Posted on 07/17/2007 12:23:53 PM PDT by outfield
Did you ever wonder who pays for all the credit card junk mail that's been burying you lately? According to new advertisements appearing this week, all Americans do, thanks to credit card fees that you have probably never even heard of.
The advertisements, placed by the Merchants Payments Coalition, a group of merchant trade associations seeking a more competitive and transparent credit card fee system, show how the big credit card companies use some of the billions they collect from the credit card "interchange" fee to pay for marketing campaigns, including a mountain of more than nine billion unsolicited credit card offers that bury our mailboxes every year.
(Excerpt) Read more at unfaircreditcardfees.com ...
Apparently the House Judiciary Committee's Antitrust Task Force is holding a hearing on interchange fees on the 19th. I've posted about this issue before as it's one that truly bothers me.
As a refresher for those not familiar with interchange (from the release)
The credit card interchange fee is a percentage of each transaction that Visa and MasterCard banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of card, size of merchant, and other factors, but averages close to two percent, or about $2 for a $100 purchase. Visa and MasterCard banks collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001.
We all love taxes, particularly ones charged on other taxes. Yes, interchange fees are charged on the cost of a product as well as applicable sales tax. So not only is does interchange pay for all those wonderful pre-approved offers it's a tax on a tax. I'm glad to see this being addressed.
I probably should get one, but I no longer have any credit cards.
Junk mail from credit card companies? Nahhh, wouldn’t happen.
How can this be? I’m “Pre Approved”!
My small bit of revenge is to mail back those empty self-addressed envelopes.
As a person who go in over thier head with credit cards and now is paying for it, I think all credit card offers must be sent for by the person who wants it.
with all my credit card probelsm and debt incurred, I still get credit card offers in the mail. This is insane/ And now everytime you get a offer, it is a chance that someone could use it to gte a illegal card and steal your ID.
They credit card companies tell people to use common sense, what about the companies show a little more and not offer cards to high risk people. Nahhhhhhh
Mine too.
Does that seem to work? I have opted out of pre-approved offers, but that hasn’t completely stopped them from coming.
Isn’t that just typical that every time you buy something you are paying to receive junk mail. Interchange is great invention for the card companies but a rip off for the everyone else, merchants and consumers alike.
Key to that strategy is to manage to pack as much crap as possible within the envelope. Utilizing a shredder, and tightly stuffing the ‘lope with the resultant junk mail shards, I’ve managed to get one over 6 ounces...
Better yet, put a few bricks in a box and tape the business-reply envelope to the outside.
Don’t you love the “fine print?” Yes I’ve heard people cry personal responsibility, but the card companies sure do everything in their power to suck you in, from the pre-approved offers to raising limits without a request. Plus, they don’t exactly practice full-disclosure whether its raising rates at will or not telling us how much fees like interchange add to the price of something.
Another funny lie from the CC companies. I sent one in for a card and was denied. Why, because I already had a card with that company. I wasn't really pre-approved for a new card!
Not me I do not have credit cards.
I have a visa which pays me 1% rebate for all purchases and 5% for all gas purchases. You need one if you want to rent a car. Also, if you go overseas, American Express is great to have. They have offices in every major city and provide a lot of benefits like finding you a doctor or a lawyer if you need one, or tickets for just about anything.
It’s not a tax, since it comes from a private business, not the government. It’s essentially the service fee charged by the credit clearinghouse. Since the fee is based on the total loan amount, it naturally is charged on the tax as well, since that is part of the loan you are taking.
And the article’s premise that some of the revenue collected by a business is used by that business in its advertising is hardly earth-shaking news. Everyone advertises to some degree. That advertising budget has to be paid for. What pays for the budget? Revenues.
You buy a can of Coke, you’re paying, in part, for Coke ads. Ditto for a loaf of bread or a video game. Why should a signature loan be any different?
My favorite is “convenience checks” sent by current credit lenders who just don’t think the balance is high enough. Just got some the other day that suggested I “take a tropical vacation!” or “buy a new computer!” or “upgrade your kitchen!” or “put a down payment on a new car!” My husband said it should just say “go into debt!” Or “get stuff you can’t afford!”
Never mail them back empty—fill them with all your junk mail—but remember to cut out any reference to yourself or your address. I pack them tight.
The difference is Coke doesn’t send out junk mail? Advertising is one thing, junk mail is another.
I realize this isn’t earth shattering news, just funny that every time anyone buys anything, gum, a coke, etc., they are paying to receive pre-approved card offers. Since, according to the ad, interchange has risen 117% since 2001 and totals around $36 billion a year . . . that’s a lot of mail.
I realize it’s not literally a tax since a private company is charging it but I still don’t like the fact that I’m paying this processing fee on sales tax.
Yep. Also if you intend to spend any time in a motel. Other instances too, I’m sure.
They don’t mind if you PAY in cash – but you need the card on file until you return the rental or check out. That’s been my experience.
Yes, but sometimes, these can be a good thing. Some credit card companies will send you these checks and try and entice you with low introductory balances, like say, 0% for the first year. Take one of these checks, write it out to yourself for the max on the credit card, stick the proceeds in a high-yield Internet savings account, then withdraw the money and pay off the credit card before the rate goes up. At the end of the year, you'll have $500--or more--for your trouble.
Have to read the fine print, though--some of the checks won't let you make it out to cash, or else it will charge you interest on checks made out to cash.
I just got hosed in the divorce paying them off when my ex racked up so much debt on hte htings. i have the fiscal isciline required, but the wounds from paying nearly a half year salary in friggin credit card bills till hurts.
Even when I did have them paid off and thought I had them closed, i got whacked with hundreds in late fees because of when the interest was applied, etc. CC companies are just so sleazy in o many ways.
I toldmy GF if I ever had enough money, I was going to start a credit card company, and basically make money for nothing. it’s amazing the crap they can pull and ge away with it.
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