New credit card surcharge to take effect

Personal finance expert explains impact


This is a rush transcript from "Your World," January 25, 2013. This copy may not be in its final form and may be updated.

ERIC BOLLING, GUEST HOST: You swipe, they charge.

Starting Sunday, stores will be allowed to hit you with a new checkout fee if you pay by credit card. The surcharge could add an extra 4 percent to your purchase price.

Dave Ramsey says, ditch the card anyway. Go for the cash.

Dave, this is new. Can every credit -- every time you swipe, they can nail you for 4 percent?



RAMSEY: The merchant fees are now going to be passed on directly to the consumer, not even in the cost of the product anymore.

And this comes as a settlement from a huge lawsuit that has been going on for many years now, to where Visa used to be able to say you can't charge a different price if you take Visa than if you take cash, and now they can.

They do have to post signs in the store if they're going to do this, so you can at least know that you're being charged more for using your credit card.

BOLLING: I go to ask you, Dave. You said something. They weren't allowed to charge more price for the product higher for using a credit card. But don't -- don't they do that at gas stations?

RAMSEY: Well, they have been doing it, and this lawsuit has been -- that's one of the things that brought it up.

And Walmart and some of the other stores, the big chains came out against, and it was a real clash of the titans between some of the big retail federation people and the whole Visa/MasterCard network. And, so, yes, they have been messing with this back and forth for years. It's been a big argument, because those of us that take cards -- like, we don't credit cards, but we take debit cards, and they hit me as a merchant for 3 percent or 4 percent every time somebody does that, instead of giving us a check.

And so we just kind of had to build it in as a cost of goods or a cost of doing business, those of us that sell things to the public. But now, of course...


RAMSEY: ... you're going to get hit on top by some folks.

BOLLING: Well, Dave, I know you like to cut up cards, but if you use a debit card, you are not going to get nailed for this fee, right?

RAMSEY: If you use a debit card as a debit card. A debit card has two functions. If you put in your pin with a debit card, it's working like an ATM card and you're not going to get charged on those.

That's not a part of this lawsuit settlement. But if you use your debit card like I use mine, it's a Visa debit card, I just swipe it. I don't even know my pin. And now it's going through the Visa network like a credit charge transaction. I'm going to get that same charge.

BOLLING: I don't understand the difference, though. It's still -- when you use a debit card, you're accessing a pool of your money. Right?

RAMSEY: You are, but you're running it through the Visa network if you don't use the pin system. If you use the pin system, you're running it through your ATM network. You don't have the guarantees for fraud and the other stuff.

But if you run -- if you just swipe it and you select credit, they ask you credit or debit, and you have to say credit because you don't put in a pin, and if you do that, then it's running through the Visa system. So Visa is charging them the same exact merchant fee for that debit card transaction as they are a credit card transaction.

BOLLING: Very quickly -- we don't have a lot of time -- we're talking billions of dollars at stake here, right?

RAMSEY: Billions and billions.

That's why this has been such a big fight. But it is truly one of those things, death by 1,000 cuts, because it's 4 percent at a time, baby.


RAMSEY: It doesn't feel like a lot, but, boy, it adds up.

BOLLING: Sure does at the end of the year. David Ramsey, thanks a lot.

Cut up all your credit cards.

Thank you, Dave.


BOLLING: Sure thing.

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