The True Cost of Using Credit Cards

Back in January of 2009, Steven Levitt (Freakanomics) wrote a blog post in the New York Times to report on a student’s website,

The article may have caused a brief ripple, newswise, but has clearly not done much to change Americans’ paying habits.

We ask you to reconsider. Americans spend $50,000,000,000 on credit card processing fees every year – three hundred and thirty dollars or so per household, twenty-eight dollars a month just on credit card processing fees.

This affects your local businesses, as credit card fees are one of their biggest line-item expenses, after rent and payroll. From the True Cost of Credit website:

The average local pizzeria (not a big chain) pays $11,213 each year in credit card processing fees (details) – enough for a new delivery vehicle.

Or enough to keep the lights on and the rent paid for a few extra months a year.

If you love your small neighborhood business – pay in cash. It will help them keep their doors open during these tough times.


2 responses to “The True Cost of Using Credit Cards

  1. Good point! I’m under the impression that debit card transactions with a PIN incur no fees (or at least lower ones) for the merchant. Any truth to that rumor?

  2. Slightly lower, AlanBob. The interchange fee schedule is different, but it still shaves a couple of points off from the retailer on each transaction.

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