Credit Card Fees Add Up!

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Calculator. Free image from rentvine.com

Are you concerned about the Co-op’s financial viability? If so, you might want to pay attention to this great way to help the Co-op save money. I find myself believing, after all these years, that lowering our Co-op’s credit-card-fee expenses, and soon, is an excellent way that we can all help Honest Weight to lower expenses by making some small changes. In this article I’ll show you how we can work together make this happen by taking a minute to think about how we use debit and credit cards while shopping.

What Does Purchasing by Plastic Cost the Co-op?

Co-op Finance staff person Alex Mytelka recently noted that Honest Weight spent almost $260,000 on credit card processing fees in our 2014-2015 fiscal year, and our Interim CFO James Guzewich said that credit card processing fee costs are continuing to rise at HW (projected to be $283,000 in 2015-2016).

The rest of this article describes every means that people use to pay for their purchases at Honest Weight, and how much each way costs our Co-op. It also describes what we can change about the ways in which we make purchases to save our Co-op loads of money if, and only if, a BIG bunch of us who can make the change do it as soon as possible!

What used to be my favorite way of paying at HW, using a credit card, costs the Co-op the most. According to Alex, our average credit card processing fee is $1.12. Credit card processing fees typically have two parts: a small flat fee (generally 10 cents), then a percentage fee (ranging between 1% and 3% per purchase, depending on your card). The advantages for the customer are that they get an extra month to pay off that debt, and the rewards programs their credit card company may offer. It’s important to note that your credit card company isn’t paying for these rewards — they are coming out of the transaction fees faced by the places you love to shop, like the Co-op!

Over the years, I’ve seen some customers pay at HW using a debit card. Based on Alex’s report, the cost to HW averages roughly 32 cents per purchase. Debit cards only have a flat fee — no additional percentage. This flat fee, however, is typically higher than the flat fee on credit cards. So, using a debit card can actually be worse for small purchases, but becomes better and better as your purchase amount increases.

What do other Methods of Payment Cost the Co-op?

If you use a check to pay for your groceries, the processing fee is a flat 20 cents. Checks do have other associated less tangible costs, like the time spent tracking down bounced checks.

If you use cash to pay for your groceries, the cost to HW is roughly 14 cents per transaction. This is an estimate including the labor cost of counting cash, possibility of over/shorts, and armored vehicle transportation to and from the bank.

Gift Cards to the Rescue

If you use the Co-op’s Gift Card to pay for your groceries, all of the above costs still apply, but ONLY ONCE! This is the big benefit of gift cards. Instead of a 32 cent fee each day when you buy your coffee, there is only ONE 32 cent fee when you put money on your gift card. Not to mention, using gift cards are a great way to budget your personal spending, allocating a certain amount of money to be spent at the Co-op weekly, or monthly — however often you want to recharge your card!

So, if you don’t already use an HW gift card, plee-eez consider starting to use a gift card for all your HW purchases, as soon you can, and for as long as you live!

After you buy your own HW Gift Card, or if somebody gives you one as a gift, it’s easy to add more money onto your gift card by recharging it. How you do that will also cost HW money, and there’s the same better and worse ways to do that also.

Re-charging a Gift Card

For gift card re-charge using a credit card, the cost to HW roughly averages $1.12 per transaction. The same fee structure discussed above applies, but only ONCE for the recharge. Each time you swipe your gift card after the recharge, there are no fees.

For gift card re-charge using a debit card, the cost to HW roughly averages 32 cents per transaction. Again, the fee only applies once.

For gift card re-charge using a check, the cost to HW roughly is 20 cents per transaction.

For gift card re-charge using cash, the cost to HW roughly averages 14 cents per transaction.

Lowering credit card costs, if a very large bunch of us approach it smartly, is our best chance of significantly lowering our HW costs. To do that, a big bunch of us (not 20 or 30, I mean like an extra thousand!) have to change the way we spend money at Honest Weight…and starting real soon!

I care a lot about Honest Weight, and I hope you do also. Tell this newsletter’s editors (send them an email at editors [AT] coopvoice [DOT] com) if you intend to commit to making any of these changes to help save the Co-op money, and they will add your name to a list on the Co-op Voice.

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Ed Miller joined Honest Weight in 1976, and was on the HW Board for roughly 15 years. Ed is retired from his paid jobs with NYS, and remains an active, voting HW member.