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Credit Cards: They can hurt more than just your own personal finances

Guest post by Audrey

Credit CardCredit cards can hurt more than just your own personal finances.

Though my husband and I have been careful with our use of credit cards and have not amassed debt, we have begun to realize that our financial decisions impact many more people than just ourselves, and that realization has helped us curb our credit-card spending more than any other budgeting lesson.

Our Story

My family bought a rustic campground in New Hampshire in 2003. We spent countless hours updating and improving the entire facility, including its highway-front, country-style general store.

We met so many wonderful people in that store, chatting with them about their homes (some as far away as Europe or Asia), their spiritual journeys, their dreams and goals and desires. But it became increasingly difficult to smile and chat with customers who paid for their $1.50 cup of coffee with their credit card.

Credit Card MachingYou see, for each and every purchase, my family had to pay a surcharge to use the credit card system. That charge could be as high as $1 per purchase, on top of the 4% fee based on the purchase price.

When we added in the cost of the coffee itself, the cup, the sugar and the creamer, our store was actually losing money for those cups of coffee. And candy bars were worse.

Eventually, my father decided that we would change tactics. When someone made an extremely small purchase and offered a credit card for payment, we simply offered to give the customer that item for free. Our family lost money either way, and we hoped it would open these customers’ eyes to the true costs of using credit.

What We Learned

Maybe those customers learned a lesson; maybe they didn’t. All I know is that I definitely did. My husband and I, though still using our credit card on occasion, try to keep these things in mind:

  • Small businesses take a hard hit when we swipe a credit card.
  • Small purchases (candy, coffee, soda) cannot compensate for the credit card companies’ fees.
  • Credit hurts more than us, and it pleases the Lord when we strive to be aware of others’ needs.

Credit card lessons learned by AudreyAudrey is the proud wife of a handsome Marine and stay-at-home-mother of a beautiful 16-month-old girl (and she’s expecting again in November!). She teaches piano lessons occasionally and is recording her journey into the world of book publishing at

Photo credits: BigBeaks, Iain TaitLlore Photography

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  • Melissa says:

    What a good perspective! I appreciate her sharing that story- I will definitely keep that in mind when/if I use our credit cards. I always try not to use my credit card for small purchases like that, but that is an excellent reminder as to why I should strive to avoid that with small businesses. I’ll definitely try to be thoughtful of that and more of a blessing to others!

  • Marie says:

    I’m sure you’ll receive many comments like this, but many businesses have a minimum amount you have to spend to use a card. Usually it’s around $5.

    It makes me laugh to think that before we started on the DR plan, I would shrug and add a muffin or two to my total so I could use my card. Now I just pull the cash out of the envelope!

    • Michelle says:

      On the flip side to that, my hubby always goes in to the 7-11 and buys a small pack of gum to get cash back! I know, I know, it’s sounds weird. This way he gets a dollar pack of gum and his cash instead of just paying an ATM fee which is usually around $2.50 plus our bank’s $1.50 charge.

      • Marie says:

        @Michelle, Hey that is a pretty good idea!

      • william says:

        This is a great way to save some extra cash.
        Go to the Jewel or whatever grocery store you use and buy your weekly groceries with your Debit not your credit card. Why? Debit cards use your money not the banks. Thus no interest payments. You either have the cash in your account or you don’t. The only middle ground is if you have overdraft privilages with your bank.
        Next, since you are using a debit not a credit card the machine will ask you if you want cash back. Say yes and indicate how much you want back. If you buy $10 and ask for $50 cash back the sale as a whole is viewed as $60. You have just saved the gas it would cost to drive to the nearest bank plus the $2.50-$3.00 most banks charge non-members for withdrawing cash from the ATM machine.
        As far as rewards go you can solve this two ways:
        1.A little shopping around and you can find debit cards that have reward programs.
        2.Join one of the major existing rewards programs and list your debit card with their shopping and dining programs.Then every time you shop or dine at one of the places on the reward program’s list you receive miles/points.

    • Audrey says:


      Yes, many companies do require a minimum purchase, but they are technically breaking the law to do so. My dad wanted to do that, believe me, but in their agreement, the credit card company requires you to accept the card for ANY purchase. Stinks, huh?

      • Rita says:

        interesting…I was really annoyed at a Shell gas station that had a five limit because i only had my card with me…I actually called Citibank to see if that was legal….(I was a really bad day) but the customer service lady told me that its up to the store owner and contracts used to have that limitation but depending on the size of the store many contracts allow for the limit….reading your article now…really makes me think…i didnt really think much about my small purchase costing the owner money…guess i need to carry more cash. Thank you,

      • Beth says:

        @Audrey, From what you’re saying, it isn’t illegal, but just violates the terms of a contract he’s entered into. So, a person could be sued by the credit card company, but not charged with a crime. Which, is probably why other companies do that-they just roll the dice that they won’t be sued.

  • Katie says:

    That is true. I used to work in a small Christian bookstore, and people would ask us often why we only took 2 major credit card brands. Our owner said each company charges a fee and percentage, and most of the fees charged to businesses are outrageous!!! PLUS, if your card is worn on the back, so they have to type the numbers in by hand, they get slapped with an additional larger fee (because when a number is entered by hand, the chance of it being a fraudulent purchase goes up).

  • Michelle says:

    Great article! A few years ago, the salon I go to stopped taking credit cards. The owner was my regular stylist, so I asked her about it. She said that each card company had a different percentage rate that they charge to be used. They ranged from 8-14% and several were about to go up to as high as 20%! The salon couldn’t afford this without passing it onto customers. Instead they chose to only accept cash, and checks( from regular customers). I also remember when I was young gas stations having two different prices listed. One for credit, a lower one for cash. I remember asking my mom about it, and she said that it cost the store money for you to use a card, so that’s how they made up their money. I wonder if the prices we pay on things are all based on if we were to use a credit card? In other words retailers have increased their prices in anticipation that a card will be used so they don’t lose money? I wonder how many people would use a credit card on a regular basis if there were two different prices listed on every single thing we buy. One price for credit, one for cash?
    Does anyone know if the retailer fees apply if we use debit as opposed to credit?

  • Heidi F. says:

    Just curious if banks charge the same fees for businesses to accept debit cards?

    • trixie says:

      @Heidi F.,

      No, it is much smaller, around 40 cents per transaction. This is why almost all major retailers have their machines set to automatically run the card as a debit and use your pin #.You (or the cashier) have to do 1 or 2 extra steps to get the card to run as a credit. This is to hopefully get the store more debit purchases which are a lot cheaper to process than credit purchases.

    • @Heidi F., In our online business, we get charged whether it’s debit or credit, regardless of the size of the purchase.

  • I’m curious about the debit question as well. I do make small purchases with my debit card, and always try to pay as a debit transaction, thinking that I’m keeping the company from having to pay fees. I don’t know for sure though. I do know that the bank is always doing pushes to get us to use credit instead of debit, so I know that has to make them more money.

  • Megan says:

    Definitely something to consider with small businesses just trying to get by these days. As a previous poster stated, there is usually a minimum dollar limit, most I have seen are $10. However, these days, it seems that everywhere I go, the customer is charged for the credit card transaction in some shape or form. When I use my cc at a local sushi place, I am automatically charged $1.50 on top of my order, one example. Also, our local storage facility charges 5% times your monthly bill to use a cc. The same fees or percents are also charged for fast food, gas stations, utility bills, albeit they are not small businesses.
    I am always happy to support small businesses or any underdog. It seems though, that lately, the consumer is the underdog more than ever.

  • Molly says:

    Well my suggestion would be that if you own a small company try offering a discount to customers who use cash. Some customers may be paying with “credit” but using their debit cards that link up to their checking accounts. Most banks offer customers rewards if you pay using your debit card as a “credit”. Therefore, a customer may be more inclined to pay cash if they are getting a discount for doing so. Not everyone that pays “credit” is going into debt.

  • Christie says:

    I’ve heard that it’s illegal to require a minimum purchase for credit cards. Does anyone know if this is true? Thanks though, for opening my eyes to this.

  • Lizzie says:

    Yes it is against the contract you sign as a merchant. They can lose their contract.

    I owned a business for several years. Taking credit cards far outweighs the cost of not taking them. Many sales are lost by business that don’t take cards. So yes, the credit cards charge a fee but statistics show people spend more with their card than they do with cash–which outweighs the fee. (I realize that isn’t a good thing;) )

    Debit cards also incur a fee.
    The only time I ever refused to run a card was when a woman bought something off the clearance rack for .52. I definitely would have given it to her before running the card.

    I did a lot of shopping around to find a very reasonable rate. It’s not that hard to find a company that doesn’t charge outrageous fees. You have to spend time finding one and reading the fine print.

    • Missi says:


      I think that you have raised a valid point. Offering the use of credit/debit cards is a business decision that is often made because it outweighs the cost of not taking them. Although I try to use cash a good portion of the time, when making a purchase from a business (small family owned or large corporation) with a debit/credit card I am using a service they chose to provide. Similarly, I do not have guilt when purchasing “loss leaders” from small grocery stores because it is a tactic they chose to use as a business.

      Businesses, small and large make calculated decisions about products, services and costs. When asking customers to think about how their purchase affects the business before purchasing in that manner, you are essentially undermining your own ability to make sound business decisions.

      Alternatively, you could say “cash only” and then offer an ATM or raise prices to cover the cost.

  • Yes, debit cards are charged as well. My parents have owned their own retail business for years, and my mother told me right after debit cards came out how much she disliked them, because of the fees.

  • No..debit cards are not charged the same fee’s. I am a former Small business banker now stay at home mom. The really difficult part is if the business owner has poor credit they have higher fee’s and they have to wait until the funds have cleared all the way through the system. So without going into minitue, the business owner could wait as much as 2 months to get paid on that transaction. One more thing, small business owner’s employee 90% of the populations in the United States. I personally try to pay cash for small purchases and give the owner break.

    • Crystal says:

      @Marisa Stone O’Brien, That is a really interesting statistic and I’d love to read more up on it, including to find out what falls into the category of being considered a “small business” Do you have a reference for this info?

      • Crystal,
        According to the SBA a small business(in general) is defined as having less than 500 employee’s and has less than 7 million in annual receipts. “Of the 5,369,068 employer firms in 1995, 78.8 percent had fewer than 10 employees, and 99.7 percent had fewer than 500 employees.[7]” Without searching the entire website I did a quick search on Wikipedia and here is where those immediate details were found.

        I am guessing you self-funded MSM, as that is what you advocate here, so you may not have much experience with the SBA(they tend to favor loans). However, if you can look past the loan part it is a fantastic resource for individuals starting a business, web site or brick and mortar. Oh and if any of your readers are starting a business do it in cash. It is stressful enough getting it going without worrying about an extra payment every month.

        • Crystal says:

          The Crystal who responded to you wasn’t me, just FYI. 🙂 It’s a little confusing because we have quite a few “Crystals” on here. Guess it’s a popular name!

          And I’m actually pretty familiar with SBA… though I’m a little rusty since it’s been a few years since I started a business. 🙂

  • In Australia it is a common practice for smaller businesses and businesses that sell small items (such as cups of coffee) to have a minimum purchase of 10 or 15 dollars. It makes sense.

  • trixie says:

    Has anyone noticed the rise in grocery prices and fast food prices since credit cards became the most popular way to pay?

    • brookeb says:

      @trixie, This doesn’t make sense as a method of analysis though, because you also have so many other things that have changed over that period of time. You aren’t isolating factors.

  • Allison says:

    I was disappointed when I was told by the clerk at my favorite consignment store that I could not pay for a small purchase with a credit card or a debit card. I usually spend at least $10 – $15 at a time there, but on one occasion I only found one item I wanted to buy. They didn’t have a minimum purchase sign posted, the clerk just said (rudely) “Oh I don’t let people use a credit card for that small of a purchase.” I almost walked out of the store! She wouldn’t let me use a debit card either. I had no cash, so I had to write a check. But checks aren’t free at my bank, so it cost ME more money to make the purchase. I was disappointed that when I was a “big spender” (relatively) any payment method was ok, but when I was buying less, suddenly there were secret rules. (I bank a at local bank (like DR recommends) so please no suggestions about looking for a new bank where checks are free.)

    Anyway, I like that these people gave small items away for free instead of demanding customers pay in cash. An alternative would be to have a sign posted with a minimum purchase amount. But my experience of being rudely cut off as I was swiping my card (like I had countless times before) left a bad taste in my mouth.

    • Sherri says:

      @Allison, Sounds like poor customer service to me. If she had smiled and explained to you *why* she couldn’t accept the card for a small purchase, I’m sure you would have had a more favorable reaction. None of us wants our favorite local stores to lose money on our transaction. You’re right, though- a sign stating the minimum purchase rule would have avoided the unpleasant situation altogether.

      • Crystal says:

        @Sherri, In the long run, you aren’t necessarily losing money. If I had that experience, they might have saved the $1 they’d lose to process my card, but they would LOSE all my future business because I wouldn’t be shopping there anymore, and if I did, I would surely spend less money.

  • Josh says:

    I think it makes sense to set a minimum purchase price — like $10 — in order to use a credit card. I don’t think it really makes sense to try to “guilt” people into not using their credit cards to make small purchases. It *is* a good idea to educate people about the fees, but I don’t think that it’s necessarily a good idea to do that at the point of purchase, when the individual buying the item might not have another means of payment. I know I would feel weird if I was offered the item for free because it would cost the owner more to accept my credit card payment than to give me the item for free. As far as it being illegal to set a minimum purchase price for credit card users — if it is, then there are a whole lot of business owners breaking the law, or their credit card acceptance agreements. I would never complain about a business owner doing this, because I know that they can lose money if the purchase total is a very low amount and someone pays with a credit card.

    • Marisa Stone O'Brie says:

      It is a credit card merchant services policy that a merchant signs when the accept credit and debit cards. It is not a law.

  • dee says:

    I use a credit card for just about every purchase because I get points and download all the transactions into Quicken every month. Of course, I pay in full every month too. Most small businesses around here have a minimum of $5 for a credit card purchase, which seems fair.

    I have traveled to Europe, around the U.S. and Canada on points. I can’t remember the last time I paid for a hotel room or a flight.

    When my husband and I had a small business that took credit cards, we shopped around for the best merchant acct we could find. We didn’t pay outrageous fees.

    I think you have a good point, but a very narrow view of the situation.

    • @dee, I agree. As a buisiness it is your choice to take credit cards or not. The fact that a buisiness chooses to take them shows that the benefits far outweigh the costs because owning a buisiness is first and formost about making enough money to stay afloat. I personally do not shop at places that do not accept debit/credit cards because I use my debit card for everything, even at CVS when my out of pocket is .49 cents. I like to be able to track every penny spent in a spreadsheet so cash just doesn’t work for my family and we rarely carry it. I feel like if I were shopping somewhere and was told that I could have the item for free because the fees if I used my credit card were going to be more than my purchase I would say no thanks and start shopping somewhere else, it just feels a bit rude to me personally. Again, a buisiness owner has the choice of how they want to run their buisiness and I have a choice of where I can do my buisiness. Even though I do not agree, it is nice to hear a different perspective on things. Thanks for the guest post!

      • Audrey says:

        @Erica @ Just Call Me Cheap,

        You are definitely right that the benefits outweigh the problems with accepting credit cards, which is why we accepted them. We would never have sold anything if we didn’t! 🙂

        However, as a consumer, I want to be aware of the businesses I am supporting as well, and to practice common courtesy by carrying at least small change for purchases of less than $2 or $3.

    • brookeb says:

      @dee, This was my thought as well. Obviously the cards aren’t fully hurting the business, or they would discontinue use. There is likely more business overall because of the acceptance, so you come out on the plus side.

      I’m generally bothered by statements that make credit cards seem like a living entity. They don’t hurt people — people misuse their credit. With business, it seems that it’s people who make small purchases on them that make it less worthwhile for business.

      • Audrey says:


        You hit the nail on the head. 🙂 Credit cards definitely cannot be blamed for any of our problems, and perhaps this post was mistitled (sorry!). People can use credit wisely or unwisely, thoughtfully or thoughtlessly.

  • Marie says:

    While I sympathize with the plight of small businesses, I don’t carry cash (or a very small amount) and pay for everything with a credit card. I pay it off every month and earn good rewards. I usually frequent the same businesses and while one purchase might be small, the next one might be a lot. If the owner would figure out at what point they break even and require that as a minimum purchase, everyone would be happy. They would have returning customers and I would still earn my rewards.

    • Aimee - AR says:

      @Marie, I do the same as you. We use our credit cards all the time because of the miles (going to China first class for free – woo-hoo!!!). I have to say, though, that I do carry cash for small purchases because having worked at a locally owned store in high school, I saw how hard it was on them to pay fees on small purchases. One exception to this is Starbucks because I figure they make enough money that I should be able to use my credit card. 🙂

      I see both side to the credit card debate. I think for a large number of people they are irresponsible using them. Two first class tickets to China would be thousands of dollars and we’re not paying a dime so for us, the airline miles are totally worth it. I also like that our CC sends a yearly statement that categorizes our spending – much faster than doing it myself.

      To each their own!

      • Crystal says:

        Have you tried going all cash for six months to see if it makes a big difference? We find we spend a lot less when we’re not swiping — plus, it forces us to stick with our budget. 🙂

        • @Crystal, For us, swiping our debit card results in fewer “just because” purchases. My husband, the wonderful man he is, will spend cash if he has it. Ususally it is only a few dollars but this adds up. Now, he thinks twice about buying a $2 pack of gum at the store because he knows I will see that purchase and proceed to tell him that I could have gotten that gum for free. I also enter every purchase into a spreadsheet so that I can see where our money is going and if we are on budget for the week. I see how the cash system works for some but for us (and my partially reformed overspending husband) using a debit card holds us more accountable for what we buy.

  • Courtney says:

    I’m guessing that although the author’s family lost money on small transactions, those costs were outweighed by the advantages of accepting credit cards. Otherwise, they would have stopped taking credit cards altogether – and the author doesn’t mention doing so.

    We own a business that takes credit cards and yes, there are fees – but the cost of those fees is well worth it when you consider the amount of business we would lose if we didn’t accept credit cards.

    I don’t begrudge the credit card companies, either – they need to be compensated for the risk they assume and the service they provide.

    Those fees are just a cost of being in business 🙂

    • Audrey says:


      You are right about the benefits of accepting credit cards! They definitely made it easier on us for taking camping reservations over the phone or online, etc. I wasn’t trying to complain about the fees, just make the consumers aware of how their thoughtless small purchases could hurt a merchant, when it would be more considerate to just pay for small purchases in cash.

      • Lizzie says:


        Thoughtless purchases?! That’s an odd description for a business owner;)!

        Maybe don’t sell things that are too cheap to run the credit card on.

        I think people missed this–it is against the contract for businesses to demand a minimum purchase to swipe the card.

        Businesses need to think about the customer. What makes it easy to shop? What makes it easy for them to keep money coming into your cash register? What gives them a good experience and makes them want to talk about your business?

        Focus on that no on the fees of taking credit cards. Customers should NOT be made to feel guilty for using a service that the business provides.

        • Dani says:

          @Lizzie, I don’t believe the author is trying to make anyone feel guilty. I think she is just trying to make people aware of these fees. I use my credit card from time to time for the rewards and pay the amount I spend on the credit card the next day or so, but I was not aware there was even fees for the business. I have never owned or worked for a small business and the people I do know who own business don’t go around talking about these things, so I had no idea. By letting people know about these fees they can decide if they want to use the card or not. It’s common curtiousy to not use the card on a $1 or $2 purchase. I buy things from companies I like, therfor I want these companies to do well, whether they are small companies or not, because I want to continue to buy their products or services because I like them. By wanting these companies to stay in business, I’ll take the small steps to insure I don’t make them lose money on my purchases. She never told us to not use the cards, just to be aware of these fees.

        • Guest says:

          @Lizzie, I agree, I think this wording sounds almost begrudging. Like was mentioned before, if you think that deeply about it, you could feel guilty for perhaps being the cause of people going into more debt or enabling them to spend money on things they didn’t need, just as their “thoughtless purchases” might cost you a little more. I guess what I’m trying to say is that this works both ways. Maybe customers could be more mindful of small purchases but by the same token you could be more mindful of customers as well.

          And, like another poster said with a gaming hall that wouldn’t accept credit cards. I think that is an awesome that they do that. A lot of times if someone has to plan, then they will end up spending less money.

          And, that also goes back to the idea that businesses accept credit cards because it benefits them overall, so I don’t think you should begrudge those who, for whatever reason, choose to pay for a smaller purchase with a credit card. but, that’s just my $.02.

  • Megan says:

    Great post! This is exactly why I try to pay cash at my local co-op and other small businesses. This is also an area where I disagree with Dave Ramsey. He encourages everyone to pay with their debit cards, but to run them through the “credit” system (i.e. use it as a credit card/signature transaction rather than a ATM/pin transaction). He argues that this gives you the same protections as if you used a credit card. That’s true, but as the post and comments above illustrate, it’s also very expensive for small businesses when you do this for tiny orders. Higher fees for small businesses mean increased prices at those businesses – and they’re already working hard to compete with the Wal-marts and Amazons out there!

    • Audrey says:


      Good thoughts! I didn’t realize this was Dave Ramsey’s policy, but I really appreciate your perspective.

    • Sarah says:

      @Megan, Do you know what DR means by saying that running a debit card through the “credit” system gives the same protections as using a credit card? Consumer protection policies on debit cards are completely different than what is standard on credit cards, and my understanding is that the type of card is the only relevant factor, not whether you push the “credit” or “debit” button when making the transaction. (I know that wasn’t the point of your comment…I’m just curious if you know more about what he meant.)

      • Tonja says:

        @Sarah, The reason I run my debit card as credit is so I don’t have to enter a pin. I have heard/read from more than a few sources that it is “safer” as far as theft and such go. Not sure if that’s what Dave Ramsey is talking about or not.

      • Megan says:

        @Sarah, That’s a really good question. Like Tonya said below, I think that the fact that you enter a pin is what makes the ATM-path “less secure.” I don’t think that ATM cards offer the same protection as true credit cards. At the very least, if you have to dispute a charge, it’s already taken the money out of your account and you’re stuck, whereas a credit card company will often side with you and adjust your bill accordingly if you find a fraudulent charge. All reasons I prefer to use my credit card and pay it off every month. It might be worth checking with your bank to see if they know of any difference in security when you run your ATM card as a credit, rather than debit, card. Anyone else have any insight on this?

  • Jen says:

    I had never thought of this before, thanks for the post! I use my credit cards for everything so I can easily track my money and use the cashback to buy all the birthday presents for my siblings/in-laws. I will try to have more cash on me for those small business donut purchases from now on.

  • Joy says:

    I experienced this during my home business selling days. I used to dread when people would pay w/ a credit card because then I didn’t make as much money.

    I try and keep this in mind especially w/ small or new businesses. We have a new family-owned tired store close by that we are trying to support so I always pay cash for oil changes or w/ a check for larger tire purchases. When I explained to them why I was doing that, they were VERY appreciative!

  • Wow – that is an eye opener to me… I had no idea the fees were so high. I guess the credit/debit cards do hurt everyone.

  • ivegotcutekids says:

    Thanks for the information!! I am a debit card user, but will definitely try to be more considerate when it comes to small businesses. I’ve been considering going to the cash envelope system lately, and this is just one more positive nudge in that direction.

  • Sally says:

    I guess this explains who is paying for those “rewards” attached to my debit/credit card! I couldn’t imagine that the *bank* would be offering me stuff for free. Clearly, they aren’t. Those freebies are provided by the vendors who pay the fee to take my credit card.

    Just thinkin’ it through, folks.

  • Michael says:

    Having owned a restaurant a few years back, I can say in my experience your best bet is to check with your bank. I used the same bank for my business that I used(and still use) personally, a local bank that has been in business over 100 years. They offered much lower rates than dealing with credit card companies directly and they provided the terminal at no charge. If you own a small business and don’t have credit/debit card processing through your bank I’d recommend calling them and seeing what they offer. You’d be surprised how much it could save you.

  • Beth says:

    About a week ago I was purchasing a smoothie from a small local store and was having to count out the change (I was short on bills but not on change). The owner said that if it be easier to use my credit card. He said that his store has their credit run through a local bank and they actually earn points for the purchases made at the store. Also, in the event of the hold up that money is not lost!

    For those of you who follow the cash envelope system that is truly risky! I have been involved in a hold up and thankfully I didn’t have much money on me. When you pull out an envelope full of cash someone with ill intent might be watching! I don’t live in a big city at all, it can happen anywhere!

    • Audrey says:


      Wow, that’s really interesting! I have never heard of earning money as a merchant for those credit card transactions, but I’ll definitely have to look into it for the future! And the theft protection is definitely a good point.

    • Sara says:

      @Beth, This is exactly why I don’t use the envelope system. I have a four year old and I’m a small woman…an ‘easy target.’ Only on rare occasions do I have cash in my wallet. Even more unlikely is to find more than fifty to a hundred dollars in there.

      I use my debit/credit (same card) for everything. Depending on the security of the store depends on how I run the card. If I have good faith in the owners I run it as debit. I don’t want to deal with the ATM fees and I have a program set up for a percentage of whatever I spend as debit/credit I get back in rewards points. In two months alone I should be able to get 10-20 dollars back in gift cards. I agree with being considerate but if it was an issue to the business owners they should make it clear to the customers what they prefer. There are plenty of places around here (North AL) that only accept cash or checks.

  • Wow, I didn’t realize how high the fees were to merchants. Good thing I mostly use cash 🙂

  • Bonita says:

    This is a very interesting post. I’m fairly new to owning my own business and was shocked to see the credit card rates. Yikes! It definitely takes a bite into the profit margin! That’s hard when you’re just starting out and all profit goes right back into the business so it can grow. That chunk stings! It definitely makes you think before using a credit card when buying from others.

    When we set up the credit card purchasing with the bank we were told that it’s perfectly fine to pass on the fee to the customer by telling them upfront that a charge will be added to any credit card transaction. I haven’t done that yet, but haven’t ruled it out for the future.

    • Crystal says:

      @Bonita, I am a small business as well, but my cards are processed through ProPay and it is in their TOU that it’s illegal to pass on fees to the customer. So weird. They say that credit card companies don’t want these fees being passed on to the customer because, obviously, they want the customer’s use of the card to be as easy as possible (and the be the only ones collecting fees from them too I guess!)

  • Flo says:

    Regarding transaction minimums being prohibited for credit card purchases, that has become a thing of the past.

    Effective July 21, 2010, per the Durbin Amendment, merchants are allowed to now set and enforce minimum transaction amounts up to $10.

  • Shari says:

    State law can also affect credit card decisions by small business owners. Here in Maine, it’s illegal to mandate a minimum purchase amount for credit cards. It’s also illegal to make credit card users pay more for an item than cash customers (unless you are a gov’t entity -nice how the government makes rules that do not apply to them). In Maine, it is okay to offer a discount to people paying with cash, so that’s the way some gas stations do it. They have to advertise the higher price on their signs, but if someone chooses to pay cash, they can give the customer a discount. It’s a slightly different way of doing business, but one way is legal and the other is not.

    • Jessica A. says:

      That is what most gas stations around here do- they offer between 5-10 cents off per gallon if you use cash or check.
      On the flip side, many places around here do no accept checks which leaves me with few options since I rarely carry cash with me.

  • I guess Dave Ramsey had it right when he said cash is king. I don’t have credit cards but have used my debit card as credit.

    I have done the cash only system from Dave Ramsey’s TMMO, but have resorted to using separate debit cards for each category. We have (1) for gas, (1) for groceries, (1) for home school etc.

    I have a fear of losing my cash because I sometimes get overwhelmed shopping with the children, tracking coupons, recyclable bags, my keys, phone and purse.

    Although I don’t shop at many small chains the cost to the retailers is still something I will consider when using my debit card option over the credit option.

  • Rebekah says:

    I use my credit card for most purchases. I pay it off every month and we earn cash back. With my husband’s purchases of gas for his business, we earn up to $250+ a year. That might not sound like much, but every little bit helps.

    I try not to feel guilty about making financial decisions that benefit us, even if it “hurts” others. For example, I get a lot of items for free or super cheap now that I use coupons. If I felt guilty every time someone else was losing money when I shopped, I would never save as much as I do. Businesses (retailers and vendors) make decisions about how to promote their products and sometimes they lose money, hoping that their other prices will make up for what they lose. If I almost always buy only the loss leaders, or things that are free with coupons, I am not making the store money, but I am saving my family money. I don’t try to hurt others on purpose, but if I am worried every time I shop about how much money a store or vendor is losing, I would not save nearly as much money for my family.

    If the store is really losing money because of my purchase, they can choose to stop allowing credit card purchases. However, if the store realizes they are still making more money by accepting the credit cards, then they will choose to continue accepting them. They have to make smart decisions for themselves too. They are not just accepting credit cards because it helps the consumer out. They are accepting them because it helps their business out.

    • laura says:


      Couldnt agree more!

    • Lizzie says:


      Excellent points! The businesses need to think like businesses ;). Averaging the sales over the week or month rather than each transaction is a much smarter way to look at things.

      I had many customers spend $100 or more when they found out I took cards. Otherwise they had $10 in their purse. I for one would rather pay a transaction fee on a few small sales and not lose out on the huge sales.

    • William says:

      Yes, Rebekah a smart store will do as you say but some feel that in order to stay competive they must take credit and debit cards. Some even feel they must accept all major credit cards. So gave them a break. If your transaction is under $20 try to use cash. Why $20 ? Because, I’ve observed that a $20 bill is the smallest bill that a store will check to make sure it is real.
      I also want to make a point from the original story. When you use a credit card you are using the bank’s money not your own. This is why their is an interest payment if you don’t pay off your total at the end of the month. If too many people don’t pay off their bill or not enough of it or the bank makes some bad financial decisions the bank can go broke and this effects the economy.

      • Audrey says:


        That’s a great additional point that I hadn’t thought of. Not only is the customer affecting the merchant, but that transactions effects spread to all of us eventually!

  • I’m not sure how many merchants do this, but I read a blog post recently at the NY Times that discussed a report that found that when credit cards are accepted and used at retail locations, merchants have to raise prices across the board to compensate for the costs of credit cards, and those who either choose to use cash or cannot obtain a credit card end up subsidizing those who do. Here is the link for those who are interested in reading it:

    We still are using credit cards currently because it was so hard to track cash purchases, and we have found that we earn enough points to get rewards every few months. But this article was really helpful in reminding me how the little purchases hurt merchants – I honestly had no idea that the fees were that high. I sell a few things here and there on ebay and even cringe when I have to pay a listing fee, so I can’t imagine paying as much as merchants do on a cup of coffee. I definitely will try to combine my shopping trips or carry a little cash for those little purchases!

  • jeanette says:

    some stores i have went in have a policy that if using a charge fo your purchase you have to spend over a certain amount some state $5 or more and i have also seen $10

  • Emily says:

    Thank you posting this. Many people including myself have absolutely no ideas that the merchants are being charged an additional fee per transaction. I thought they only charge a percentage of the transaction amount. I will keep that in my mind. If it is not illegal to set a minimum amount, it would be a good idea to do so. Otherwise, just explain the fee incurred to the customers and ask if they are willing to pay cash for it. I believe many people, once being explained, will be willing to do so if they have cash. If they don’t carry cash, they will keep that in mind and pay cash for it next time. Simply offer the item free for them may tick they off. I believe there are only a few people that inconsiderate enough that even knowing the fact but yet still choose to use credit card.

  • Connie says:

    First, I use my debit card almost exclusively and I don’t feel bad about it. I’m also a retailer and understand the costs involved (although I’m charged considerably less than your bank was charging you for accepting debit/credit cards – perhaps some shopping around for a better rate was in order). I don’t worry about single transaction but look at the big picture. I also would never insult a customer by imposing a minimum (illegal in this state but you CAN offer a cash discount) because it can be degrading.

    My husband and I were once at a tiny story, in the middle of nowhere, on the other side of the state with two starving and crying children and we wanted to buy $12 of food for them. They would not allow us to charge less than $25. Made us feel awful for even asking. Gave us all kinds of grief about the fees, yada…yada. We told them just to charge us $25 for the $12 in food, they refused. So we scooped up some chips and candy to meet the $25 minimum. I remember that transaction to this day and it had to be 20 years ago.

    As a retailer, it’s better to price the items in your store to cover the charges for the small purchases and again look at the overall balance sheet and not each individual purchase. I lose money on sale items all the time when people use coupons at my online store, but it’s part of the cost of doing business. If I don’t allow for losses like that, then I’ll be out of business in no time. Same for the person who allows less than $5 charges.

    Just my 2 cents.

    • Audrey says:


      Wow, that’s awful. First of all, I think $25 is a little ridiculous! Secondly, I don’t want to begrudge people who genuinely were not prepared to make the purchase or forgot their cash, etc.; that person has been me before!! Just wanted to make people aware of the effects of their spending. Thanks for sharing your story!

  • Courtney says:

    Like the others who have already mentioned it, I would recommend that you check around for a better credit card deal. Our business only pays a small monthly flat fee and then a percentage of each transaction.

  • Jennifer says:

    I have a question – something I have always wondered. When we use our debit card are there still those high fees attached? I also use my debit card as a credit card because I don’t like using a pin and it means no fees from my bank. It seems nowhere likes to take checks anymore and while we use cash for many, many things, I also don’t like carrying a ton of cash around.

  • mommyfixit says:

    I discovered the same thing when I started running the finances for a small web business. From that time on, I paid particular attention when shopping at the family-owned hardware store in my town. It is one of the few stores in which I still write checks.

    • Chrys says:

      @mommyfixit, And yet, a bad check would cost a merchant $20-$25. If I were a merchant, I would think a check would be the least favored type of tender. Of course, not everyone writes bad checks, but I’d imagine just one far outweighs the credit card fees of many…

      • mommyfixit says:

        @Chrys, My local hardware store owner actually told me his preference for a check over credit cards on small purchases. Of course, I’m in a small town, and he knows me by name and that I’m not going to stick him with a bad check.

  • Crystal says:

    The thing is that unless you’re paying cash, these same fees apply, regardless of whether the purchase is truely “credit” or if it’s just credit/debit that’s subtracted straight from your checking account. So, whether you’re going into debt with a credit card or paying with a bank card, the company will still have some cost involved with processing it.

  • My Boaz's Ruth says:

    My friends own a gaming store. They don’t accept any kind of credit cards. They figure their business is entertainment and they don’t want their customers and friends tempted to pay grocery money for a game — and that would be much easier if they took credit cards. They took cash and checks and that was it. And if you did not have it, they directed you to a cash machine nearby.

    And no, they were not flying under the radar doing this.

  • Margaret says:

    Interesting point, however, this is why sometimes small cafes/boutiques ( even in NYC) will not take cards due to this reason.
    If you have the option of taking cc/debit cards, this just comes with the territory. Some people just do not carry cash on them.

  • I’ve never thought of it that way. I’ve always kind of been annoyed when the business has a $5 minimum to use my credit card, even though I knew they had fees to pay. I just didn’t know the fees were a flat rate (like $1) plus a percentage of the purchase. Makes sense to just “Give it Away Free”. Thanks for the insight. I’ll make sure to use cash now!

    ps…is this the same with a DEBIT card that has the Visa or Mastercard logo?

    • David S. says:

      @Cashback Shopping, depending on the merchant agreement with the credit card company, sometimes debit cards cost the same and other times they cost less (but only when used with a PIN generally, when used for a signature transaction it’s usually treated like a credit card for fees). There’s a LOT of variety out there in merchant accounts. Some great deals, and some really really bad ones with much higher interest rates and fees. And a lot of it depends on the type of merchant, it’s based on risk categories. A retail clothing store probably pays a LOT less than any online store because online transactions are inherently riskier (no card present to swipe, easier to be fraudulent) and the type of business and how often there’s fraud plays into it as well. Since credit card companies are legally required to cover fraudulent transactions above $50 (and many cover them fully as a feature gimmick) if you report them promptly, they have to charge enough in fees to the merchants (and you in interest of course!) to cover all the fraud. I know, wonderful to pay for all the crooks, too! So you really are paying for fraud, just not at the individual level, but in higher interest rates and higher prices that merchants charge to cover their fees that pay for the fraud. Anyway, since some businesses have a higher rate of fraud and chargebacks (where you tell the credit card company to reverse a transaction if the merchant won’t–this costs the merchant usually $20 to $50 by the way each time it happens, whether they “win” the argument about it being a legit charge or not, and if they have too many it can raise their rates or cancel their merchant account) they have a higher transaction rate they pay because of the risk for their industry as calculated by the credit card companies. And how good a deal they’re getting from the bank who sold them the merchant account–some of them are just highway robbery! It pays to shop around, but some merchant accounts require contracts, often multi-year, so a business might have to wait to shop around if they have a bad long-term contract.

  • Beth says:

    Thanks so much for sharing this story- it is really good to think about the effects of credit cards not just at the personal level but at a systems level as well.

  • Elizabeth Mengelt Walters says:

    I completely understand the author’s point, but I NEVER carry cash. I am always running around trying to do too many things at once, chasing two kids through the store, and trying to manage coupons. Adding in cash is ridiculous. I charge everything and pay it all off at the end of the month, EVERY MONTH IN FULL. If a store clerk asks for a check instead, I will gladly write the check. But, I get points back for each and every purchase so even the little ones add up. Don’t assume that each person who is charging an item is doing so because they truly don’t have the cash, sometimes it is someone like me who prefers to deal with plastic instead of cash.

  • LYNN says:


  • Vicki says:

    I understand why the businesses make the 5 or 10$ minimum..but some stick to it so strictly…a few years back I starting working at a drugstore, it wasn’t opening for a week or two so we were there stocking shelves, etc. On my 15min break, I went across the street to 7/11 with one of tne of the girls I work with. We were looking to buy a bag of chips, soda just some snacks since our store wasn’t open yet. They had a $10 min purchase sign and the cashier stood there and watched us pick out $10 worth of junk food and magazines because we had no choice, he wouldn’t let us pay with a card unless we spent the $10. We had no cash and as two teens, weren’t able to drive. I mean in situations like that, retailers need to be more flexible with their min purchase requirements. In a situation like that, customer service should be more important than a few dollars! Haven’t shopped there since and it’s been over 2 years..1st impressions last a lifetime.

  • Sarah says:

    this is all really interesting. i can totally see both sides of the situation… thanks for sharing!

  • Lindsay says:

    I came back to read this article again today. Very interesting. I’m a debit card user as well – find that cash disappears quickly! I’m going to try to be better about carrying a few bucks in my wallet for small purchases. Thanks for sharing!

  • Audrey says:

    Thank you everyone for your great comments! It’s been interesting to read the different perspectives and suggestions, and I’m learning along the way!

  • Interesting! That’s a point which I have never been educated on until today. Thank you.

    I’m wondering if it’s okay for me to use a credit card for small purchases at larger chain stores. I often have enough coupons at Rite Aid that my purchase is well under a dollar, which I pay with a credit card. Do the big retailers have better deals with the credit card companies so they aren’t hurt by very small purchases? Is there a magic number I should remember (pay cash for a purchase smaller than $X)?

  • I knew about the surcharge, and understood that as being the reason some stores require a minimum 5.00 purchase, but I never realized it was that high! For some reason I always assumed it was for a percentage of the purchase amount. In fact, I was always extremely frustrated and wary of stores that required a 5.00 minimum, feeling that they were forcing me to buy something I didn’t need just for the ease of using my debit/credit card. Now I know better!

    I go to the same gas station every time, I really like the owner, its a small family owned store, and they are always super nice and polite too me. I use debit/credit for a lot of my purchases (we are moving to a cash only system soon) but after reading this I realize that even though I might have cost them a lot of money over the past few years, since I usually buy small items, they still smile and greet me like an old friend. Here I thought I was doing them a favor and showing Customer loyalty by going out of my way to buy my coffee and 1.00 snacks at their store instead!

    Truly eye-opening, and I will no longer be using credit/debit for purchases at smaller stores because of it. Thank you so much for sharing that with us!

  • Ginger says:

    I’ve recently moved to an area where it is common for the small businesses not to take a card, I’m sure for this reason. I’m from a larger city where I hadn’t experienced this, so I was surprised to walk into several stores, and have to walk right back out, because I don’t have cash on me. While I understand the reasoning explained here, the business has to understand that NOT taking a card is a business risk they have to weigh. In this day’s society, most people don’t carry cash. Small businesses are closing left and right, because they didn’t plan properly for the costs of business. I expect the lights to be on when I walk in the door; do I have to pay a portion of their electricity bill too?

    My husband and I simply won’t patron these places, because we don’t carry cash. I have a credit card, and pay it off at the end of each month. It is simply more convenient (and safer, as a very unlucky someone who has had her wallet stolen THREE different times) to carry plastic. [Side note: even if I didn’t use the card responsibly, the credit card companies are another business, they make their profit off of people who don’t have money, and want to borrow some, similar to a car rental, and if the person who uses the card, with the knowledge of their interest rate, that is their right and their concern what they do with their money, not mine.] Unfortunately, this is just part of the cost of doing business, the small purchases with the large. But as a business, that is certainly within rights to not accept a charge card. It’s just our right to go somewhere else that makes the experience convenient for the CUSTOMER, instead of the business.

    As for advice for small businesses to set themselves apart, I’ll relate a short story. There is a small deli, family-owned, right across from my former workplace. Their food was good, but nothing special. Their prices were good, but I certainly could have gotten larger portions and possibly tastier food elsewhere? So why did I keep coming back? They offered something that no Subway does — when I came in, they greeted me by name, knew what I liked and suggested things, asked about my life. In the depths of the worst of the bad economy, they opened a second location across the street, because they had too much business. It’s not the economy closing the small businesses. A small business is rarely going to be able to compete in prices or convenience. So what else is there to do? Offer something I couldn’t get elsewhere–an experience.

    • Flo says:

      That is not about convenience for the business; it is about survival. And since you won’t go back to a store that doesn’t take your card, you will never know what sort of experience you have missed.
      I carry a minimal amount of cash with me most of the time because I refuse to use any sort of card for a dinky little purchase. If I don’t have the cash, I can go without. In 40 plus years, I have had my wallet stolen once…because I left it under my chair at a restaurant. I lost about $20 and change. (Funny thing was, the wallet was returned about 6 months later when a wrecker company took possession of a car they had towed in lieu of the unpaid tow bill and found a couple of wallets that didn’t match the names on the registration. Everything was there except the cash.)
      Anyhow, I like to support local businesses (like the wrecker company above) and do not find it an inconvenience to carry a little cash. I am a cheapskate myself, and have never been willing to force a business to pay those exorbitant fees because of my whim of the moment, which is what my single tiny purchase usually is. I hope you rethink your stance and open up to the community provided by doing business with your neighbors.
      Yeah, I know this is five years later but it takes a while to encounter many of these posts.

  • Tammy says:

    We get ice cream every weekend on date night, and prefer to use our card, as per usual, but since the locally-owned place across the street from us won’t take a card (unless you spend $10) or more, we drive down the street to Baskin Robbins. Instead of losing $52 per year on the $1 fee, the owner has now lost probably hundreds of dollars per year in our business altogether. I wonder about his trade-off and how long he’ll stay in business. Love that there are small businesses and love their variety, but I just refuse to carry cash. It’s 2010!!!

    • David S. says:

      @Tammy, it’s technically against the contract stores have with the credit card processors to not accept credit cards for any amount of any purchase. So there can be no minimums, but some stores post signs otherwise. They can get in trouble if reported to the credit card company (you could call the number on your card to report). Similarly they can’t require a photo ID to take the card, just that it be signed. However, I would hesitate to report a small local business since they’re only doing it to try to avoid losing money–whether it helps or hurts their business it of course up to them to figure out, and they risk being reported. A local chinese restaurant has a $5 min. credit card sign posted and I try to use cash, but I didn’t have the cash once and paid like $3.75 on a credit card without being challenged. A national chain like Wal Mart I wouldn’t really hesitate to report, but I haven’t bothered (we have a local one that requires ID now against the contract…probably because they’ve had issues with stolen cards so regardless of whether it’s against CC policies, it’s probably justified for that store is my guess).

  • Lyra says:

    I know a lot of small businesses don’t allow credit charge purchases unless the total reaches a particular price. I’ve seen that price be as low as $5.00 and as high as $10.00. I guess it just depends on which the business is using.

    I also know a lot of small businesses that give a discount if the customer uses cash no matter what the amount of the purchase is. It’s usually 10%. I reckon they are passing the savings of not having to pay those credit card handling fees.

  • Karen says:

    I paid my bill at the hair salon with a new system my stylist had implemented. As you have stated, the fees when using a card reading system had become very high. She used a reader connected via USB to a tablet as her payment system, and the software worked just fine. My receipt was sent straight to my computer. An

  • Karen says:

    I didn’t realize how the fees could be so high on a small purchase, we usually have some cash on hand but not always. in the original example of the1.50 cofee, maybe some creative marketing. Sell a punch card with 5 coffees on it for 7.50 and someone that is likely camping all week can use it the rest of the week. With on credit card swipe. In other types of business maybe it helps get a return customer. You coul easily print these out yourselves. This is only one example, but a little creative thinking could make it easier for the merchant and the customer. Why limit either oneselves.

  • Julie says:

    Here is a thought: up the price on camp ground rental and offer the coffee as a perk. The candy bar’s and snacks have a minimum purchase and politely explain why you have a minimum purchase. A note stating that small businesses have to pay a fee for every swipe of the card. If they want to pay the fee instead of making the minimum purchase let them. Good luck!
    For those who don’t carry cash – your loss is my gain.

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