Consumer Alert: Watch for illegal credit card fees
Credit card "convenience" fees are becoming a major inconvenience
How do you squeeze a few extra bucks from your customers when you're on the brink of a recession? By making them pay your credit card fees.
There's evidence that is happening. Subscriber Chuck Cecil just returned from a road trip to Iowa from the Washington, D.C., area. He reports that many businesses along the way have started adding surcharges for bills settled by card.
"Restaurants in Iowa and Kentucky added between 3 percent and 4 percent to our bill if we paid by credit card," he says. "The Kentucky restaurant did it without asking or offering us an option to pay in cash."
Cecil says other businesses posted signs about the credit card charges. "This could be a national trend," he adds.
Maybe. Credit card networks raised their swipe fees earlier this year, which has encouraged merchants to pass these expenses along to consumers. (Swipe fees, also called interchange fees, are the 2 percent to 3 percent that credit card companies charge retailers every time a customer swipes their credit card to make a purchase.) Businesses are also lobbying for new laws that would bring more competition to credit card processing — an industry dominated by Visa and MasterCard.
Ten states have banned card surcharges and convenience fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
If the fees are legal in your state, businesses should prominently disclose the surcharges (sometimes also called convenience fees). If they don't, you should be able to get them removed from your bill. Or you can reverse the transaction and do business with someone else — or pay by cash.
Cecil says the fees have made him think about the value of a credit card.
"If I pay 3 percent or 4 percent more to use my card and only get 1 percent cash back, I come out the loser," he says.
The takeaway: Passing credit card fees along to customers could turn into a big trend if the economy falls into a recession. The only fix is a federal law banning businesses from imposing "convenience" fees. And that's unlikely to happen any time soon.
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Holiday travel freezes
Maybe it was the crazy summer. Maybe it's inflation. But the holiday travel outlook is less favorable than it was a few weeks ago.
The latest Deloitte Holiday Travel Study finds that amid a worsening economic outlook and concerns over travel disruption, demand for travel has slowed. Less than one-third of Americans — 31 percent — plan to travel between Thanksgiving and mid-January, down from 42 percent in 2021.
Of those staying home for the holidays, 37 percent said financial considerations were the main reason not to travel. About 20 percent say this summer's airline disruptions were too much for them, and they want to avoid a holiday sequel.
Another interesting trend: Demand for lodging has cooled by a few percentage points. (The black bar is 2021; the purple bar is 2022.)
The takeaway: As demand slows, prices will plummet. I've seen projections for early 2023 that look like rates will fall off a cliff. So there might be some real bargains in January and February.
Where's everyone going this Thanksgiving?
Every year before Thanksgiving, Allianz Partners performs a public service by warning us where all the tourists are headed.
This year, the travel insurance company has done it again — and you'll want to avoid New York City and Cancun if you don't like crowds. (Then again, if you do like to be surrounded by throngs of other tourists, you'll want to use this list to find the happening places.)
Why is New York so popular? It's a combination of holiday shopping and the famous Thanksgiving parade that give this city an edge. And Cancun? Warm weather and availability of good deals.
“Thanksgiving travel tends to provide a deep sense of nostalgia for Americans, whether continuing traditions at the Macy’s Thanksgiving Day Parade in New York City or reuniting with family on the beaches of Mexico,” says Daniel Durazo, an Allianz spokesman.
Here are the lists, along with previous winners:
And here are the top international destinations:
Don't … be … afraid
We had an interesting discussion about the latest COVID "nightmare" variant this weekend. I think most readers dismissed it as media hype. That's not to say we shouldn't take COVID seriously, but this is no time to cower under the table in fear.
Here's my takeaway from the discussion and in light of this week's holiday travel projections: This is no time for fear. Once the holiday travel season is over, we'll have at least two months of low occupancy and cheap rates, and it could be an excellent time to travel. If you don't mind a little cold weather, it could be a great time for an adventure.
Your thoughts, please
Have you paid extra to use a credit card lately? Thinking of traveling somewhere in January or February. The comments are open.