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May 14th, 2009:

ACTION ALERT: Senators aim to introduce European-style credit card fees

cash onlyOne of the great things about America is that you can use a credit card anywhere, for almost any purchase and merchants don’t charge you a fee.

In fact, merchants are contractually prohibited from charging you either a fee to use your card or mandating a minimum purchase amount, though lots of treasonous types try to ignore the latter rule.

That is not to say that VISA, MasterCard and American Express don’t charge fees to process transactions. They typically charge merchants 1 to 3 percent of each transaction. Last year, this equaled nearly $50 billion.

But in the true American fashion, those costs are externalized. The fees charged for credit card transactions are paid by everyone—including cash and debit card users—in the form of higher prices. The are not born by credit card users alone.

This system allows responsible credit card users to rack up frequent flier miles or cash-back rewards that are paid for both by merchants and the guy behind you in line who pays for his gallon of milk in cash.

But a pair of U.S. Senators is trying to change that and let retailers introduce European-style fees for credit card transactions. The Wall Street Journal reports that Sens. Durbin (D-Ill.) and Bond (R-Mo.) are trying to insert an amendment into the broader credit card reform bill that would allow merchants to discriminate based on whether a customer is paying with cash, debit or credit.

Contact your senator and tell them that freedom means paying the same price no matter what you carry in your wallet.

As for cash customers subsidizing the rewards earned by credit card users, well, externalizing costs is the American way. Besides, paying with credit cards offers some great consumer protections.

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