Never pay credit card surcharges again!

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December 6, 2010

How do you feel about paying surcharges when using your credit card? Many are opposed, while others support it. But the good news is you can avoid these charges and save yourself money.

Some retailers may charge you a surcharge to cover the merchant service fee they pay for processing EFTPOS transactions, which is usually a percentage of the total amount and will depend on your card.

According to the Reserve Bank of Australia (RBA) merchant fees charged in September by Bankcard, MasterCard and Visa were 0.81 percent of the purchase value, American Express was 1.92 percent and Diners Club 2.12 percent.

Against credit card surcharges
A survey on credit card surcharges from consumer watchdog Choice, showed that 68 percent of the 1435 Australians surveyed do not believe retailers and other businesses should be allowed to charge extra to those who choose to pay with plastic.

Of those surveyed about 88 percent say they paid a credit card surcharge over the past year, more than 50 percent paid a surcharge between one and five times and 22 percent had paid more than 10 times in the previous 12 months.

They also identified the top five worst offenders were airlines, telecommunications companies, holiday travel, restaurants and utilities.
Pro surcharges
However Australian Retailers Association (ARA) says it supports retailers applying surcharges for credit card purchases.

"At the end of the day," ARA executive director Russell Zimmerman says, "retailing is driven by consumer demand and if charges for using credit cards are deemed unacceptable by consumers this will affect the individual retailer's bottom line.

"The Reserve Bank's decision back in 2002 to allow retailers to choose whether or not to pass on the cost of accepting credit card payments created the opportunity for a user-pays system."

Avoid paying
When you next use your credit card to purchase petrol, pay your water bill or pick up dinner, or for whatever purpose, here's how you can avoid paying a surcharge for all your future purchases:

  • Use cash to pay for your purchases.
  • If you have a debit card, select "savings" instead of "credit" as this will be processed through the EFTPOS system rather than the credit providers' system and you will avoid having to pay a surcharge.
  • Choose a credit card with lower merchant fees. For instance Visa or MasterCard currently charge less than Diners Club and American Express.
  • Compare credit cards online at RateCity.

Also remember that no matter where you are or how much you spend, all retailers must inform you of the surcharge before you pay. If not, you can report them to the Australian Securities and Investment Commission (ASIC).

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