I was picking up a pizza this weekend and was perturbed by the sign stating “3% Extra for Credit Cards”. Not only is accepting credit cards a normal business practice and a convenience for customers, but for years, it was explicitly disallowed by the credit card companies. So, since I only had a ten on me, I gave them my card to see what would happen and as it turns out, yes, they did tack on 3% onto my bill. While this only equated to about a dollar for me, I had to investigate.
I promptly did some nifty searches and quickly realized that yes, this used to be a banned practice if you wanted to offer Visa, American Express, etc., but now, it is actually mandated that businesses be allowed to charge extra, as well as set minimum purchase requirements (usually a $10 minimum). As part of the Dodd-Frank Act in 2010, merchants were allowed to have latitude on both issues to do as they please. I used to be annoyed with gas stations claiming a “cash discount” which is really a credit card penalty, but I now realize what they’re doing is allowed as well (I do avoid those stations as well out of principle).
Evidently, the credit card companies weren’t pleased with this change, nor are consumers, but it’s a win for small stingy businesses that want to actually turn a profit on credit card transactions. Fortunately, you can offset these costs and still come out ahead on most credit card transactions with top cash back rewards cards, of which there are many. Compare across the best based on your spending via this cash back comparison table. You can get up to 5% back on several key categories. We save hundreds of dollars per year in tax-free income via cash back cards, so no reason not to take advantage of the benefits!