New legislation may mean an end to interchange fees, which cost the average family more than $400 a year.
NEW YORK (CNNMoney.com) — Swiping your credit card at the register may save you time, but it certainly won’t save you money. Thanks to hidden fees, credit card purchases are costing you more than you may know.
Whether you use a card or not, you’re probably paying more than $400 a year in “interchange fees,” which are factored into the prices of everything from gas to groceries.
Every time a credit card or debit card is used to pay for a transaction, merchants pay a “merchant discount fee” to the bank for processing the payment. That covers the cost of renting the credit card terminal, customer service and an interchange fee, which all adds up to about 2% per transaction.
The interchange fee is by far the biggest chunk of the merchant discount fee. But it goes largely undetected by consumers because it’s included in the advertised price of items and, merchants say, is too complicated to break out on individual receipts.
But credit card use has become so prevalent, it’s costing retailers a fortune in fees. So merchants pass on this cost to consumers by way of higher prices, which means that even shoppers who don’t use plastic end up paying more.
