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WASHINGTON -- The American Consumer Institute (ACI) yesterday released a ConsumerGram detailing the negative effects high credit card interchange fees have on families across the country. On average, each household will pay an estimated $337 this year in interchange fees -- which it calls a hidden tax on credit card purchases.
Interchange fees far exceed normal bank processing costs, which are around 13 percent, said the ACI. Experts estimate that a substantial share of the fee is used for marketing efforts. According to the Food Marketing Institute (FMI), almost half goes to reward programs enjoyed mainly by high income users or to marketing efforts to new users, including those most at risk of defaulting on credit card debt. A large part of the remaining third is pure profit.
"As many American families take to the shopping malls this time of year, more and more realize they need to cut back on their spending in the midst of tough economic times," said ACI President Steve Pociask. "However, they could have more money in their pockets if it weren't for hidden interchange fees. Credit card companies and banks have been able to turn a huge profit at the expense of hard-working families. So instead of helping the situation, the credit card industry is adding to their financial stress by imposing hidden taxes. This has gone on for far too long. Policymakers need to investigate these hidden fees and their effects on hard-working consumers."
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