Willy Wonka wrote:
Merchant fees are 3-6% across all card issuers. Only very large retailers have fees less than 3%.
Sorry, but you are wrong. We are NOT a "very large retailer", and our fees are all between 1.5-3% (and debit is a flat fee). I would actually expect big box store to have fees between 1-2%.
dukerdog wrote:
But when AE worked that way they charged merchants a good bit more than Mastercard or Visa. I don't know if they still do.
Willy Wonka wrote:
Your source?
Back when AE worked that way I was told by a couple merchants that AE charged more, and that's why they didn't accept it. I'm not sure why they wouldn't accept it if it didn't cost them any more than MC and Visa.
Credit card use is borrowing and usually involves a finance charge. Charge cards typically do not have a finance charge or fees when bills are paid on time. Both are designed for convenience and short term (less than 30 days) borrowing, although as others point out, many consumers treat them as loans or try to justify the borrowing based on "teaser rates" or "rewards" which make them feel better about the actual long term cost of not paying the balance each month or budgeting correctly.
That said, for most adults, debit, charge or credit cards are a necessary convenience. Consider:
1. You cannot rent a car without one, other things like purchasing plane or concert tickets or making on-line purchases without one, are difficult.
2. Some people have very cyclical incomes or commissions which makes it difficult to budget certain seasonal expenses without them.
3. They are generally required for business travelers.
4. Any responsible adult should carry one for emergencies.
5. They often carry free conveniences like insurance, and in some extreme cases, like for business owners, college tuition payers, etc., can give you tons of free mileage on airlines which is actually valuable.
Bank Loans come in many secured and unsecured forms and have a cost which can be anywhere from below the prime interest rate (generally home equity lines of credit) to far above the prime rate for sub-prime personal loans. The best forms of these are properly structured Home Equity Loans and Lines (interest is usually tax deductable and generally good rates). However, these are also, very often abused.
The following forms of borrowing can be extremely useful, but are the most often abused:
-Excessive credit card use
-Using checking account overdraft protection as a line
-Imprudent use of margin lending accounts (not a bank loan)
-Borrowing from retirement accounts
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