Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Plastic Police: How Merchants Gouge Credit Card Users

By

Keep an eye out for these tricks.

PrintPRINT
It might not always feel like it, but paying for a purchase with a credit card can be more of a blessing than a curse.

Yes, credit card companies sometimes increase their interest rates to exorbitant heights with little notice. Yes, they hike fees and impose penalties, along with other sneaky tricks. Yes, credit card debt can decimate a person's finances. Still, when used wisely, credit cards protect consumers from fraud and provide a valuable link to extra cash when they need it.

Studies show that customers spend more money when they're allowed to pay with a credit card, so in theory, merchants should like credit cards, too, even though they have to pay a fee in order to accept them. That's why it's frustrating to go into a store and be made to feel like using your card is an inconvenience to the establishment.

Merchants employ lots of sneaky ploys to subtly discourage the use of credit cards, but some of these common behaviors are actually against the rules set forth in the merchants' contracts with Visa (V), MasterCard (MA), American Express (AXP), and the like.

The next time you pull out the plastic, be on the lookout for these tactics. They're not just shady moves -- they actually constitute a breach of contract.

Minimum Purchase Requirements


No establishment is allowed to require its customers to spend a certain amount of money simply for the privilege of using a credit card; if it does, it's breaking its contract with the credit card company.

MasterCard's contract states: "A merchant must not require, or indicate that it requires, a minimum or maximum transaction amount to accept a properly presented card."

When merchants try to impose a minimum purchase for credit cards, they're probably trying to either encourage cash sales or force customers to spend more money (or both). Sometimes businesses try to discourage customers from using credit cards just because of the amount of time that goes into processing a credit transaction.

If you're in a store that tries to enforce a minimum purchase for credit cards, calmly remind the cashier that it's a breach of the store's merchant agreement. If the merchant still won't budge, threaten to take your business elsewhere. Most places will give in and allow you to buy only what you need, because they'd rather have a credit card purchase than no purchase at all.

Credit Card Surcharge


I tended bar after college, and one place where I worked tacked on an extra fee whenever a customer paid with a credit card.

The owner wanted to recoup his merchant fees, which are, on average, 2% to 3% of each purchase. We told customers that we had to charge "sales tax" on credit cards, when in reality, those few extra bucks were simply to reimburse the owner for the money he paid to his bank and the card companies.

Most people saw our charge for what it was: an unauthorized fee that can get a business into very hot water with its bank.

According to American Express, "merchants must not impose any restrictions, conditions, disadvantages, or fees when the card is accepted that are not imposed equally on all other payment products."
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE