How the Visa and Mastercard Credit Card Lawsuit Affects You

A recent settlement between merchants and Visa and Mastercard could result in increased fees for credit card borrowers. In this blog post, I’ll discuss the lawsuit and how it may affect you in the long run financially.

Key Points:

• A settlement with Visa and Mastercard could increase borrowers’ fees.
• The lawsuit against Visa and Mastercard resulted in lower business transaction fees for merchants.
• Be aware of hidden fees when applying for new credit cards due to this lawsuit settlement, such as annual fees, higher interest rates, increased balance transfer fees, and cash advance fees.
• Credit card transfers could result in higher interest rates after the introductory period ends.

Visa and Mastercard Settle a Two Decades-Long Lawsuit

For a while now, we have seen those signs, especially at gas stations where there is one price for gas if a credit card is used versus a lower price if cash is used. Of course, at least for me, the days of carrying cash are long gone, like for so many of you, so I always got stuck paying the higher rate.

But now, after more than two decades of litigation, consumers won’t have to face that choice. Now, fees charged by Visa and Mastercard will be capped. However, the settlement is only for a three to five-year period.

How Customers May Ultimately Pay the Price

Because Visa and Mastercard charged businesses anywhere from one to three percent on transactions, merchants passed that expense on to the consumer. Those fees and costs add up quickly for the merchant and the consumer.

At one point in my law practice, fees cost me thousands of dollars per year. As a result, I knew many of my colleagues were only accepting cash or checks. Now imagine retailers who generate thousands of dollars daily.

Who Does This Credit Card Lawsuit Affect?

The settlement is with merchants and business owners, not consumers! Here’s where my cynicism skills go on high alert. If this settlement will cost Visa and Mastercard billions, do you not think they will try to compensate for that loss?

This means moving forward, be careful with any new credit cards you apply for. As you have heard, “read the fine print.”

What to Look For When It Comes to Credit Card Fees

The settlement with Visa and Mastercard will likely result in fees passed on to the consumer. So watch out for “hidden fees” that will cost you more in the long run. Here are some fees to take into consideration.

Annual Credit Card Fees

Lately, I’ve been receiving credit card offers in the mail with specific features that make it stand out—for example, credit cards that are all black, even one made of metal. I guess I’ve been paying off my credit cards lately, which has increased my credit utilization ratio and resulted in these offers.

Biden Reduces Credit Card Junk Fees

However, the catch with all these credit card promotions I’ve been receiving is an annual fee, which doesn’t interest me. Usually, these credit cards offer premium rewards programs such as travel benefits, but the only traveling I do is in my travel trailer, so it doesn’t interest me.

These annual fees can be steep in price, as much as several hundred dollars annually. Plenty of credit cards with no annual fees, so shop around.

Credit Card Companies May Charge a Higher Interest Rate

Interest rates can vary per credit card, and what it costs you per month could add up, so before you apply, find out the interest rate. If the interest rate is lower, it might be worth applying for a credit card with a lower credit limit.

Over time, the creditor will likely increase your credit limit.

Watch Out for Credit Card Balance Transfer Fees

I blogged a while back about balance transfers. While credit card companies typically use promotions where the transfer balance is free, it generally is for a certain period, say six to twelve months. After that, the interest rate may even be higher than you were paying before.

So, while the transfer may save you money initially if the balance is paid off by the time the promotional period ends, if not, you could end up getting into more debt.

You can read my my blog post about credit card balance transfers via this link.

Need more Cash? Beware of Cash Advance Fees

Withdrawing cash or cash advances from your credit card typically has a “cash advance fee.” These fees tend to be much higher than a regular transaction fee compared to a debit card.

Also, the interest rate on cash advances may be higher, and interest will start accruing immediately. So, unless facing an emergency, cash advances should be avoided.

To summarize, due to the settlement lawsuit of Visa and Mastercard with merchants, be careful when applying for new credit cards with hidden fees as creditors try to pass the loss to their borrowers.

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