The avalanche of seemingly free enticements that credit-card companies offer is not free at all when you factor in the interest and fees that consumers pay, including charges they don't even know about ["Credit-card users reap the rewards," July 12]. The most costly of these is the hidden "interchange fee," averaging up to 2 percent on each and every plastic payment.
Interchange fees cost consumers $26.3 billion in 2004 alone – more than late fees, cash-advance fees and annual credit card fees combined. Most consumers don't know about interchange fees because retailers like my company pay them and must build them into the cost of products. Credit-card company rules prohibit retailers from disclosing the interchange fee on receipts.
These fees help pay for all the "free" airline miles, gasoline, mortgage rebates, restaurant meals and vacations. They also help pay for the 6 billion credit-card junk solicitations that consumers now receive each year.
When consumers cash in their credit-card awards, they are simply recovering money already spent on credit-card payments. Those consumers who don't or can't are simply losing money in this credit-card rewards game.
[Source: Orange County Register, "Letters to the Editor", William R. MacAloney, Chairman and CEO, Jax Markets, Anaheim, CA]
