Ah….Valentine’s Day….A day of love, a day of romance – and a day to add to your already large credit card balance in order to impress that special someone? It’s the American way. According to experts, Americans will spend approximately $16.9 billion on Valentine’s Day gifts this year alone, and about half of these gifts are bought with a credit card.
And since approximately 60% of United States consumers carry a card balance on their credit cards, much of this is likely to remain on their cards for an extended period and cost even more after finance charges are added.
This isn’t the only way the credit card companies are making out on this special day of love, however. In fact, as I’ve mentioned repeatedly in previous posts, card issuers bread and butter actually comes from the merchants who pay the credit card company a fee for every purchase that you make. Merchants have to pay a fee that is referred to as an interchange fee. It’s akin to merchants having to pay a toll for using the transaction exchange. This fee, which is based on a percentage of the credit purchase amount, will vary according to the merchant and the type of purchase. On average, however, these fees are roughly 2% of your purchase price. These interchange fees are essentially passed down from the card issuer to the merchant and to you as a consumer.
Of course, you don’t see these costs. They are actually buried in the cost of the item you purchase. In addition, merchants are not allowed to tell you the cost of these fees that are being passed on to you. But, believe me, you are bearing the burden of these fees. According to data collected in 2005, credit card companies make $30.7 billion from interchange fees alone and the average family pays more than $300 per year in these interchange fees.
One less thing to give you that warm and fuzzy feeling on Valentine’s Day.
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