New Credit Card Fee Law Reaffirms Cash is King

January 29, 2013

If you live in one of the 40 states affected by the new credit card law allowing stores to charge you a “checkout fee”, you may want to rethink that purchase on plastic and swap it for cash. As of January 27th, retailers are now allowed the option to charge back the credit card swipe fees to consumers. That’s an additional 1.5-3% of each transaction—the result of a lawsuit settlement last summer against MasterCard, Visa and some financial institutions, which made it possible for merchants to impose such fees. This does not affect debit card purchases.


 What’s this mean?


You might want to consider the benefits of using your credit card. Do the rewards or loyalty points outweigh the new fees? If not, cash could be your new best friend. Retailers are even permitted to offer discounts to consumers paying with alternate methods.


Retailers are required to disclose any imposed checkout fees, as these vary from card to card. But you’ll have to consider this added fee, in addition to taxes, before walking up to the register.


The ten unaffected states (those who restrict surcharge fees) include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Paying with cash has long been a bartering chip. Now, consumers may find the ability to barter with an even wider selection of merchants and retailers—those who were previously unwilling. The key takeaway here is to use cash to avoid fees, negotiate and keep costs as low as possible.