What You Need to Know About What Credit Card Swipe Fees are Doing to Your Wallet?
Credit card swipe fees are a major cost for consumers many don’t know about, costing you hundreds more than anticipated. It’s gotten so bad that many are looking for the best online personal loans to help to reduce the hit their budgets have taken thanks to these hidden fees. Here is what you need to know about these fees and how they affect your wallet.
What are swipe fees?
Swipe fees are a fee charged by banks when a consumer swipes their card using a POS (Point of Sale) terminal. These fees can be as high as 2% of the total amount transferred and vary based on the credit card company. American Express typically charges the highest rate in swipe fees, while Visa and Mastercard are usually the lowest.
Why do swipe fees exist?
The main reason banks charge swipe fees is to cover the cost of processing the transaction. This includes the bank’s costs (Chase-issued Visa cards, for example) and those of the credit card company (Visa, in this case). To compete, each card company has set rates that it believes are reasonable and necessary to cover expenses incurred to help you buy the things you want by using your credit card.
In addition, many of those fees go toward the membership perks of owning the card. American Express, for example, offers premier perks such as airport lounge access and complimentary top-tier membership levels to partnering hotels, airlines, and cruises. These perks cost money, so Amex partially subsidizes these through swipe fees charged to merchants.
How do swipe fees affect me?
You’ll rarely see these fees on your receipt since retailers are charged the fee directly instead of the consumer. However, that doesn’t mean you’re still not paying those fees; many retailers simply add the charges they pay to the final product or service cost.
Significant swipe fee hikes in recent years have had a major impact on consumers’ wallets. A study by CompareCards found that the average American household pays $103 per year in swipe fees, totaling $24 billion annually.
What can I do to reduce the costs caused by swipe fees?
The good news is that there are ways to reduce your exposure to swipe fees.
● Use a debit card if possible since they don’t typically have swipe fees.
● Compare rates before making a purchase to avoid paying high swipe fees.
● Use cash instead of plastic when possible to avoid paying those pesky swipe fees. Many vendors will offer cash buyers a discount, so ask first before purchasing.
● Monitor your bank account regularly to ensure you’re not spending more than you can afford to pay in swipe fees.
● Try shopping in person instead of online. Online retailers don’t have the ability to offer cash discounts, while many brick-and-mortar stores do.
Credit cards without swipe fees can help you save money on expenses and keep more of what you earn. Make sure to research available offers to get the best deal for your needs.
Swipe fees might be hurting your wallet, but there are things you can do to avoid paying more than you should. By following the tips in this article, you can save hundreds of dollars on your next shopping trip.