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Cost to use credit card will soon go up

More than seven million retailers and merchants nationwide are jumping for joy. If a judge approves the nearly $7.25 billion settlement and terms, Visa and MasterCard will have to refund fees to merchants for every single credit-card transaction.

As you may know, every time you use your credit card at a New Jersey store or gas pump or online retailer, that merchant must pay a fee to the credit card company for the privilege and convenience of using their card. Those fees come right out of the merchant’s profits. The surcharge can range anywhere from 1 to 5 percent of each transaction, and are usually higher for the smallest vendors. This lawsuit argued that those “swipe fees” were fixed among the credit card companies and large banks.

In addition, more customers have increasingly paid with plastic than with checks or cash since 2003. Meaning, those credit card surcharges have consistently taken an increasingly bigger bite out of merchant’s bottom line each year.

What’s more, the credit card companies would not allow merchants to pass along the fees to the customers and consumers, because the big banks feared it would dissuade shoppers from using plastic to pay. This legal settlement will give store owners the opportunity to do just that.

What does this lawsuit mean for those suffering from credit card debt? It means that you will soon be paying more for your purchases if you use plastic instead of cash. The convenience surcharge or “swipe fees” will be passed along to you, the customer, and your credit card balance will grow at a larger rate than it already is.

Start learning to pay for your purchases with cash, check or a debit card. You will reach your debt relief goal quicker without digging a deeper hole.

Source: The Wall Street Journal, “CONSUMER FINANCE: Credit-Card Pact Is No Deal for Consumers,” Jennifer Waters, July 18, 2012

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