David J. Danto
Business travel thoughts in my own, personal opinion
eMail: ddanto@IMCCA.org Follow Industry News: @NJDavidD on all
The New Cost Of Plastic – September 2023
Using credit cards to collect miles/points/cashback used to be a smart strategy. Lately however, I’m beginning to second guess that. Affinity credit card rewards looks like they will be the next big thing from our past that will be drastically changing. More and more businesses are starting to charge extra for use of credit cards.
In the past, some retail stores would not allow the use of some brands of cards, and also require minimum purchases to use any of them. Gas stations were next, with many charging different prices for cash or credit. That seemed to be the norm for a very long time, but lately the ‘I’m not paying a fee for your convenience’ attitude has crept into many more businesses.
During the pandemic, many of the restaurants that were able to stay open started charging extra percent add-on fees. At first it was for the cost of just staying open and sanitary – and I was happy to pay for that. Then, as supply chain issues crept-up that was the reason for the extra cost on every bill. Now it is difficult to find a nice restaurant that isn’t also charging extra for the privilege of using a credit card. They got so used to charging everyone a bit more that the credit card processing fee (the card companies charge them) was the easiest, next thing to pass along to customers.
Now the wireless phone companies are getting into the act. AT&T, Verizon and T-Mobile have all announced that automatic payments set to credit cards will now be charged a fee. Of course, they don’t say it that way. Just like most of the restaurants above they describe the direct payment from a bank account as a “discount” that they are extending, and they will now ‘phase-out that discount’ for credit card payments.
What does all this mean for you and I, the frequent travelers of the world? Well, the best credit card I have for dining and entertainment is the Capital One Savor, which offers four percent cash back on those transactions. That means, at restaurants charging about four percent to use the card it’s a wash. At other establishments and with other credit cards, I’m likely paying extra for the miles or points that I’m getting – in essence buying them directly at hugely inflated prices compared to what the bank or issuing company is paying to get and offer them.
I don’t think I’m going to stop paying with credit cards, as the convenience of not carrying cash everywhere is worth it. I will start paying by check at companies that take those and charge a premium for using cards (like our cat’s veterinarian that just took a grand to tell me our cat was ‘fine.’) And I will allow the aforementioned mobile phone / cable companies to take automatic payments from my bank account.
It's important to note, however, that I’ve set-up a separate bank account for direct withdrawals. I’m not using my regular checking account. Not a lot of people realize that giving a third party the authority to add to (direct deposit) or withdraw (direct bill) from an account technically allows them to do so whenever they want. That’s too much access for me to feel comfortable allowing on my primary banking/checking account.
Honestly, I don’t know how many people even care that they are being gouged with these fees. Airlines and hotel chains have had ‘miles/points sales’ for as long as I can remember, and there are always apparently some suckers willing to directly pay exorbitant fees for these constantly devalued items. I still don’t understand why (other than to top-up for an award) anyone would pay real money for what is essentially fake money – currency that the firm that controls it devalues at their whim. They often don’t even have mile-price charts anymore, they just giggle and charge whatever they want for each inquiry. “Get fifty thousand miles for signing up” for their card, but – oops – they just raised the price of the flight you want to eighty thousand miles….
This article was written by David Danto and contains solely his own, personal opinions.
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Copyright 2023 David Danto
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