My wife and I sometimes practice transfers of wealth. One way that consistently works well to do this is to take a car in for repair.
Recently, while at my local repair place, I spotted a notice that indicated that they were now charging 3% extra for credit card payments. However, there would be no extra charge for payment by check or debit card.
The notice also showed how much 3% would be for various amounts charged. For example, if a repair bill were $1,200.00, the additional charge would be $36.00 for using a credit card.
The above was good and useful information, but it occurred to me that there was more to the story. Let’s say I used a credit card that gave me 1% back. The repair shop would charge me $1,236 ($1,200 for the repair plus $36.00 because I paid with a credit card), and I would get 1% back from my credit card, or $12.36. This means that the cost to me wouldn’t be $36.00, but $36.00 minus $12.36, or $23.64. Still not enjoyable to pay anything extra, but less than $36.00.
Let’s say that I wanted to avoid any additional fee by paying with a check. I would save $36.00, correct? Almost. Our paper checks now cost almost $1.00 each (printing costs), so we would save something closer to $35.00 by paying with check for a $1,200.00 repair bill.
If the amount to pay were much smaller, a check could actually cost more. For example, if you paid for $20.00 for a state inspection, using a credit card would add $0.60 to the bill (before any rebates you received from your credit card company), while writing the check would cost almost $1.00.
A debit card would save even more than the above examples, though you might want to take into consideration any additional protections you would have because of paying with a credit card versus a debit card. I don’t know how to quantify that in terms of a dollar amount, but it is an extra data point.
In short, my car repair place has come up with a new way to make the large transfers of wealth to them even larger, but they may be overstating how much more the new way would actually cost me.