Credit card

Credit Card Fees Drive Thanksgiving Inflation

As Americans prepare to spend a record amount on Thanksgiving dinner and travel this year, credit card swipe fees will contribute significantly to vacation cost inflation, adding millions of dollars. at the prices paid by consumers, according to the Merchant Payments Coalition.

“Consumers are spending more than ever on Thanksgiving, and credit card fees are a big part of it,” said Doug Kantor, MPC executive committee member and general counsel for the National Association of Convenience Stores. “Whether it’s the turkey on the table or the price of gas and the plane ticket home, credit card fees are driving prices up again, and the card industry sees an unearned windfall every time the prices go up. “

Unbeknownst to most consumers, banks and card companies take a percentage of the total “swipe fee” each time a credit card is used to make a purchase, and merchants receive on average less than 98 cents on the dollar. As prices rise, the dollar amount collected by the card industry increases with them, becoming a multiplier effect that pushes inflation even further. The costs run into the tens of millions of dollars on Thanksgiving alone and over $ 100 billion a year. With fees being the highest cost for many traders after labor and most consumers paying in plastic rather than cash, the fees need to be built into the prices and cost the average family hundreds of dollars a year. even if they pay with debit cards, which have a lower fee or cash cost.

While an overall total is difficult to calculate, the sweep fee affects all aspects of the Thanksgiving celebration.

Groceries for a homemade Thanksgiving dinner for 10 people will average a record $ 53.31 this year, up 14% from last year, due to a 24% increase in Turkey’s average price of 16 pounds (now $ 23.99), according to the American Farm Bureau. With swipe fees for Visa and Mastercard credit cards averaging 2.22%, the card fees are $ 1.18 of the total, with about 50 cents for each turkey. Based on prices per pound and average weights, the fee is the cost of the turkey wings.

Lending Tree sets the estimate for dinner much higher, claiming that those who throw a Thanksgiving home party for 10 people spent an average of $ 343.26 on food and drink last year, which would result in 7.62 $ in sweeping fees. For foodies, upscale restaurants can charge $ 80 or more per person, costing a group of $ 10,800, including $ 17.76 in sweeping fees. This does not include tips, which are also subject to a sweep fee if charged.

Americans will spend $ 927 million on turkeys alone for Thanksgiving, according to the Finder research website. Based on this amount, the credit card fee would represent $ 20.6 million of the cost.

Dinner is not the only cost of the Thanksgiving celebration. An estimated 48.3 million people are expected to drive to their destinations, and the average cost of a gallon of regular gasoline is currently $ 3.41 per gallon, according to the AAA. This means the sweeping charge is 7.6 cents per gallon, adding over 75 cents to a 10 gallon fill. This figure is up from 4.7 cents a year ago when gasoline averaged $ 2.12, meaning the card industry will earn more than the station owner. -Local service – The fuel industry’s pre-tax profits are on average less than 6 cents per gallon.

AAA says daily car rental rates are up 4% from last Thanksgiving, averaging $ 98, which would result in a sweep fee of $ 2.18 per day. The mid-range mid-range hotel rose 39%, going from $ 137 to $ 172 per night, or up to $ 3.82 in sweeping fees.

Airfare for a round-trip domestic flight will average $ 300 for Thanksgiving, up 23% from last year, according to the Hopper travel app, and the transfer fee is said to be $ 6.66 from the ticket price. The AAA expects 4.2 million people to travel by air during the holidays, that’s about $ 1.3 billion in airline tickets, including about $ 28 million in fees.

The sharp increases in Thanksgiving costs come amid soaring inflation driven by consumer demand and supply chain disruptions during the pandemic. The Consumer price index was up 6.2 percent year-over-year in October, the largest increase since December 1990, according to the Federal Bureau of Labor Statistics.