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Have you ever felt a surge of satisfaction as you watched your credit card rewards accumulate, dreaming of the day you could cash them in for something special? We all love rewards, especially when they promise to bring joy to our families. But what if the true cost of those rewards was far greater than you imagined?
Imagine this: you've decided to treat your family with a gift funded by your hard-earned points. Your daughter wants a new iPad, your son has his eyes on an unusual garden gnome, but you opt for a frying pan, believing it will bring the family together over shared meals. Yet, as you hold that frying pan, a question nags at you: who actually paid for this?
The answer may surprise you. When you use your credit card, every swipe comes with hidden fees. Store owners are charged a "swipe fee," often between 1.5% and 3.5% of your total purchase, by the card network, typically Visa or Mastercard. These fees are used to fund your rewards, but they come at a cost to everyone.
For small businesses, these fees can be devastating. They are forced to raise prices to compensate, and guess who ends up paying more? We all do. However, only those with premium cards enjoy the rewards, creating a system where the wealthy benefit at the expense of the less fortunate.
In fact, the Federal Reserve discovered in 2020 that the average American loses more to swipe fee price hikes than they earn in rewards. The poorest among us are hit the hardest, paying five times more in price mark-ups than they'll ever receive in rewards.
Why are we stuck in this system? Visa and Mastercard dominate the credit card market, controlling over 80% of it. With little competition, they have little incentive to lower swipe fees. But there's hope. Congress has the power to regulate these fees, and a bipartisan bill aims to do just that for credit cards, as they did for debit cards in 2010.
So, what can you do? First, call your senator and encourage support for this bill. Second, consider using your debit card or cash when shopping at small businesses. Many now offer discounts for cash payments, allowing you to avoid this predatory system and support local businesses.
If rewards are too诱惑ing to give up, remember that every time you use your credit card, you're contributing to a system that perpetuates inequality. The next time you boasts about never taking a handout, remember that the working class is, in fact, paying for it.
By understanding the true cost of those rewards, we can make more informed choices and work towards a fairer system for everyone.
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