Financial planners usually advise clients against running up debt on credit cards. Now there is another reason to be cautious about whipping out the plastic for your next purchase.
Since January 27, 2013, merchants who accept MasterCard and Visa are able to add a surcharge to your bill. The surcharge is the result of a class-action settlement between merchants and banks and credit card companies, according to nydailynews.com.
In addition to paying a group of retailers $6.05 billion, Visa, MasterCard, and several banks and credit card institutions agreed to permit merchants to charge an extra credit card fee. All retailers pay a percentage of their sales to credit card companies in order to process in-store credit card payments. The surcharge is supposed to be equal to the cost of processing a credit card transaction, which is usually 1.5 to 3 percent of the purchase and can’t be more than 4 percent. Merchants won’t be able to add extra fees to debit card transactions, nbcnews.com reports.
Credit card surcharges are illegal in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Some larger retailers have said that they won’t use the surcharge, and smaller merchants could institute a “cash only” policy, require a minimum for credit card purchases, or factor the transaction fee into their prices.
A final ruling on this case will be made later this year, so modifications may be made later.
Stores that implement this extra surcharge are required to post a sign announcing the extra fee and to disclose the fee at the checkout counter and on the receipt, according to the Electronic Payment Coalition, as cited by nydailynews.com.
If you have accumulated high credit card debt in New York and have considered bankruptcy, contact an experienced New York consumer bankruptcy attorney to discuss the best way to preserve your assets.