Sunday, July 15, 2007

Big Business Helping Credit Card Fees?

I read an article by Mike from findqualitycreditcards.com and he gave some interesting insight into how big biz is helping to lower credit card fees:

Big Business Leads the Drive for Lower Credit Card Fees

There are a lot of mixed messages floating around about credit cards.
We know that they're a vital part of building and improving credit, but
it's hard to tell exactly what you're paying in monthly fees and late
penalties. It seems so complicated! Fortunately, credit card companies
are beginning to lift the veil of secrecy so that it's easier than ever
to see exactly what you're paying and when.

Why the Change of Heart?

Thanks are due to two unlikely sources: Wall Street and retailers.
MasterCard just became a publicly traded stock in May, and Visa is going to
follow suit next year. This is great for cardholders everywhere,
because Wall Street bigwigs want to see the raw data before they invest
money in a company. There have long been rumors that credit card companies
work together to gouge consumers with excessive fees. No investor would
want to put money into a company that could go the way of Enron.
Lawsuits, scandals, and shifty business all add up to lost money for the
stockholders, so in order to make their stocks attractive to investors,
credit card companies are bending over backwards to show that they are on
the up-and-up. This doesn't only help Wall Street investors, it helps
all cardholders see exactly how much they are paying and when they are
paying it.

The other group that is responsible for this increased disclosure is
the merchants who take credit cards. If a cardholder is unhappy with his
service, he can always switch to another plan, or even another
provider. However, retailers who choose not to take credit cards end up losing
business to competitors who will. They've decided not to take it
anymore, and who can blame them? Merchants typically pay one or two percent
of each purchase to the card companies. There are about eighty types of
fees that merchants have to pay, depending on how a card is swiped,
whether they take a signature, how often each card is used, and much more.
Now that retailers are learning how much they are being charged, they
can put pressure on the card companies to give them better deals - and
a better deal for them means a better deal for you!

The Benefits For the Cardholder

So it's easy to see why investors and retailers want to see the details
of credit card companies' fees. But how does it help the average
person with a Visa or Mastercard in their wallet? The first way is that
comparison shopping is now easier than ever. In the past, most people based
their decisions on interest rate alone. However, that card with the
lower rate could be sticking you with excessive late fees, or even
raising your rate each time you're late - without even informing you!

As cardholders become more informed and comparison shop for the best
deal, companies will undoubtedly lower their fees and rates, especially
those tricky "hidden" ones. The competition will encourage the card
companies to try to win business, rather than just taking it for granted.
Having a credit card is vital in today's society, but it's been a
daunting prospect for some consumers. Soon there will be no excuse for living
without a credit card, and we'll have "Big Business" to thank it!

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