The True Cost of Using Credit Cards

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

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.