Credit card fees are similar to the statues involved in Mount Rushmore; most people know they exist but not so many understand the details – who are the people involved, exactly how large are they and, more importantly, just why?!

Well, here are some answers for you.  The people that benefit most from credit card fees are the credit card issuers themselves; each business that accepts credit cards as a form of payment pays a fee and, of this fee, approximately 85% goes to the issuing bank!  The rest of the money goes mainly to the credit card processor – which is normally Visa or MasterCard since they own 75% of the market!

75%!

Considering that almost every merchant service – and certainly every big business – accepts payment in the form of credit or debit card, it doesn’t take the financial genius of Michael Martin to realise that there is lot of money to be made on these credit card fees, rightly or wrongly.  After all, what is it that these companies are actually doing for their money?

Well for starters, using a credit card is meant to help protect you from fraud, entitles you to refunds and includes other protective methods.  Furthermore, they provide customer service and, of course, pay for everything you buy before the money is taken from your account.  The biggest expenditure, however, is the rewards schemes that credit cards offer; around 40% of all fees generated by credit card issuers are the direct product of the rewards schemes that they use to lure people in to start with!  Examples of these rewards include air miles, free balance transfers and reward points that can be collected and spent on a variety of lovely things, like money-off car insurance!

So, despite the fact that only Marvin the Paranoid Android has a chance at understanding the “complimentary” monthly statements and transaction reports; all these things have to be paid for – and apparently Visa needs to make an average of $0.07 for every transaction made in the world in order to provide this service…  After all, their quarterly net income in April was a mere $536 million!  As for the credit card providers and banks; how else can they afford to give out so many generous bonuses without charging everybody else for it?

In conclusion, despite the fact that credit cards are almost a necessity in modern life, the ridiculous fees that we end up paying are essentially there to make more money for the people that pressure you into needing them in the first place.  But that’s the way of the world eh?

Oh and finally; Mount Rushmore National was created by Gutzon Borglum, and comprises of 4, 18-metre high heads of George Washington , Thomas Jefferson, Theodore Roosevelt and Abraham Lincoln.  Apparently the entire memorial covers 5.17 km2!  It was created as a memorial because 150 years is quite a lot of history in the States!

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Before diving into our first post, allow me to welcome you to the Seymour Direct Blog. For our first post I considered it appropriate to take a look back at the history of plastic cards. By taking a look back to the past I hope that we can understand how we have arrived at where we are today and, as a result, be in a position to look at how we use our cards today, both from the perspective of individuals and businesses.

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