Big Business Leads the Drive for Lower Credit Card Fees

by : James Marshall

Big Business Leads the Drive for Lower Credit Card Fees

There are a lot of mixed messages floating around about credit cards. We know that they're a vital part of building and improving credit, but it's hard to tell exactly what you're paying in monthly fees and late penalties. It seems so complicated! Fortunately, credit card companies are beginning to lift the veil of secrecy so that it's easier than ever to see exactly what you're paying and when.

Why the Change of Heart?

Thanks are due to two unlikely sources: Wall Street and retailers. MasterCard just became a publicly traded stock in May, and Visa is going to follow suit next year. This is great for cardholders everywhere, because Wall Street bigwigs want to see the raw data before they invest money in a company. There have long been rumors that credit card companies work together to gouge consumers with excessive fees. No investor would want to put money into a company that could go the way of Enron. Lawsuits, scandals, and shifty business all add up to lost money for the stockholders, so in order to make their stocks attractive to investors, credit card companies are bending over backwards to show that they are on the up-and-up. This doesn't only help Wall Street investors, it helps all cardholders see exactly how much they are paying and when they are paying it.

The other group that is responsible for this increased disclosure is the merchants who take credit cards. If a cardholder is unhappy with his service, he can always switch to another plan, or even another provider. However, retailers who choose not to take credit cards end up losing business to competitors who will. They've decided not to take it anymore, and who can blame them? Merchants typically pay one or two percent of each purchase to the card companies. There are about eighty types of fees that merchants have to pay, depending on how a card is swiped, whether they take a signature, how often each card is used, and much more. Now that retailers are learning how much they are being charged, they can put pressure on the card companies to give them better deals - and a better deal for them means a better deal for you!

The Benefits For the Cardholder

So it's easy to see why investors and retailers want to see the details of credit card companies' fees. But how does it help the average person with a Visa or Mastercard in their wallet? The first way is that comparison shopping is now easier than ever. In the past, most people based their decisions on interest rate alone. However, that card with the lower rate could be sticking you with excessive late fees, or even raising your rate each time you're late - without even informing you!

As cardholders become more informed and comparison shop for the best deal, companies will undoubtedly lower their fees and rates, especially those tricky "hidden" ones. The competition will encourage the card companies to try to win business, rather than just taking it for granted. Having a credit card is vital in today's society, but it's been a daunting prospect for some consumers. Soon there will be no excuse for living without a credit card, and we'll have "Big Business" to thank it!

Stay safe.