be that the credit card companies mentioned above prohibit merchants from encouraging shoppers to use lower-cost payment methods when making purchases, aka cash and debit cards.

The retailers are not allowed to offer discounts or other incentives to encourage you to pay in ways that cost the merchant less to process. The settlement with Visa and MasterCard, which still requires court approval, will allow merchants to offer you discounts or rebates for using less expensive forms of payment, including credit cards without reward programs, debit cards and cash. Merchants may also disclose the cost they incur by accepting one card over another, and can promote a particular credit-card network.

This settlement allows merchants to:

  • Let you know what form of payment they prefer.
  • Offer a discount or rebate when checking out if you use a particular credit card or other form of payment – meaning you get to buy the item for less!
  • Promote a particular credit card or other form of payment through posted information or other communications.

The settlement allows retailers who only accept Visa and MasterCard to take advantage of the above actions immediately, but if the merchant also offers American Express they cannot offer the rebates, cash discounts, or other benefits of the settlement.

American Express is only used by a fraction of Americans as compared to Visa and MasterCard; they are crying foul because retailers may dissuade customers from using their card.

What are your thoughts?

Are you a die-hard Amex fan and have concerns that the terms of the settlement will hurt you because you won’t get the discounts and special offers? Do you think retailers should be allowed to offer discounts for using a certain credit card, debit card or CASH (which is what I recommend using!)?

Let me know your take on this situation.  

About the Author

The following blog post is from April Lewis-Parks, the director of education for Consolidated Credit Counseling Services, Inc. She is a certified credit counselor and a consumer affairs advocate who is dedicated to generating awareness about personal finance issues. She is on the education advisory committee of the JumpStart Coalition, which is dedicated to furthering financial literacy for the youth and she is active in the South Florida chapter of Junior Achievement which promotes entrepreneurship and financial literacy through hands-on programs.

Share   

4 Comments
  1. Helpful blog, bookmarked the website with hopes to read more!

  2. Thanks roclafamilia! I hope you will be able to check back often!

  3. This formal post assited me very much! Bookmarked the site, extremely excellent topics everywhere that I see here! I really appreciate the info, thanks.

  4. This was a wonderful read loved all the information on it !…

Leave a Reply

By clicking "Submit" below, I affirm that I have read and agree to the MissMoneyBee.com Privacy Policy, Terms of Use, and Community Rules. I specifically agree that all information, suggestions, ideas, or other materials I provide are freely usable and transferable by MissMoneyBee.com without compensation, and become the property of MissMoneyBee.com and all of its affiliates upon my submission. I also agree that I will not upload anything owned by anyone else, nor will I upload images of (or personal information about) anyone else without their permission.