How the F are you spending 80k a year? What are you buying? I eat and drink like a king and I have to be spending less than 1k a month including gas and cellphone. The occassional vacation might be a few thousand max. You are telling me you spend almost 7k a month? Even if your rent is 3k a month in NYC and you charge that how is that possible?
^ He get’s there because of work expenses. If I could put my kids’ daycare and my mortgage payments on my card, my bill would be $7k+ every month. Without the daycare and mortgage, it ranges from $3,200 - $3,500 per month for groceries, gas, utilities, restaurants, etc.
^Business spending. My personal expenses are far South of $1k a month. At my last firm, one could use their personal card and submit itemized recieipts for reimbursement. This included travel, hotels, cabs, meals entertainment, rental cars, etc. If I’m on the road for a week, it was not unreasonable to spend $2-3k. My current role is less travel, but the job I had before this had me zipping off to satillite locations regularly.
That is correct, commander. And he (the merchant) gets most displeased with this apparent lack of transparency.
I think the partner said that he plans to try to recapture it on next year’s tax bill. But the transaction was easily identifiable on our bank statement, so we knew exactly which customer to raise rates on.
But we had a similar issue with “non-easily-identified” clients, but they were a much smaller $ and %. How you’d deal with this same issue at a retail store, I have no idea.
^ Wow, I had no idea. I always thought it was a straight percentage of the sale plus maybe a swipe fee. I assume that only applies to small merchants? I can’t imagine Wal-Mart would stand for that.
…and this answers my OP question. They’re sticking it to the merchants.
To clarify–we get a bank statement that details the charge on each and every swipe. A $3,500 tax return is easy to identify, because we charge significantly less than that for most 1040’s. This guy had several entities that we did work for, so it wasn’t just a 1040.
However, there were a lot of $150 and $200 swipes that were unidentifiable, because the statement doesn’t say whose card it is. It just shows the gross amount and the fees paid for that swipe.
It used to really chap my @$$ when I saw a merchant who added a “5% credit-card fee”. But after looking at the bank statements, I wonder if 5% really recaptures all your lost profits. I’m very serious about that.
Wal-Mart, being the corporate superpower that they are, probably brokers some kind of a deal with its bank. In that case, I have no idea who pays for it.
Its bank? Now I’m confused again. I have 2 MasterCards, the aforementioned Citibank AAdvantage card and a CapitalOne card. Let’s assume I bought gas this morning at my local, unaffiliated station using my Citi card, drove around a lot and bought gas again at the same station later in the day using my CapitalOne card. Will that merchant likely be charged a different fee for each of my transactions?
^ I don’t know much about this, it depends on the terminal vendor. I know Square has a nice business model for the little guy making that service advantageous to bank products.
I think the big boys work directly through Visa/Master Card to get wholesale fees versus a vendor who provides a POS terminal for the little guy. You know what I’m talking about.
^ I don’t know much about this, it depends on the terminal vendor. I know Square has a nice business model for the little guy making that service advantageous to bank products.
I think the big boys work directly through Visa/Master Card to get wholesale fees versus a vendor who provides a POS terminal for the little guy. You know what I’m talking about.
When Wal-Mart began accepting credit cards, I’m sure that Chase (or whoever they use) didn’t dictate the terms to Wal-Mart. Wal-Mart probably told Chase how much they would be willing to pay. Wal-Mart probably has the power to dictate to Chase how much it’s willing to pay in fees–not the other way around. Greenie’s Tax Service doesn’t have the same “dictate power” that Wal-Mart has. (I don’t know that Wal-Mart told Chase that it refused to pay for rewards. I’m just guessing. It might pay for them because the backlash would be too much to deal with.)
And yes–the merchant paid two different fees. He paid significantly more when you used your rewards card than when you used your non-rewards card.
Sounds incredible, but it’s certainly true.
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Here’s a link to a newspaper in West Texas, about 90 miles from where I live. I lived here for about three months when I was in the Marines. In fact, I lived here on September 11, 2001. (I’m sure you all wanted to know that.)
In a piece of investigative journalism, this person actually set up their own company, just to see how the credit card stuff shook out. Here’s the result.
http://www.gosanangelo.com/news/2010/dec/12/who-pays-price-for-reward-credit-cards/
I’m also a CPA. although I don’t take credit cards. Here’s an interesting arbitrage opportunity. In relatity it’s probably a lot more work than it’s worth.
ChoicePay.com/fed charges a 1.88% fee for federal tax payments with a credit card. Using a 2% cash back card, there is a 0.12% profit to the taxpayer. It’s rather small, but if the taxes are high enough, you could make something off of it.
Although again, I still wonder how ChoicePay and their processor is making a profit if the consumer is being reimbursed the 2%.
In the past 6 months, I’ve spent 38,000 per mint. I’ve earned $1,712 in cash back bonuses plus an additional $500 in cash back cards (used for spending categories I wasn’t earning >1% cash back). over that period.
CvM, if you are staying in hotels or eating at restaurants you should get the US Bank Cash Plus. You choose the categories, so you can choose the 5% categories based on what other cards are offering. You really should get this to fill in the gaps of your calendar.
I’ve applied for that card twice and got dinged both times despite my appeal. Last year I had like 40 hard credit inquiries (yes 40!). While my loan officer just needed and explaination, many financial institutions get worried with pecking order when you have so many credit cards.
A good CFP would advise you to stop applying for so much credit.
Of course, CFA doesn’t teach that in the curriculum. +1 for the CFP!!! 
Interesting topic… something we use everyday like credit card i realize how little we know about it.
But why? I have never paid an interest charge nor a fee to any of my credit card companies. I maximize return on personal/business spending. And I often get a ‘sign up bonus’ for cards which can be substantial (Sapphire was $500 cash bonus when I was approved). This adds up. Also, my loan officer was taken back, but after seeing a perfect ontime payment history, my mortage was approved without hesitation.
So, why should I stop applying for so much credit? Today my CreditKarma FACO score is 790.