It may pay off to put away the plastic
A credit card reform bill making its way through Congress could pay off for consumers who buy with cash instead of plastic. Stacey Vanek-Smith reports.
A customer prepares to spend her money. (Joe Raedle/Getty Images)
TEXT OF STORY
STEVE CHIOTAKIS: Lots of consumers take hits with their credit cards. The U.S. Senate takes up a reform package again today. And a lot of changes are on the table there. Here's Marketplace's Stacey Vanek-Smith.
STACEY VANEK-SMITH: At the grocery store near my office, you have to spend at least $5 to pay with a credit or debit card. That's because merchants pay the bank a fee every time you use plastic. It's usually about 2 percent of your purchase. A lot of stores just build that cost into prices. So you pay it, even if you use cash. Craig Shearman is with the National Retail Federation.
CRAIG SHEARMAN: Retailers have always wanted to discount for customers who pay cash, but Visa and Mastercard rules make it virtually impossible to do that.
An amendment to the credit card reform bill now making its way through Congress would let retailers give discounts for cash. Trish Wexler is with the Electronic Payments Coalition. It represents banks and credit card companies.
TRISH WEXLER: This amendment would remove all sort of enforcement about how merchants advertise their cash discount.
Wexler says retailers could advertise the cash price, and then hit shoppers using credit cards with a higher price at the register. Shoppers pay about $48 billion a year in interchange fees.
I'm Stacey Vanek-Smith for Marketplace.
Comments
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From houston, TX, 05/19/2009
I like using cash, it helps me realize how quickly the money disappears.
However, what happens when gangs start staking out walmart/grocery stores knowing people are toting large amounts of cash, trying to get the discount?
I noticed no mention of Debt cards was mentioned. How are they going to be handled?
Shell is already trying to "protect me" by not accepting my credit card at the pump (saves me nothing, only them in case of fraud)
I'm sure business will suddenly inflate the credit cost (so they don't get called to task for mischarges or defective merchandise, etc (a nice check/balance for consumers)(the ability to have the retailer's payment stopped is a great way to make them actually deliver what was promised) in order necessitate cash, which is dangerous for the consumer to carry around, and hard for the consumer to get back when retailers can change return policies at will...
From Austin, TX, 05/15/2009
I didn't know Visa rules made cash discounts difficult! Good reporting.
And Here's an even bigger story: what you own Senators just did to your own interest rates:
http://findingourdream.blogspot.com/2009/05/check-to-see-how-your-senators-voted-on.html
From VA, 05/15/2009
Its not about being illegal. Its about going against the agreements signed with the credit card issuers. Merchants pay as high as 4% of your total purchase for the privilege of accepting your credit card for payment. The card issuers impose draconian limitations on what merchants can do regarding discounts, advertising and many other things. You risk losing your ability to accept credit cards if you go against any of their imposed regulations. This legislation would simply give merchants back some of their ability to run their businesses as they see fit. Most card holders have no idea what power the credit card issuers hold over the marketplace.
05/15/2009
I'm not sure I like this. I use credit for everything so that I can track my expenses every month and not carry cash which goes fast. I always report retailers that illegally charge a fee for credit card purchases. And I think it is stupid of retailers to charge for credit use because you actually buy more with a credit card if you are short on money. Many many times I have left a convenience store or a gas station without buying anything just because they would charge me for credit and I did not have any cash with me. I think you should be able to pay for your things with whatever you like and not pay extra for that. If the do that then I will stop going two times per week to my favorite indian restaurant and will budget all my expeenses so if I have to use cash I will be extremely limited to my purchasing power. And there it goes the economy!
From Westlake Village, CA, 05/15/2009
Retailers already do what you way they "could" do.....fast food restaurants, gas stations and others....
Are you suggesting that the merchants that are currently conducting these practices are doing it illegally? Should I notify the attorney general?
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