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    Small Plastic Purchases No Longer Require Signatures

    Credit card companies grow lenient on no-signature transactions.

    Major credit card companies are letting rushed customers get out of stores sooner with an increased allowance of no-signature transactions for purchases less than $25 at many retailers, including movie theaters, pharmacies, convenience stores and fast-food restaurants. The goal: to speed up checkout and to get more people to use plastic for everyday, small-ticket purchases.

    The amount of small purchases that are charged to credit cards has jumped in the past few years and consumer groups are alarmed that this move will push people into greater debt. The average U.S. household's credit card balance has risen 76 percent over the past 10 years, to $9,159 in 2005, USA Today reported.

    "People should not charge a meal at McDonald's to a credit card unless you're disciplined and paying off the credit card every month," Ken McEldowney, executive director of Consumer Action in San Francisco told the paper.

    Even religious bill-payers should even be cautious about such actions, McEldowney added, noting that with a transaction with multiple items can be overlooked and fraud might not be spotted. "It becomes harder to detect fraud," he said.

    CardWeb.com estimates that this year, consumers will use Visa cards to buy $60 billion worth of items that cost less than $25 each, approximately 11 times more than the rise from 2000.

    "Not having to sign is a huge convenience for consumers and a critical element" to grow small-dollar purchases on credit cards, Elizabeth Buse, an executive vice president at Visa told USA Today.

    Retailers also benefit from the new no-sign environment, according to credit card companies, the stores can serve more consumers and see higher overall sales. "People will spend more if they come in with a card versus cash," said Gareth Forsey of MasterCard Worldwide.

    But the use of credit cards also carries a double edged sword. Consumers are paying more to use plastic at stores. Bank fees that retailers pay -- varying from 1.8 percent to 2.4 percent according to a Nilson Report -- drive up the price of items to cover those costs said Sam Turner of Favorite Markets, a chain of convenience stores in Tennessee, Alabama and Georgia.

    Even for small purchases, "you can't stop taking credit cards, because America is in love with them," Turner said. "They're a necessary evil."

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