Those Credit Companies

I just finished my reading assignment for BA-250 (Small Business Management) and a few of the facts regarding American credit card spending jumped out at me. According to the text, Essentials of Entrepreneurship and Small Business Management by Thomas W. Zimmerer and Norman M. Scarborough (2008), "[customers] now make 30 percent of personal consumption expenditures with credit cards." Now this is a fact that I can identify with and I would guess that my percentage is much higher. Nearly all of my daily expenses are charged to my credit card account. Heck, even my monthly rent bill is put on my credit card. One reason I do this is because I receive a cash back reward for all purchases of at least 1% (3% on gas and groceries). I figure it is the only way I will ever get a discount on my rent (even if it is only 4.55).

While the 30% statistic really didn't suprise me, one that did was the fact that the average interchange fees for Visa and MasterCard transactions "will increase from 1.75 percent to 1.86 percent in 2010." Now I know why I can get 1% cash back fee for any purchase I make. It's because Visa and MasterCard are still getting .75% to .86% of that purchase I just made. And with annual credit card charges of more than $2.2 trillion a year in the U.S. alone, the credit card companies are getting at least 1.75% of that or $38.5 billion dollars!