"Credit Card Companies Are Amazing."

[Thailandnotes]

My wife's nieces and nephew recently came to visit. They saved up to make the trip and used most of their vacation time. When they put their U.S. ATM cards in the local machines, a warning appeared saying they would be charged 150 baht ($5.00 – 5.50) for each transaction. They didn't blink. The next screen asked them to accept or decline an exchange rate that wasn't specified. (“That's bullshit,” I said, “We can give you the cash and you can pay us back when we are back in the states.") They declined. The ATM rate was ten percent worse than what you could get across the street for paper dollars. So their bank accounts are debited 200 dollars while the ATM spits out 175 dollars in Thai currency. We had told them to bring cash. One did. Two did not. When they went into stores, they were surprised that fixed price goods were 3-5 percent cheaper if you used cash, but more surprised that even when they were willing to pay the premium to use credit cards, the store owners seemed reluctant to make the sale.

The usury is amazing.

I'm sure they went home thinking, “Credit cards don't work very well in Asia."

http://www.washingtonpost.com/wp-dyn...020504377.html

“Credit card companies are amazing. Not only do they now offer cards with no annual fees and low teaser rates, they even give you a a rebate for 1 percent of everything you buy. Get an American Express card through Fidelity and you can get 2 percent of your purchases rebated to your investment account. Discover offers 5 percent on selected categories of purchases - groceries, gasoline, travel, clothing - depending on the month and the season. Can 7 percent be far behind?

“Of course, you may be wondering, as I did, where the credit card companies come up with all the money for these rewards and rebates, which are now a feature on half of all credit cards in active use. At first blush, the money appears to be coming from retail merchants, who are paying ever-escalating fees for the privilege of swiping your credit card through their registers. But according to a wide range of government and private economists, ultimately it's you, the consumer, who is paying for those rebates, as merchants raise their prices to cover those additional costs. When all is said and done, all that's really happening is that the credit card companies are taking money out of your left pocket, setting aside a hefty fee for themselves and putting what's left back in your right pocket.”

[Master Shake]

Re: "Credit Card Companies Are Amazing."

You can choose to use the credit card wisely or let it use you. I use my American Airlines Visa Card for everything and pay it off each month. I've used my miles for many "free" airlines tix (you need to pay a booking fee). My wife and one daughter are flying to Argentina this July for $200 worth of booking fees (+ my $50 annual fee). My other daughter's ticket was $1400. I think it's a good deal. We take cash and Traveller's Checks when we go because we know about the exchange rate fees. You have to be desperate, stupid, or rich enough not to care about the fees to get money from an ATM in a foreign country.

[dcarrigg]

Re: "Credit Card Companies Are Amazing."

You can choose to use the credit card wisely or let it use you. I use my American Airlines Visa Card for everything and pay it off each month. I've used my miles for many "free" airlines tix (you need to pay a booking fee). My wife and one daughter are flying to Argentina this July for $200 worth of booking fees (+ my $50 annual fee). My other daughter's ticket was $1400. I think it's a good deal. We take cash and Traveller's Checks when we go because we know about the exchange rate fees. You have to be desperate, stupid, or rich enough not to care about the fees to get money from an ATM in a foreign country.

I think Thailandnotes' point was that we here in the states are getting charged what is functionally a 3% sales tax by the credit card companies through increased merchant prices. Add up 3% of everything you've bought and see if it's still a good deal...

[gwynedd1]

Re: "Credit Card Companies Are Amazing."

Where are the cash discounts? Any merchant that offers it will get from me. That is one reason why Aldi does get some of my business.

[lektrode]

Re: "Credit Card Companies Are Amazing."

....But according to a wide range of government and private economists, ultimately it's you, the consumer, who is paying for those rebates, as merchants raise their prices to cover those additional costs. When all is said and done, all that's really happening is that the credit card companies are taking money out of your left pocket, setting aside a hefty fee for themselves and putting what's left back in your right pocket.”

again, the banksters are screwing us, while the political aristocracy sets them up with enabling legislation (or the lack of it) - not sure which doc states it, but sez "only the US Treasury shall have the power to coin money"

now tell me that what the credit card issuers are doing _isnt_ 'coining money' ?

they surely are when one looks at how high the stock prices of mastercard and to some extent visa got in their last runup - and why should that be, if what they are doing _isnt_ printing their own currency? (in the form of cashback on volume of purchases)

methinks we need a law that states that "any transaction that accepts credit cards must by law offer a discount for cash or check/debit payment"

one would have thot that with the latest scam from congress known as the dodd-frank 'consumer protection' racket that if they truly were "looking out for the little guy" we might have seen something (anything) that might actually 'protect' us from these bloodsucking vampires, but fat chance - all we got out of that nightmare is no more '0-interest, no payments for 6mos' and minimum payments that dont even come close to paying off the balance in the period of 0-interest and a GD late charge when you miss the teeny-weeny payment???

_sweet_ little scam they got goin, aint it.....

tell me again how the idiots in congress are "helping the little guy"

[dcarrigg]

Re: "Credit Card Companies Are Amazing."

del

[Thailandnotes]

Re: "Credit Card Companies Are Amazing."

Where are the cash discounts?

In the states in most retail sectors, it is illegal to offer a discount for cash payments.

I'm not sure if this is true in Thailand, but I would suspect that retailers who set up accounts with credit card companies sign agreements not to offer discounts for cash, but that Thai merchants are doing it anyway.

[dcarrigg]

Re: "Credit Card Companies Are Amazing."

In the states in most retail sectors, it is illegal to offer a discount for cash payments.

I'm not sure if this is true in Thailand, but I would suspect that retailers who set up accounts with credit card companies sign agreements not to offer discounts for cash, but that Thai merchants are doing it anyway.

Some are doing it anyway in the states. Gas stations certainly do it for gas. Lots of places also have 'minimums' for credit card purchases, which is an unallowable practice per credit card agreements...

[aaron]

Re: "Credit Card Companies Are Amazing."

It is the same in the U.S. It is most certainly not 'illegal', however. And, I do not know the details, but I think the credit card companies do not like the merchants to advertise a discount. It does not necessarily mean that they cannot offer a discount.

[drumminj]

Re: "Credit Card Companies Are Amazing."

In the states in most retail sectors, it is illegal to offer a discount for cash payments.

I didn't think it was illegal..I thought it was just against the merchant agreement for the credit cards (Visa, MC)

[shiny!]

Re: "Credit Card Companies Are Amazing."

I didn't think it was illegal..I thought it was just against the merchant agreement for the credit cards (Visa, MC)

Your are correct. A merchant is not allowed to charge different prices or have different minimum purchase amounts for cash vs. credit cards. Perhaps gas stations get different merchant service agreements than retailers do.

I stopped accepting credit cards this past November. With all the Cash-Back cards in use now the total monthly fees were 10% of my gross.

[Thailandnotes]

Re: "Credit Card Companies Are Amazing."

With all the Cash-Back cards in use now the total monthly fees were 10% of my gross.

Can you elaborate on that or give an example. Are you saying you charge a customer 100 dollars and receive 90 dollars from the credit card company?

[bungee]

Re: "Credit Card Companies Are Amazing."

My wife's nieces and nephew recently came to visit. They saved up to make the trip and used most of their vacation time. When they put their U.S. ATM cards in the local machines, a warning appeared saying they would be charged 150 baht ($5.00 – 5.50) for each transaction. They didn't blink. The next screen asked them to accept or decline an exchange rate that wasn't specified. (“That's bullshit,” I said, “We can give you the cash and you can pay us back when we are back in the states.") They declined. The ATM rate was ten percent worse than what you could get across the street for paper dollars. So their bank accounts are debited 200 dollars while the ATM spits out 175 dollars in Thai currency. We had told them to bring cash. One did. Two did not. When they went into stores, they were surprised that fixed price goods were 3-5 percent cheaper if you used cash, but more surprised that even when they were willing to pay the premium to use credit cards, the store owners seemed reluctant to make the sale.

I didn’t realise credit card companies forced people in the US to use credit cards?

If someone is told they are going to have to pay a fee for a service they selected and choose to do so after being reminded then I can’t see how they can complain that the CC company is ripping them off? If the fee was added onto the bill at the end and not declared upfront then they would have a valid point to complain they were being unfairly treated.

It seems that with the cash withdrawal they choose to let the Thai bank do the currency conversion and bill them in dollars rather than baht. They should probably have chosen to be billed in baht and let their CC company do the conversion back to dollars. I have always found that the foreign currency conversion rates offered by Visa / Mastercard (excluding any commission / fees) is always better than the rate offered locally. It’s just a case of selecting a CC or debit card that minimises or eliminates any currency exchange commission and withdrawal fees. Obviously this takes a little time and thought in advance of needing it to research and apply for.

People seem to willingly waste money every day, and not trivial amounts, through inaction to change to a better deal. I assume this is a combination of lack of education, laziness, lack of care as their basic needs (food / shelter etc) are met and that many people seem unable to think ahead. It’s like they are drugged up on something. However if you forced CC companies to only offer the lowest / best deal you would effectively remove the market place and we would all be paying sky high rates. The only solution would be to ban CC altogether.

[Thailandnotes]

Re: "Credit Card Companies Are Amazing."

I would describe what I was witnessing as predatory lending. When I was standing at the ATM machine, a British guy walked by and said, “Please don't use your credit or debit card here. You are being ripped off by your home bank and your credit card company and the Thai bank that owns this ATM, all at once!”

Maybe travelers should be ridiculed for not doing their homework, but they should not be blatantly ripped off.

In the USA predatory lending is best viewed when crossing a river. The payday-pawn-shop-liquor-by-the-half-pint is often just across the bridge. One state allows it, the other says no. Global travel is much more confusing.

My post starting this thread points to two grudges: 1.) people who rarely travel overseas are being taken to the cleaners (it's much worse than it was ten years ago), and 2.) credit card companies are raising/taxing the price on everything for everyone even the savvy.

Side note:

I recently bought a small painting. I paid 3,200 baht (cash). The price using a credit card was 3,800. The 600 baht difference = about 20 dollars. That does not factor in the credit card companies poor exchange rate. Both major CC would add more than 4% on top. Exchange rates in the airports in Asia are often beating card rates by a long shot.

[shiny!]

Re: "Credit Card Companies Are Amazing."

Can you elaborate on that or give an example. Are you saying you charge a customer 100 dollars and receive 90 dollars from the credit card company?

I have a very small e-commerce store- a micro-business. My monthly fees for taking credit cards included a

• Gateway fee (for using the secure payment gateway where the card is processed- such as First Data, Authorize.net, Verisign...)
• Monthly service charge.
• Internet authorization fees (charged when each card is "authorized" as good for the purchase)
• Batch settlement fees (for transmitting the purchases at the gateway to my business bank account)
• Internet AVS authorization fees (verifies the customers' addresses)
• Penalty fees charged when the address does not match (sometimes someone enters their shipping address instead of their billing address, or they have recently moved and the records don't reflect that. The sale is honest but the vendor gets hit with a fee).

In addition, there are transaction fees on every transaction. This is the percentage that Visa, MasterCard, Discover, Amex charges the vendor on each sale. While the standard transaction fee might be something like 2% or 3%, with "cash back" cards the "cash back" given to the customer is also taken from the vendor. This happens about two months after the first fees are deducted.

What happened with me was I had a slow month, but had 10% of that month's gross pulled out of my account at settlement time because two months earlier a lot of customers used "cash back" cards. In addition to all the regular fees, I was having to pay them their "cash back". There's no way to plan for that except to raise prices across the board. I'm at a point now that if I raise prices anymore it will cut into sales, so I just stopped taking credit cards. Now my sales are down because of that, but at least I'm not working for the banks anymore.

For an e-commerce store with a shopping cart, all the transactions are handled automatically at the payment gateway. As a vendor I never knew if a card being used was a credit card, debit card, business/fleet card (higher transaction fees on those), personal card or "cash back" card.

Vendors are not allowed to refuse certain types of cards, e.g. if they accept MasterCard, they must accept all types of cards issued by MasterCard. Vendors are not allowed to charge an extra fee for credit cards, or to give discounts for cash.

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