The True Cost of Using Credit Cards

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Back in January of 2009, Steven Levitt (Freakanomics) wrote a blog post in the New York Times to report on a student’s website,

The article may have caused a brief ripple, newswise, but has clearly not done much to change Americans’ paying habits.

We ask you to reconsider. Americans spend $50,000,000,000 on credit card processing fees every year – three hundred and thirty dollars or so per household, twenty-eight dollars a month just on credit card processing fees.

This affects your local businesses, as credit card fees are one of their biggest line-item expenses, after rent and payroll. From the True Cost of Credit website:

The average local pizzeria (not a big chain) pays $11,213 each year in credit card processing fees (details) – enough for a new delivery vehicle.

Or enough to keep the lights on and the rent paid for a few extra months a year.

If you love your small neighborhood business – pay in cash. It will help them keep their doors open during these tough times.


  1. AlanBob on November 8, 2010 at 6:47 am

    Good point! I’m under the impression that debit card transactions with a PIN incur no fees (or at least lower ones) for the merchant. Any truth to that rumor?

  2. Nice Seattle Homes on November 8, 2010 at 8:47 am

    Slightly lower, AlanBob. The interchange fee schedule is different, but it still shaves a couple of points off from the retailer on each transaction.