Credit Card rant

[stavebuyer]

I get a text message Sunday morning about a suspicious purchase that Capital One did not approve because they suspected it to be fraudulent(which it was). The outcome is the card in my hand is cancelled and they are mailing me a new card. Monday the 17th is a Fed holiday. Capital One tells me I will need to update the account number with anybody I had set up to for auto billing. From past experience I know this to be the case. I don't have the new card and don't yet know the new number, expiration date, security code that I will need to update various vendors.

All routine; been through this before, and thankful Capital One denied the transaction so I don't have to go through the hassle of disputing the charge or having it removed etc.

I log into the account this morning(the 19th) and see that a new card number has already been billed an annual fee for expanded email storage from Microsoft yesterday the 18th. This is a valid charge, but my rant is what kind of special status does Microsoft have as a vendor to be able to charge an account that I did not even know the number to myself while I will have to manually update everyone else?



 

[Roxie]

That's exactly what I experienced with Apple and my credit union debit card. 

Voodoo magic. 

[mike_belben]

The beast is here. No mark name or number, no service.   Misbehave, we just turn your number off. 

[SwampDonkey]

My insurance company was not even allowed to do that. I've since ditched the credit card option and just send a cheque. A bit before that, they never allowed a cheque as payment. But when you press upon them that a credit card payment is no more assured than a cheque, they come around. :D

[TroyC]

Had a card compromised like that once. Got the new card, activated it. Went to make a purchase and it had already been compromised and shut down. Oh well, that's why I carry 3 cards. Gotta love that cash back in February!

[Tom King]

I had a card replaced once, and the three digit code on the back of the new one was 000.  Not even the activation phone call would work with that one, so I was without a card for over another week waiting for the next one to come.

[stavebuyer]

The "cash back" is a good scam since merchants have to jack up the selling price 5% in order for us get back 2% of our own money but what can you do? As many times as I have had to cancel cards over compromised data, I prefer the low-lifes not have access to my checking account. Anything I order on-line or auto-billed goes on a credit card and never my checking account. I never carry a balance, so pay no annual fees, interest, get 30 day terms and the cash back does add up when much of your personal spending goes through the account. Except for big ticket items it seems most merchants prefer to pay fees and not have to worry with stolen cash or collecting bad checks.

[SwampDonkey]

Used to be the card company paid me 2% interest if I paid more than was owed. I used to do that for kicks. Now it's just these rewards, like you say, your paying, and so isn't everyone else to. That's the way it works in other points programs whether the other guys uses it or not, he pays the same price you are. :D

[hacknchop]

There are some cards we just won't accept they are greedy wanting 5% or more and take up to 90 days to reconcile whereas most are within 30 days

[att_t_2d]

In most cases the bank will pass along transactions from the old account to the new one for a period of time that are believed to be valid based on past transactions from the same company.

[Ljohnsaw]

Anything I order on-line or auto-billed goes on a credit card and never my checking account. I never carry a balance, so pay no annual fees, interest, get 30 day terms and the cash back does add up when much of your personal spending goes through the account.

Same here.  The only place that won't take a card is my electric company.  If I want to pay my property taxes, they charge a 2.5% fee so I send them a check.  I rack up $2-5,000 / month (when insurance payment are due) and get $30 - $60 deposit into my savings account.  My best every was around $95.  Pays for toys.

[moodnacreek]

Big brother must love it, everything on record. Me, one credit card for when that's the only way, the rest cash or maybe check. That's enough.

[BradMarks]

Credit cards and being in business are a fact of life. We take them, but not AmEx, as they are the ones who charge the really high fees. We are not alone, tons of businesses refuse AmEx.  Most people/companies also have a Visa or MC.  As far as adding extra charges to process a credit card, not at our business, that policy does not exist. CC is same as cash. Same price. Having a credit card(s) compromised many times speaks of doing business with those that have lax security measures in place. IMO.

[peakbagger]

I seem to have my card scammed every couple of years. Usually its a temporary charge from an unknown store in the pending category or some charge for a trivial amount. No doubt someone has the number and is getting ready to use it. I also expect an issue everytime I do international transacations.  If in doubt they issue a new card. I recently broke my ankle and getting lot of bills for the out of pocket share (I have a High Deductible Plan so lots of bills), almost every bill can be paid with a CC with no surcharge. It adds up compared to sending checks and a lot easier to prove I paid it. I know a fee former coworkers who flew all over the world for work and they always had issues with card being put on hold due to foreign transactions, they always had 2 other cards just in case and called the CC companies in advance to lt them know they would be traveling. They also carried some dead cards in dummy wallet to keep the pickpockets happy.  

When my now deceased parents were in skilled care and assisted living, I paid the monthly bills with a credit card. The cash back added up but some accountant figured it out and they stopped taking CCs. 

One thing I learned is that if a company charges a surcharge for credit cards, they have to disclose it in advance and enter it as a separate charge, they cannot combine it into one charge per the agreement they have with the CC companies. If you complain, the CC company will void the transaction until its split up. Years ago my dad bought an Oldsmobile on credit card with no surcharge. It was a nice cash back but most dealers now surcharge or limit charges.  

[stavebuyer]

Credit cards and being in business are a fact of life. We take them, but not AmEx, as they are the ones who charge the really high fees. We are not alone, tons of businesses refuse AmEx.  Most people/companies also have a Visa or MC.  As far as adding extra charges to process a credit card, not at our business, that policy does not exist. CC is same as cash. Same price. Having a credit card(s) compromised many times speaks of doing business with those that have lax security measures in place. IMO.

Same price but everyone including those paying cash is paying for the credit card markup. There is no free lunch. Widgets that are priced at $1 would be priced 3%-5% less if the business didn't incur the credit card charges.

[mike_belben]

I recently broke my ankle and getting lot of bills for the out of pocket share (I have a High Deductible Plan so lots of bills), almost every bill can be paid with a CC with no surcharge. It adds up compared to sending checks and a lot easier to prove I paid it.

I have a sorta related warning for anyone facing 3rd party out of pocket medical billing.

  I was in the ER without insurance right after covid cost me the truckin job.. Rates crashed to a buck a mile and i was sick behind the wheel trying to make $30k 1099.   Wife really needed healthcare for what we now know is a nervous system disease and the road life was killing me.


What i learned in hindsight is that an uninsured ER walk-in automatically gets kicked to a 3rd party biller almost like a collections agency.  And they are looking for double of the hospital charges.  Basically theyre buying a $1500 hospital bill for $1500 and saying you owe us $3k then trying to collect it all. But their firat priority is covering that $1500 the hospital wants with your money, not theirs.

I didnt know this when i called the two biggest ones (two different agencies working same medical center) saying i dont have the money for this, im sick and just lost my job, can we work out a payment plan.  They both immediately offered to cut the bill in half if i paid the entire amount right then.  That sized savings was well worth borrowing to knock the debt down and keep a lien off my deed.

Few months later one of the companies started billing me the other $1500 and threatening collection when they offered me to settle it right then if i paid and i did.  But all i had was verbal, a name and a payment confirmation number. This dragged out for months with the management saying it never happened, then oh she was new and wasnt authorized to do offer that and then it was some baloney story with the hospital.  My wife used to work at the hospital and knew the woman in billing so she went and got the real story privately and finally i got them to buckle.  To cover the entire lie the story was that the hospital paid my other portion so i was off the hook. Which we knew was false.  


Anyway.. Beware of 3rd party payoff offers.  You need it at least emailed to you before you take them up on anything. It was a rare case of naivety on my part.

[BradMarks]

Stavebuyer:  I'm sure you must be referring to businesses other than mine. 

[BradMarks]

Another note on fees. Those 3% or whatever the charge may be to the merchant is called merchant service fees and is 100% tax deductible as an expense of doing business. 100%. There is no need to add the charge to the goods being sold.  Credit card companies make their money on annual fees, interest and late fees. Those consumers with a no annual fee, that pay in full every month do not incur these charges and are ahead of the game when getting their "cash back". 

[stavebuyer]

Sales-Expense=Profit

Credit Cards are an expense to sales. A business owner certainly is free to choose between lowering profits or increasing sales price in order to cover the additional expense.

If a business that deals only in cash and checks has gross sales of 100k and a net profit of 10%; they have $10K of profit.

If that same business signs up with ABC Card Processing at 3.5% and keeps their prices the same:

The same 100k sales, same labor, etc. now only gets $96,500. The labor and materials did not change they still cost $90K so the business now has a net profit of $6500. Considerable impact to the bottom line. Now it can be argued that accepting the card could lead to an increase in sales but then again it may not. I sold firewood and only accepted cash. I could not meet the demand, so accepting cards would only be an increased cost.

There used to be a cut-rate cash only gas station in town. No store; just unbranded gas $.05-$.10 less than anyone else. Credit costs.

 

[SwampDonkey]

Brad, a tax deduction is not a reimbursement for the credit fee. The deduction reduces taxable income, it does not give you back your credit fees. ;) A credit fee is like taking $100 away from you. Now your net income is $900 instead of $1000. Your being taxed on the $900, the government isn't giving away a dime.

[Ljohnsaw]

Gas stations changed here about a year ago.  There was one station (AM/PM aka Arco) that only accepted cash or debit cards.  There was one posted price/grade.  If you used a debit card, they charged a 35 cent flat fee (used to be 10 cents a while back).  Other gas stations had two prices, one for cash/debit and another for credit.  The credit was usually 6 to 20 cents more per gallon.  That was about 2% to 10% surcharge.  Last year things flipped.  Now Arco will accept credit cards.  They have a two price system of cash or debit/credit cards.  With gas at $4.50/gallon, the spread is now 9-11 cents so that's, what, a 2-2.5% fee?  The other stations followed suit and they are now charging the higher price on debit cards like credit cards.  There is a lone station that had one price for any payment type but, alas, they now follow the crowd :(  I shop at one of two stations that is selling cheap but now down to one - 3.99 for regular with cash.  If I want to use a card, I'm in the $4.29-4.49 range.

When debit cards first came out, the banks did not impose a fee on grocery stores because they could sell the anonymous data to marketers wanting to know spending trends.  Like, if you bought cat food, what type of cereal or meat did you also buy.  Early on, I think Arco was classified as a food store and didn't have to pay fees.  Then something changed and they started with the flat 10 cent fee.

[BradMarks]

Ah statistics.... and I do know math.  I'll throw out some numbers of no relevance.  So you buy something for $100 with a credit card that has a 3% fee to the merchant.  He/she receives $97 real dollars.  Now assume that item cost the merchant $70. First the entire $70 as the cost of goods sold (COGS) is deductible. And guess what, the $3 in merchant fees is also deductible, so the realized COGS is $67, realized sale price is $97. Difference is $30, same as the equation started with 100/70.  This factors in no other business cost or overhead, relates only to the item purchased.  

[stavebuyer]

 :new_year:

[stavebuyer]

Ah statistics.... and I do know math.  I'll throw out some numbers of no relevance.  So you buy something for $100 with a credit card that has a 3% fee to the merchant.  He/she receives $97 real dollars.  Now assume that item cost the merchant $70. First the entire $70 as the cost of goods sold (COGS) is deductible. And guess what, the $3 in merchant fees is also deductible, so the realized COGS is $67, realized sale price is $97. Difference is $30, same as the equation started with 100/70.  This factors in no other business cost or overhead, relates only to the item purchased.  

It is apparent you are sincere in your view. I am having trouble following. We agree if I buy something from your "store" for $100 and pay by credit card that I will pay the card company $100 and you will receive $97 of the $100 transaction.
The COGS excluding the credit card transaction fee we agree is $70 before any credit fees are considered. If I walk into your store and pay with a $100 bill, we both agree that your sales were $100, your cost of goods sold was $70 and your business therefore made a net profit of $30 on $100 in sales.
If I walk into your store and make the identical purchase but pay with a credit card the sales total is still $100. The credit card company keeps $3 and you get the remaining $97. I contend that your cost of goods sold was the original $70 plus a $3 transaction fee which increases your total COGS to $73. The costs and expenses are all deductions but not from each other.
Your net from the cash sale is $30(100-70) and your net from the credit card sale is $27(100-70-3)

[Southside]

Let's not forget about the whole "coin shortage", when suddenly merchants could only take exact cash payments.  Ya know - those folks who worked for the mints could not sit close to each other and chisel out our coins because of the covid.....