Saturday, March 23, 2013

Are credit card charges too high?

19 March 2013

Forum Page,
Straits Times

You have printed three letters on 19 March regarding credit card
surcharge, "Cab firm right to take a stand", "Enforce fair trade
practices", and "Budget carriers profiteering via convenience fees".

They continue arguments on the party that should bear the credit card fees. 

I like to ask the question, "why should the credit card charge be 
as high as 3 to 5% of the transaction ? " For an transaction of $500, the 
charge can be $25.

I know that the card issuer, which is usually a bank, carry the credit risk. 
But they do have the means of checking which customers have
sufficient balances in their bank account, and do not merit this charge.

Perhaps these banks are profiteering at the expense of the
merchant and their customers?

I understand that the Association of Banks (ABS) is introducing the Online
Giro by the end of this year. I like to ask if this new facility allow 
customers to make online payment, without having to incur this high
charge for use of credit cards?

As the ABS is an association representing the interest of the banks, I 
like to ask the Monetary Authority of Singapore to give their comments 
as well. 

Perhaps MAS should also comment on whether they have a 
role to ensure that credit card charges are fair to consumers?

Tan Kin Lian
Financial Services Consumer Association

1 comment:

yujuan said...

Credit cards are useful if confined to big ticket expenses like teeth implants and travell, where extra charges imposed are unlikely.
For small expenses, just use cash or ATM or debit cards.
A habit of using credit to pay would likely make one lose control on one's spending.
Advice from a smart consumer, not from me.

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