You may be surprised to learn that if you paid your tax bill with your credit card this week, you paid a hefty, extra fee. The fee cost you anywhere from 2 to 4 percent of your total tax bill, and it didn't go to Uncle Sam either.
It went directly to banks and credit card companies.
Bloomberg reports that if all U.S. residents paid their income and estate taxes by credit card, banks would rake in about $6 to 8 billion -- more than half of the IRS' proposed 2013 budget.
Granted, not all residents pay their tax bills this way, but more and more of us no longer use checks.
Unlike Uncle Sam, merchants do not pass along the cost of what are known as "swipe fees" to their customers. They can't afford to; the marketplace is too competitive. Instead, some of that costs is deducted from their profits and calculated into consumer prices.
Banks and credit cards basically agree what the swipe fee will be or price fix, an activity that is usually against the law. As a result, swipe fees have tripled in the past decade and have become the second highest expense for merchants after labor. Meanwhile, in Europe, consumers and merchants pay swipe fees that are EIGHT times LOWER than what U.S. consumers and merchants pay.
Learn more about swipe fees here.
