In the movie “Up in the Air,” George Clooney plays a corporate executive obsessed with frequent flier miles. As he explains to his co-worker, Anna Kendrick, “I don’t spend a nickel, if I can help it, unless it somehow profits my mileage account.”
“The miles are the goal.”
For years I used my credit card to pay for everything imaginable — groceries, restaurants, newspaper deliveries, tolls, home and car insurance and more. If I was buying lemonade from a neighborhood kid’s sidewalk stand, I’d try to charge the 50 cents.
But, unlike Clooney’s character, I wasn’t after the miles. (I hate to fly.) For me it was about the 1.5% of my total spending that the credit card company kicked back every month. I usually let it accumulate in my account until I had “earned back” a few hundred dollars. Then I would apply it to that month’s credit card bill as a bit of “found money.”
Let me stress that I only did this because I was fortunate enough to be able to pay my credit card bill, in full, when it arrived every month. I never paid a cent in interest and hopefully never will. I used my credit card purely as a convenience. I didn’t leave home without it.
In the past two years, however, things have changed. Many stores and restaurants in my area have begun charging a “transaction fee” (also known as a “swipe fee”) to anyone using a charge card. Normally the fee is between 2 to 4%. It varies by state and only Maine, Connecticut, Massachusetts, California and Puerto Rico prohibit surcharges altogether.
There is a legitimate case to be made for passing on surcharge processing fees, especially if you’re a small business operating on thin margins, such as a restaurant. In addition to credit card fees, the average restaurant pays rent, taxes, insurance, payroll, and payroll taxes. That’s substantial overhead. Add to it the rising cost of goods such as eggs and it’s surprising more eateries aren’t shutting their doors on a daily basis.
My nephew worked in a family restaurant in Florida. The owner calculated he was paying $60,000 a year in fees to credit card companies. With his business teetering in the post COVID era, he simply couldn’t afford to absorb these charges any longer and felt he had no choice but to pass them along to his customers.
Fair enough, but this new policy still rankles me. I can only imagine how much it rankles those who can’t pay off their charges every month and are now paying a surcharge for the privilege of then paying a 20-26% interest rate on their outstanding balances! Experts say there are millions of struggling American consumers caught in this miserable predicament, with the total national credit card debt now at a staggering $1.211 trillion.
Though swipe fees are usually no more than a few dollars per transaction, for this child of Depression-era parents, they seemed like an avoidable waste of my hard-earned money. Something had to give. I decided to begin paying cash at any establishment that charges a credit card fee.
The immediate upshot of my new policy was that I found myself making more trips to my bank’s ATM than previously to always have the necessary cash on hand. Not my favorite thing to do.
But over time something unexpected happened. I began to notice how much money I was actually spending, often on things I didn’t need — the book I’ll never read, the shirt I’ll never wear, the dessert my waistline doesn’t want. The physical act of reaching into my wallet and then counting out the 20s, 10s and 5s made me keenly aware of where and how I was spending my money.
It was similar to a few years ago when my investment company asked me to fill out a form listing every expense I incurred on a yearly basis. I was scrupulous down to the penny. No expense was too small to notate. When that little fiscal exercise was over, and I looked at the totals, it was clear I was squandering too much of my money on unnecessary things. I immediately set about to cut those expenses.
Credit card surcharges have once again refocused me on my spending habits. By paying cash, I’ve actually reduced my monthly spending with no discernible impact on my lifestyle. The surcharges are saving me money. Thank you, Visa, Mastercard and American Express.
What’s in my wallet? More money and fewer charge card receipts.
Ficarra is a freelance writer.