Credit cards are convenient and ubiquitous, but the Canadian Federation of Independent Business is suggesting Canadians should spend a bit less time playing with plastic.
The group has launched Credit Free Friday, a plea for Canadians to put their credit cards away for one day each week.
Uptown Waterloo’s Honey Bake Shop is also promoting the campaign, placing signs in front of their registers asking customers to pay with cash or debit cards rather than credit.
“A lot of our customers do opt for cash over credit card after seeing that, and our returning customers do know to bring cash,” owner Darlene Khounphachangsi tells CTV News.
The reason behind shunning credit cards? Money.
When consumers pay with credit cards, companies have to fork over a percentage of the purchase price to the credit card company.
The exact percentage varies depending on the credit card being used, but Alnoor Keshvani, owner of Loop Clothing in Waterloo, says his fees can range anywhere from one per cent to four per cent.
Khounphachangsi says depending on the business and the product, that amount could eat up the store’s entire profit margin.
“Having that much money taken from each sale could mean we won’t be here anymore,” she says.
Debit card purchases also take money out of retailers’ pockets, but based on a flat fee unrelated to the cost of the purchase – up to 10 cents per purchase.
“We love debit. Debit’s awesome,” says Keshvani.
Pattie Lovett-Reid, CTV’s chief financial commentator, says there are advantages and disadvantages to credit card use from a consumer perspective.
“If you use credit responsibly, it’s a great tool to use. You can consolidate your purchases, you can track your purchases, you may be able to get reward points,” she says.
“If you’re not disciplined, then you’ve got to use debit so that you don’t get in over your head.”
Lovett-Reid recommends that anyone who uses credit cards pay at least the minimum balance each month – preferably the entire amount outstanding.
As a consumer, Keshvani says he keeps the toll credit cards take on his business in mind.
“Nine times out of ten I will pay cash, just because I know it’s better for everyone,” he says.
Honey Bake Shop does offer debit and credit payment options, but Khounphachangsi says the sign at the register makes most customers think twice – and causes them to be armed with cash on return visits.
