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Credit card companies will continue fees; will consumers pay?

Massachusetts residents who are traveling to other states will want to be careful when using their credit cards to pay for their purchases. As a result of a recent class action settlement, credit card companies will now allow vendors to tack on an extra charge to cover their bank fees.

This new practice may result in higher credit card bills and consumer debt. Before the recent lawsuit settled, a credit card company would charge a merchant a certain percentage on each transaction involving the company's card. The company would not allow the merchant to pass these expenses off to their customers.

Now, that has changed, at least in some states. In Massachusetts itself, state law prevents a merchant from passing the credit card company's surcharge on to an individual consumer.

Most other states have no such law, however; moreover, even in Massachusetts, a vendor is allowed to offer a "cash discount" under certain circumstances, meaning that a person using a credit card may still wind up paying more for the same product.

From a bankruptcy practitioner's standpoint, this new practice is concerning because, for those who frequently need to use credit cards (i.e., for a small, family-owned business), it means more expenses that can add up quickly. It will also mean more consumer debt.

While this firm is in the business of helping people with financial struggles file for a Chapter 13 or a Chapter 7 bankruptcy, it is also in the business of keeping people apprised of important news that may help consumers keep their financial houses in order. Those who use credit cards need to be aware of this change, which begins January 27.

These changes do not apply to debit cards.

Source: CNN Money, "Using a credit card? Watch out for the 'checkout fee'," Emily Jane Fox, Jan. 27, 2013

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