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3 On Your Side: Credit Card Traps

PHILADELPHIA (CBS 3) ― In these tough economic times, we're all being careful about the money we spend. It's more important than ever to watch out for credit card traps, as 3 On Your Side's Jim Donovan shows us.

We went undercover in stores and found surcharges, minimums, and other ways stores are squeezing you a few cents at a time.

"I don't think it's fair," said credit card user Michael Smith.

We went to Beer Hut in Northeast Philadelphia. The beer cost $20.32. But when we paid with a credit card? Suddenly, 50 cents was added to the bill, and we were charged $20.82.

3 On Your Side went back to talk to the cashier and asked, "Do you always charge the fifty cents for credit?"

"As far as I know," the cashier said.

The owner of Beer Hut told us later, that's how they keep prices down for cash-paying customers.

But as 3 On Your Side learned, there's a problem. Every store that accepts Visa and MasterCard signs a contract that says no surcharges.

"You can always call your credit card company, and more likely than not, they will reverse that fee on your account," said Stephanie Bittner, consumer education and outreach coordinator for Consumer Credit Counseling Service.

Another credit card trap: Minimum orders.

We wanted to buy a $6 pizza at Philadelphia's Sorrento Bona and pay with a credit card. But they said, they had a $10 minimum. So we had to buy more.

We went back to ask why. Tony Lafratta, Sorrento Bona's manager, explained it was "because we get charged from the bank a percentage."

Lafratta said, if he let people charge a slice for $1.25, he'd never make a profit. "So I might as well give the food away free, yeah?" he asked.

"Well, I don't agree with that," said credit card user Melinda Thomas. "They choose to accept the card, so I think they should just accept what comes with it."

Bittner said, "The credit card companies themselves actually specify that it is a violation for any retailer to charge someone a minimum purchase amount when they use their credit card."

How about this: Cash price versus credit price? You'll see it at gas stations such as this BP in New Jersey.

"We pay nine cents a gallon, at least, if we use the credit card," said owner Gessi Singh.

So is this a credit card trap? Actually, no.

"A retailer is allowed to charge a discount price if a customer uses cash instead of a credit card," said Bittner.

It's a fine distinction. So figure out whether it's worth it to pay cash or pull out the plastic.

If a store won't take your credit card without you spending more than you want to, you can report them to your credit card company.

The Fine Print:

MasterCard's website considers the following scenarios violations:
1. In order to make a MasterCard purchase, the merchant/retailer required a minimum or maximum amount.
2. The merchant/retailer is adding a charge for using a MasterCard card.
3. The merchant/retailer required identification [for using a MasterCard].
4. A merchant/retailer displaying the MasterCard decal in their window refused to accept a valid MasterCard card.

MasterCard allows people to submit complaints at their web site.

Visa does not allow surcharges or minimum purchases. Visa does allow merchants to discount for cash purchases. Visa cardholders who encounter merchants who appear to be violating Visa's policies can call the company at 800-VISA-911.

American Express' policy is that merchants may not impose restrictions on the use of the American Express Card unless they are applied equally across other payment products.

Merchants who accept American Express may apply discounts for purchases made with cash.

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

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