Next time you are paying for your big gulp at 7-11, the cashier will probably be asking you to sign a petition. From coast to coast, this chain of convenience stores is protesting what’s known as credit card interchange fees a.k.a. the transaction fee when a credit card is processed. These amounts include a flat fee, plus a percentage fee. For most purchases, these aren’t a problem because they only work out to be 2-3%. However with small purchases (such as those at 7-11) the fees ends up being higher on a percentage basis, since the flat fee portion of it skews it higher. For example, if the flat fee was 10 cents, and the percentage fee was 2%, that would equal 13 cents on a $1.50 coffee…. or around 8 to 9% of the purchase price. So as you can see, it’s understandable why this could be a problem when it comes to tiny purchases.

Indeed, there should probably be an alternate payment structure when it comes to smaller purchases. But there are a few important advantages businesses have when they’re accepting card payments. First of all customers have the ability to spend money they may not otherwise be able to afford with cash, this in turn means more sales for the business. If the customer doesn’t pay their charge card bill, the store owner is not responsible and still gets the money no matter what. It’s the credit card company that takes the hit, and with most of them seeing a 10% default rate right now by cardholders, it’s definitely a big hit to take. The same applies to fraud, and criminals are notorious for using stolen cards at places like convenience stores because they know they’re not likely to be asked for ID. In addition, card payments simplify payment processing because it’s all done electronically. Otherwise, someone has to manage and account for all the coins and cash that comes in and goes out. This is a tedious and time consuming process to say the least – meaning an employee on the clock would be doing this.

So there are a number of benefits that debit and credit cards bring business owners, but it’s true, the fees can definitely be a pain in the butt when it comes to smaller purchases… like a big gulp at 7-11. Hopefully, the banks and businesses can work out this problem and find a happy medium.

Any company related to the financial industry has gotten quite a bit of negative press as of lately. However, for Visa, times are good.  According to their most recent quarterly report, earnings are up 40% when compared to the same quarter one year ago. How is this company growing while the rest of the sector is struggling?

Well, for starters, Visa does not make loans. They simply process payments. That means they are making money whether or not a customer pays their credit card bill. Today, just under half of all purchases in the United States are made using electronic payment methods, such as Visa cards. That amount is expected to continue growing by around two percent… nothing to sneeze at, but it’s far from being high growth. But the story is different overseas in developing countries where card payments are just beginning to catch on. The other major player that follows this “no-risk” business model is MasterCard.  Discover and American Express are a hybrid – they make money by being a processing network, but since they also lend the money, they do take on risk.

The origins of Visa are actually quite fascinating. Check out the Visa company history and how they got started.

What is the biggest credit card purchase in history? Here’s the answer… sort of…

Imagine opening up your monthly credit card statement to discover that you owe $23 quadrillion dollars! Well, around 13,000 cardholders of Bank of America’s prepaid cards saw exactly that – an amount that is more than the entire planet’s GDP! Of course, there was not an actual purchase of that amount, but rather a glitch which caused these accounts to reflect that amount. A New Jersey man discovered this when routinely logging on to his B of A online accounts to check his balances. He first fled to the gas station where he last bought a pack of smokes to inquire on the charge. They had no idea what it was, so only then did he call Bank of America’s customer service, where he was on hold for more than two hours before they were finally able to resolve the problem. Visa responded by saying it was a “temporary programming error” in there systems… that sure is one heck of an error! They claimed they have correct the problem and refunded the overdraft fees associated with these errors.

With gas stations coast to coast, it comes as no surprise that the Chevron credit card is one of the most widely issued gas cards in America. But be warned… before you fill out an application to get your own, there are a few important things you should know. Is the card a scam? No, it is not (despite what some people have said, to the best of my knowledge what they’re doing is completely legal). But is it is a good way to save money? No, and here’s why…

The Interest Rate Shocker…

Chevron includes Texaco (they acquired the company in 2001) so they issue similar cards under each brand. Their ordinary cards are not affiliated with any major payment networks (like Visa, MasterCard, etc) so they can only be used for purchases at their stations. Two of them offer no rewards on fuel purchases, and the other one that does requires cardmembers to pay a $25 annual fee just to have the ability to earn cash back… not cool! These all carry sky-high interest rates, currently 21.49% APR and up at the time this article is being written.

The company also issues another, different category- the Visa Chevron Texaco cards. The interest rate on these is not cheap either… which can be as high as 20.49% when this post was published.

The Rewards Exposed…

Let’s be honest here. The only reason 95% of us apply for a gas card is because we are looking to get a cash back rebate on our fuel purchases. So you would think these would have fantastic rewards? Well, think again. In fact, according to their official page, it appears their “personal” cards only gives you cashback for the first 2 months only. After that, there’s no great benefits offered. For example, they list “zero fraud liability” as a benefit, when in reality, just about every credit card on the market gives you that. And if they didn’t, federal law protects consumers – you can only be held liable for up to $50 in fraudulent charges – so for them to call this a “benefit” is certainly a stretch. And if you pay the $25.00 for the “premium” card do you think it’s any better? Not much! They only offer a small rebate but it’s not even on gas… only specific travel services, and only those booked through their reservation service (which may or may not have the best prices).

Now their Visa-version does offer gas rewards, but they’re certainly nothing to write home about. It saves up to a dime a gallon, but only at their gas stations (which usually costs a lot, anyway). Also, if you do the math, at $3.00 gas, that only equals out to be about a 3% rebate per gallon.

It Gets Worse…

Our research has found complaint after complaint peppered across the net. For example, one story was by a loyal California cardholder of many years. According to her, she had always paid her bill in full each and every month, never late. While on an unexpected roadtrip, she was struck with a big surprise… GE Capital (who manages these cards) allegedly decided to cut her credit limit from $3,200 to $100 out of the blue. They cited no negative reasons for the change. Her trip was thrown into haywire, as she counted on that card to fill her tank.

The Solution

Stay away from the Chevron credit card. There are so many other options out there when it comes to rebate cards. For example, you may want to check out the no annual fee Discover More card which offers a full 5% cashback bonus in a number of rotating categories, one of them being gas (any station!) The rewards on the Chevron cards are laughable in comparison. To be completely honest with you, I want to disclose that this site does indeed have a financial (advertising) relationship with Discover. However we also do with many other banks too, so there’s many other cards I could promote here instead but I’m not, because I truly believe this is the best and you can see this for yourself…

Check out our full review of the Discover More card to learn more.

Many are asking why Citi raised their APR – often for no reason – to a higher interest rate. Well, you are not alone. They have raised rates on up to 15,000,000 US accounts. After the Financial Times broke this story, Citi responded claiming they are the rate hikes were part of their “regular account reviews.” Well, I suppose that makes sense if you consider it’s “regular” to raise an APR by nearly 24%, which is the average increase seen on their co-branded cards (such as the Sears card) from the first of the year through April, for customers who carried a balance.

It is true that credit card defaults are occurring at a record rate right now, but it appears Citi is being more aggressive than its competitors in raising rates. The other important point they should remember is that we, the American taxpayers, bailed them out big time. In fact, we took on over $300,000,000,000 in liability to keep their company afloat… and this is how we are repaid?

[We reported in May about B of A is doing pulling similar shenanigans. Check out the letter they sent out as their crazy justification for Bank of America cutting credit limits.]

Wouldn’t it be great to have a cash back debit card? In fact, that is the sole reason many consumers pay with credit cards – not because they need to carry a balance, but because they want the cash back. So if you are one of these types of spenders, the idea of debit card rewards probably sounds like a good idea to you, right? Unfortunately, it’s not quite that simple.

Let’s say you are paying for a purchase with your Visa or MasterCard debit card. When you swipe the card, it will ask you if you’d like to process it as debit or credit. You can choose the “credit” option and process it as such. It won’t make any difference on your end, but it makes a big difference to the store. You see, the transaction fees on these two types of payment processing methods are drastically different. The transaction fees on a “credit” transaction (whether that’s processed using your credit or debit card) typically runs anywhere from 2.5% to 3.5% of the transaction amount, plus a fee of anywhere from 17 to 33 cents, on average. Meanwhile, a debit transaction (which can only be done using a debit card) is extremely cheap in comparison – as little as a 10 cent flat fee. This is why stores prefer you to pay using debit.

However, because the fees are lower, naturally you can guess why a cash back debit card is almost impossible to do. Even if the bank offered you just 1% cashback, that would probably be much more than the fees they are collecting for the transaction. This is why you it’s rare to find any kind of debit card with rewards, and when you do come across one, run the numbers and calculate how much their points are really worth. You will discover the rewards end up being no more than 1/10 to 1/5 of a percentage point… a 0.1% to 0.2% rebate. With even the most basic credit cards nowadays offering 1% back on virtually all transactions, plus higher tiered rewards for certain categories, you can see it’s hard for these two types of cards to compete when it comes to rewards.

So this is why you cannot find any decent cash back debit cards on the market, nor will you find any in the future as long as the processing fees work this way. That being said, it doesn’t mean you should use credit cards solely for this reason. If you overspend and cant manage your budget, you’re far better off skipping the rewards than carrying a balance with hefty interest rates. But if you can manage your spending responsibly, you may want to check out the best cash back credit card deals on the market to see if any of them are right for you.