Unknown Cost of Credit Cards

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Canadians love their rewards programs; collectively we see there are 114 million active members of rewards programs in Canada, according to Colloquy, the market research division of LoyaltyOne, the group which owns the Air Miles program.

When you think about it, you are probably part of at least 3 rewards program. One will be with your bank, another will most likely be with your favourite gas station, and the last one would be at a department store such as the Bay or Sears.

ESSO is one of the most popular rewards to be collected, you get it all, points to redeem for products, such as the all important car wash, or even small items at the station.

With ESSO Extra points, you will also find yourself to exchange for RBC Reward points, so for those who bank with RBC and collect RBC Reward Points, its double the collecting power for you.

The Bank of Canada concluded that credit cards have become the most expensive form of payment for merchants.

Credit Card companies have noted that interchange keeps the entire system running smoothly. In a two way network, both sides have to agree to participate, ensuring that banks have an incentive to issue credit cards to consumers and merchants have an incentive to accept them.

The fee that is collected by merchants’ bank and paid to the cardholder’s bank to compensate for the credit card issuer for the cost of bringing cardholders into the system.

It is a great system we have going on here.

With new premium cards on the market, we have higher net work customers on the market, with interchange changes boosting processing fees by more than 10% for Visa and almost 20% for MasterCard in the 12 month period ending last February.

Now these costs might not have been known to everyone, but at least the information is out there. Look forward to more information in retail markets concerning credit cards in the upcoming week.

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