Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
In case you missed it, Visa and MasterCard settled a major lawsuit last week and have agreed to pay various retailers a total of $6B, temporarily reduce interchange fees (to the tune of ca. $1.2B), and allow merchants to tack on credit card surcharges.
So what does this mean for you? Well, unless you live in a state where surcharges have been deemed illegal*, it could start costing you more to use your credit card. Then again, if you don’t use a credit card, you could see some savings as the costs to use a credit card are currently built into product prices.
As part of the agreement, merchants will only be allowed to assess a fee equal to what they pay to accept credit cards and they won’t be able to tack on the fee for debit card transactions. They will also have to disclose the fee at the point of entry, at the point of sale, and on the receipt.
For their part, American Express and Discover have never expressly forbidden such fees. Rather, they’ve specified that merchants can’t treat their cards any differently than those of other issuers. By extension, then, the Visa and MasterCard rules have applied to both Amex and Discover.
It’ll be interesting to see how this develops. Will merchants start competing on whether or not they have additional credit card checkout fees? Will more states act to ban credit card surcharges? Or will those that have banned them drop their objections? And will we see a shift away from credit card usage in favor of other forms of payments.
Only time will tell, but I’d be shocked if we see a wholesale movement away from credit cards. Sadly, many people are just too dependent on them to make a clean break. It will also be interesting to see what, if any, impact this has on credit card reward programs as these fees will effectively offset the points, miles, or cash back that you’re currently earning.
What do you think? Is this ruling good or bad news? If you’re a credit card user, will these fees change the way you pay? And do you foresee any unintended consequences?
Note: States that don’t allow credit card surcharges or checkout fees include: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas.