Credit Card Blog

More bad news about those high gas prices: they’re not just affecting drivers. Some gas station owners are refusing to take credit cards for fuel purchases. Why? As the price of gas keeps going up, so does the dollar amount that the stores must pay per credit card transaction. These interchange fees mean decreased profits, and some store owners have instituted ‘cash only’ policies.

Gas sellers typically mark up the price of gas by eleven or twelve cents per gallon. Rising interchange fees take away about ten cents per gallon. But stores that stop taking credit cards risk losing their business altogether.

These interchange fees affect other retailers as well, but many small convenience store operations are being hit hard. For example, Mr. Ed’s Chevron in St. Albans, WV, makes about sixty dollars in profit from its monthly gas sales. But after paying out a whopping $500 a month in interchange fees, the manager there has decided that it’s just not worth it to take credit cards.

“It kind of runs hot and cold, but I do know some stations have decided enough’s enough, and it’s cash only,” said Ed Stephens, VP of Englefield Oil Co., whose Duke and Duchess Shoppes are scattered throughout Ohio and West Virginia.

It looks like tough times ahead for gas station owners.

If you drive a large vehicle, you may have noticed yet another consequence of high gas prices: you can’t even fill up your tank when you pay at the pump with your credit card, because you’re not permitted to charge more than $75 in gas purchases.

Wait, what? Yes, it’s true. Many gas stations have instituted a $75 transaction limit for customers who pay at the pump with their credit cards. To pump more than $75 worth of gas, customers have to do a separate transaction or have their card swiped inside the store by a cashier.

Needless to say, many customers are angry about the transaction limits. But who’s really to blame? Card issuers insist that the merchants are the ones who choose to put such limits in place. Merchants point out that card issuers won’t reimburse them for more than $75 if a customer disputes a charge or uses a stolen card to pay for their gas purchase.

Regardless of where the guilt lies, it’s safe to blame the $4/gallon gas prices that have brought about situations like this one.

Have you ever been to a gas station that advertises two different prices per gallon of gas?  One price for cash purchases (listed in larger numbers and in a more eye catching place, of course!) and another, slightly higher price, for credit card purchases?

Is it legal to charge more for gas to people who pay using their credit card?

Sal Risalvato, the executive director of the New Jersey Gasoline C-Store Automotive Association in Springfield, is quoted in an article posted on DailyRecord.com, “they are not charging for credit. They are giving a discount for cash.”

The discount for paying with cash may only be a couple cents per gallon over paying with your credit card, but it’s becoming almost a necessity for gas stations to try and encourage more cash sales.  Gas stations average a profit of about 10 cents per gallon.  The fee the retailers pay for credit or debit card payments is 3% of the total sale.  If you purchase 15 gallons of gas at $3 per gallon with a credit card, the profit for the gas station is about $1.50 - until they pay the credit/debit card fee of $1.35.  Suddenly, their profit is all of 15 cents on your gas purchase!

These days, most consumers take credit card payments for granted. It’s just too convenient to pick up your purchases and pay for them with a quick swipe of your card. And with rising levels of competition among small businesses, merchants who decline credit card payments aren’t doing themselves any favors. Forcing shoppers to carry cash or write out checks will send them – and their money – elsewhere.

The Internet has increased the demand for credit card payments. Most online businesses accept credit and debit cards through PayPal or other payment processors. Businesses that don’t take plastic run the risk of looking unprofessional and losing their sales to others who employ more modern payment methods. And there are more online credit card processing services than ever. Their fees are competitive – a small price to pay to ramp up your business. And don’t forget that credit cards have better security features than checks.

But cyber-shops aren’t the only ones who need to take credit cards. It is frustrating to walk into a store and pick up items without realizing that the merchant doesn’t accept credit cards. If you’re not accustomed to carrying cash, it’s easier to just take your business to someone else. These days, credit cards are accepted in even the most remote and unlikely of places. If you’re a merchant who doesn’t take plastic, do yourself and your customers a favor. Find a credit card processor and make your transactions a breeze.

The fed’s lowered the interest rates- so taking out mortgages or refinancing existing mortgages would result in lower interest rates.  The rates have dropped 2.25% since September.

But what about credit cards?  Shouldn’t your credit card interest rates decrease, too?  Seems some of the popular credit cards actually have increased their rates.  Interesting.  Check your credit card interest rate- if it hasn’t decreased, call up and ask why and if they can lower your interest rate.  If they say no? Time to shop for a credit card with a better interest rate!

American Express and their Blue card had a rate decrease of .5% in October- but is now back to it’s 12.24% rate. Chase Freedom, from JP Morgan Chase went from 14.24% to 17.24% in January.

If you have the Citi Platinum Select card- you’re probably experiencing the rate decrease. Between September and January, the interest rate went from 10.24% to 8.49%. 

What are your credit cards charging you? Try to take advantage of the rate decreases by getting your current card rate lowered- or getting a new card to transfer your balance to.

A technique that some credit companies are using- whether intentional or not- is offering a promotional or introductory offer for new cardholders.  When you sign up for the credit card under the terms of the introductory offer, you expect to get that offer of course!

Keep an eye on plain white envelopes that might soon after be delivered to your mailbox.  Often, it will have a return address but no indication of who the envelope is coming from- and because it looks like a credit card offer many people just toss it in the trash.

The problem is, many of these plain white envelopes contain updates to your credit card terms and policies in the form of “changes to our agreement”.  The grace period may be shorter,  the late fee may increase, or an annual fee may be added or increased.  If you see these changes after you sign up for a credit card, it’s probably a good idea to keep looking for some better credit card offers.

Imagine that you’ve finally taken your dream vacation to Europe, only to find out that your credit cards cannot be accepted. That would certainly put a damper on things, and it’s actually happening to lots of Americans who travel overseas. Some countries have instituted a new card system that requires you to enter a PIN instead of signing a receipt after the transaction. Additionally, European cards carry a chip inside them that carries information. American cards don’t have this, and were designed for the “swipe and sign” system we use here at home. That means that American credit cards simply might not work at many European stores, and especially at self-serve machines.

If you’re an American going abroad, carry cash with you to avoid an unpleasant surprise at the last minute. And try to select stores that have an attendant on staff, rather than self-serve situations. The attendant can let you know whether or not your card can be accepted before you ring up gasoline or train ticket charges.

All of the three major credit card companies report that merchants who accept their cards must agree to accept “swipe and sign” cards, even if they have another system in place. Some merchants don’t know or don’t abide by this, though, so it’s best to be prepared when traveling.

Have you ever tried to make a small purchase using your credit card, only to find that the store owner had a minimum purchase rule in place? Many of us assume that such rules are legitimate, and so we buy things we possibly don’t need in order to meet the minimum purchase amount.

But according to Visa and MasterCard, such minimum charges aren’t allowed in their terms of business. Merchants who accept Visa and MasterCard are not permitted to set a minimum amount for which the card can be used as payment. Nor can they tack on fees for small purchases. American Express allows minimum purchase amounts, but insists that merchants impose those amounts on all the credit cards they accept. Since Visa and MasterCard won’t permit that, and since most merchants accept those cards, you can bet that most minimum purchase amounts are bogus.

The merchants who impose these rules often don’t know it’s not permitted; they are simply trying to recoup some of the fees they pay for credit card processing. Still, some consumers don’t like the rule. One irate customer even complained to Visa, who responded with a letter stating that the practice wasn’t allowed. He now shows the letter to any merchant who insists he make a minimum purchase to use his credit card.

Small businesses need to take credit card payments to survive. It’s estimated that 60% of consumers ages 18-25 use credit cards as their primary form of payment.

But small business owners quickly realize the high cost of taking plastic. Between the purchase itself and the final processing of the payment, fees can be charged by as many as twelve intermediaries. In fact, credit card payment processing is usually one of the top business expenses for small businesses. Bob Carr, CEO of Heartland Payment Systems Inc., is sympathetic. “Small merchants are eaten alive by all the middlemen,” he says.

How do the major credit card companies stack up? MasterCard has the most complex system, with 170 rates categories. Visa has about 100. American Express has fewer, but their per-transaction fees are higher. Discover has low fees and few rates categories.

It’s recommended that small business owners shop around for processors that offer the best terms possible; negotiate for better fees; request to see paperwork from similar businesses; and ask for references from local customers before choosing your processor. Many financial institutions offer credit card processing services, but they might not be the best deal. PayPal is a popular source if you do business online. You can also get card processing services through non-traditional sources, like Sam’s Club and Costco.

Have you ever been standing behind someone in a check out line who opens their wallet to get out their credit card to pay… and noticed a rolodex-style wallet containing what looks like a hundred different credit cards?

Are you that person?

How many credit cards is reasonable?  I guess it really depends on each individual, but the general recommendation is to carry somewhere between two and six different credit cards at the most, and they should be the top issuers- Visa, MasterCard, Discover or American Express. 

You should also have a goal to pay off your credit card statements in full each month, so keep that in mind when deciding how many cards you should have in your wallet.  If you know you have a tendency to carry a balance from one month to the next, look for cards with no or low interest rates, and you should be receiving some sort of rewards from using your credit card, whether it’s in the form of cash back or airline miles or something else- with all of the various rewards programs, there is no reason not to have one you can benefit from.

The more credit cards you have, the harder it is to remember when each of the payments come due.  it’s better to select two or three cards with great rates and a solid rewards program than to try and spread your purchases out among fifteen different cards and attempt to remember when each are due!