Tuesday, March 3, 2009

The hidden costs of credit cards and debit cards

Visa announced a new ad campaign. In previous campaigns Visa showed people making major purchases for vacations and other large ticket items using their credit card. The new campaign is an attempt to overcome the effects of the major downturn in the economy. The company explains the goal of the ads to deliver "a single marketing message that is consistent with the company's core strategy of migrating cash and check spending to Visa. The campaign is not about spending more, it is about using Visa for more of your spending."

Previously Visa was concerned that people were not using their credit card and were migrating to using debit cards. However, even though the user does not pay a fee for the use of their Visa Debit Card, the merchant who sells to the user does pay a fee. That fee is passed on to the consumer in the form of higher prices for goods and services sold with the "convenience" of a debit or credit card. This hidden cost is compounded even more if the user is charged a fee for the use of the debit card, as is done in many gas stations across the country.

Another hidden cost of using your credit or debit card is the cost of the world wide advertising campaign. See videos of campaign. Notice the absence of such values as thrift, industry, savings, self control and provident living. We are in the middle of a severe economic downturn and Visa is advertising ice climbing, surfing, travel and a lot of people doing things that have nothing to do with everyday living, especially those people shown flying in a private plane.

Credit and debit cards are not free. You pay extra for every purchase.

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