|Posted by Percy A Lowe on August 15, 2013 at 5:00 AM|
Who Cares? You should care since you fit the bill.
So far, you may be unimpressed. Who cares how each transaction is processed? You might not, but banks and retailers do. When you do an offline transaction and simply sign a charge slip, the retailer has to pay a small percentage of your total purchase – perhaps 2%. This fee goes to the bank that issued your debit or credit (card as an interchange fee).
What about online transactions? Retailers can get those done for a lot less. They might only pay 10 cents or so per transaction. Why would Retailers pay for my transaction fee? Have you even thought about that are you didn't know.
As you might imagine, 2% of every purchase adds up to a lot of money. The banks and credit card companies would love for you to choose credit because they get 2% of every dollar you spend. So, if the banks and credit card companies get 2% of all the debt card purchase fees. How much money would that add up to be? Remember you are also, using a pre-paid debt card with a visa or master card logo on it. Then you have a load fee and others fees. Have you just thought about sitting down and adding up all the money you pay out on fees. Retailers, on the other hand, beg to differ. They’d prefer that you choose debit so that they don’t have to pay a hefty interchange fee (but in some states they can add credit card surcharges that pass that fee back to you). There are ten states that doesn't use credit card surcharge fees. So, if ten states don't allow the retailer to charge you fees you need to ask yourself what is the retailer doing. Well I am glad that you are thinking they just mark the price up.
In order to maximize revenue, banks give you an incentive to choose credit (or a penalty for choosing debit, depending on how you look at it). They may charge you a fee for online transactions – usually in the ballpark of one to two dollars. Once you discover these fees, you’re more likely to choose credit next time. In addition, they may offer rewards (such as airline miles or entry into a sweepstakes) each time you choose credit.
Of course, somebody has to pay the 2% interchange fee. Some retailers don’t pass it on to you as a transaction cost, although in some states they are allowed to add a credit card surcharge. However, it has to come from somewhere – they have to build it into the price of the products and services you buy. So, all you debt card user who feel you have been alright not using a major credit card. Well you are getting the fees as a major credit card though. Now, let's change our thinking and get a secured credit card that reports to al three major credit bureau's. So, that now your monthly spending goes towards your credit score. So, the fees you are paying don't bother you know because you are using your money wisely. Now, you are getting a reward just like the banks, credit card companies, and retail stores. Your reward is a better credit score which means your credit character headed towards A paper client.
Categories: Building Credit Score