Changing My Credit Card Strategy

Changing My Credit Card Strategy

So today marks the day where the ban on merchants charging consumers a credit card surcharge fee has been lifted in 40 states, including mine. What this means is that merchants can now add an up to 4% surcharge on all purchases made with a Visa or Mastercard.

My credit card strategy is outlined here. Basically talk about how I use my credit card for everything. It is unclear to me whether or not AMEX is affected by the lifting on the ban, but early reports seem to suggest that the surcharge may not apply to AMEX.  I currently use my AMEX for almost everything unless I’m getting a preferred quarterly cash back through my Chase Visa card.

Most news outlets have reported that many large retailers (Walmart, Target) won’t bother with the surcharge, but many smaller outfits may entertain the idea. The only caveat to the surcharge is that the retailer has to let the consumer know (verbally or via display) that they issue a surcharge on credit card transactions.

So the only change I’m making is that if I’m in a store that does not accept AMEX and does charge a surcharge over and above the cash back reward that I earn on my Chase Visa card, I will be using cash.

In my humble opinion, I don’t believe there ever should have been a legislative ban in the first place. If a retailer needs to charge more for a credit card transaction to make up the cost of the fee, they should have been allowed to do so and let the consumer decide how they want to purchase their items. If the original ban was not via legislation, but via contract between the credit card company and the merchant, then the ban should continue to stay as per the contract.

I’m still trying to understand the background to this, so if you have any information, leave it in comments!

About The Author

Edwin is a marketer, social media influencer and head writer here at I Am 1 Percent. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.


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16 Comments

  1. Shape

    I am also quite unsure why there was a legislative ban on this issue to begin with. It seems like a waste of our legislator’s time, but that’s what they are good at!

    If I see a surcharge added, then I definitely will not use a credit card at that store. Actually, I will probably not shop there anymore as I much prefer using credit cards over cash/debit for security, expense tracking, and rewards.

    In fact, I really don’t like debit as I like to limit access to my checking accounts. I know people who have had debit cards stolen and it creates a big hassle. Having a credit card or credit card number stolen is minimally invasive in your life vs having your checking account drained and fighting the bank to get the money back.

    What AMEX card do you have? I have all the other credit cards (master, two visa, discover) and am considering the AMEX Blue Cash Preferred. I have been looking for the amex sign at all the store I go to regularly and its there. 6% back on gas, 3% on grocery, 3% at department store, and 1% on everything else seems to fit my life well. Even with the yearly fee I will get more than my current selection of cash back cards.

    Reply
    1. iam1percent

      I have the Blue Cash as well as the AMEX Fidelity Card. I use the blue cash for groceries and department stores and get 6% and 3% back respectively. The AMEX fidelity offers 2% back on anything so I use this card for everything else unless a store doesn’t accept AMEX. Hope this helps!

      Reply
  2. Shape

    I didn’t know that about the Fidelity card, but I would have to see about getting a Fidelity account to use it.

    I am pretty sure I will be going with the Blue Cash Preferred.

    Reply
  3. J

    The fact that fees may now be charged wasn’t the result of legislation, it was the result of a lawsuit settlement.

    That the fees are not allowed to be charged in 10 states despite the settlement IS a result of legislation in those states.

    Seems many financial blogs are getting this wrong today in their haste to discuss what individual consumers should do about the fees – accept the fee or use cash … interestingly, I don’t see anyone considering another solution – refuse to frequent merchants who charge the fee!

    Reply
  4. Mrs. Pop @ Planting Our Pennies

    It’s my understanding that it’s not a matter of large retailers not “bothering” with the surcharge and more a matter that if they have locations in any of the 10 states that do not allow price discrimination they are not allowed to charge the fees across the entire chain. (At least that’s what I was told.)

    This is yet another instance in which I am glad to live in FL.

    Reply
    1. Brian

      That is what I understand to be the case. There is also some some wording in an AMEX agreement that AMEX cannot be treated different from other accepted forms of payment (so say it is more along the lines of AMEX cannot be treated worse) so if a store accepts AMEX it cannot add the fee either.

      In the end I image most places won’t add a surcharge for fear of losing business. There is too much competition for your money and someone would be willing to eat the fee to get more business.

      Reply
      1. iam1percent

        I agree….most large retailers won’t have to. I image some small retailers may try for a while to see how it affects business.

        Reply
    2. iam1percent

      yeah, legally I don’t know if 1 state can dictate prices on another state. So I don’t think that the state of FL can tell a Walmart in FLthat they cannot charge credit card surcharge fees in NJ. I still think its up to the individual company to decide what to charge by state.

      Reply
  5. Joe Morgan

    I’m also changing my credit card usage accordingly, however if I see a merchant charging extra for credit, I will shop elsewhere. 🙂

    Reply
    1. iam1percent

      Yes, I guess you could shop somewhere else or just pay in cash….but obviously shopping somewhere else makes a stronger point.

      Reply
  6. KK @ Student Debt Survivor

    The only card I use consistently is my Amex blue. But I use it for everything. If I were charged a fee, or the retailer doesn’t accept Amex I’d just use cash.

    Reply
    1. iam1percent

      If its the same AMEX blue that I have, we get 6% back on groceries so if a grocery store imposed a 4% surcharge, I’d either find another grocery store, or just pay the fee since the cash back is 6%, I’m still making 2%.

      Reply
  7. Wayne @ Young Family Finance

    While I’d hate to have to resort to cash, it’s a no brainer in this situation. I’ll definitely go back to cash if needed. However, I wouldn’t be surprised if credit card companies learn a way to innovate around the agreement.

    Reply
  8. HappyFund

    Thankfully, this will not come into effect in Texas, so this doesn’t really affect me for purchases in state. I am curious how this will play out in the online market. Will it be like sales tax where the rules do or don’t apply depending on whether they have B&M stores in that state?

    In the end, if they charge me a fee, I’ll just spend elsewhere. When Amazon started charging sales tax here, they became less competitive with local B&M stores, so my spending at Amazon has plummeted.

    Reply
  9. Gaylord Twitchell

    very good strategy, I hope you’ll be more specific on your everyday use of your credit cards 🙂

    Reply

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