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Credit Card Applications » News » Other » Credit Card Costs

Credit Card Costs

August 30, 2007
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A few thoughts on credit card applications and their costs

Visa has recently come up with a commercial to promote its credit cards. Essentially, the ad shows a smoothly operated business with a constantly moving line of people who use credit cards for payment. However, the neat process stops as soon as someone from the line takes out cash.

The idea behind this ad is simple - Visa is trying to market its products as a fast and convenient mean of payment. However, this convenience comes at a price. And if you thought that it's the merchants who end up paying more due to processing and transaction costs, then you were only 50% right.

However, it's not just the customers that are being targeted by this commercial. Credit card issuers are also trying to send a message highlighting that all sorts of businesses would prefer plastic over paper money. This is not quite true and mostly depends on the size of the business.

We can see how a huge business may end up paying more for carrying out operations with cash transactions rather than debit or credit cards. But on the other hand, small and medium size companies have no trouble dealing with cash or checks.

In fact, small companies lose on payments made with plastic. They are obliged to pay a commission on every transaction together with the processing, batch and statement fees. And when it comes to pricing the goods, it's the customers that get hurt the most.

First, there is often a minimum amount required for purchases made with debit or credit cards. This makes it inconvenient for people who are willing to purchase small items. Next, certain retailers are charging different prices depending on the method of payment for the same item.

The worst thing is that a lot of companies end up boosting prices to keep up with the increased costs. Therefore, when it comes to choosing between credit cards and other means of payment think twice. You might be paying a little more than the interest on your card.

Some experts argue that the processing cost incorporates costs of providing convenience of credit cards to the public. This does sound fair enough for us. However, credit card companies should not market their products as being superior or equal to cash.

Staying on the subject of credit card commercials, there is another thing to be noted. Think of all the rewards that are being aggressively marketed. There are tons of commercials promoting credit card applications with attractive reward programs. But what they are not telling you is where they get the funds to support such programs.

Well, it turns out that it's the cardholders themselves who get to pay for all sorts of bonuses that their card has to offer. To financially support reward programs, credit card companies increase transaction fees and rates for merchants, who in their turns have to increase prices of the goods and services they are selling to stay in the business.

Now that you know a little more on credit cards, we hope you can contribute to the ongoing fight against unfair practices by paying cash or writing a check here and there. We do not discourage credit card usage - they do prove to be useful in a lot of cases. However, you may find paper money to be more effective cost-wise in the long run.

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  • With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • deborahellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • deborahellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • disqus_kAtnCPlNM9
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • disqus_iTwLZvS3Xn
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