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The Hidden Cost of Credit Card Points

The Hidden Cost of Credit Card Points

Credit card rewards seem like a great benefit to consumers, but they come at a hidden cost that disproportionately affects small businesses and less wealthy individuals. Each credit card transaction includes a swipe fee, which can range from 1.5 to 3.5 percent of the purchase, and these fees are higher for premium cards and at small businesses. The fees are used to fund the rewards programs, leading to higher prices for all consumers, but the benefits are primarily reaped by wealthier credit card holders. In essence, this system silently shifts costs to those who can least afford it and raises prices for everyone. The solution may lie in new legislation to regulate swipe fees or in consumers choosing to use cash or debit, especially when supporting small businesses.

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