Booking with your credit card? Check surcharges!
Have you ever noticed how when you pay for flights with
Aussie credit cards you can pay quite a surcharge?
The airlines and travel bookers tend to sweep this under the carpet as “covering transaction costs” but is what you’re paying really in line with actual credit card transaction charges?
The Concerns With Surcharges
Surcharges are meant to cover transaction costs and most customers would not mind if this was a fair reflection of the actual cost the company pays to the credit card company.
However there is growing evidence that this is simply not the case.
In many instances it seems travelers are getting hit unfairly by airlines for online bookings. They may save money in one respect by receiving a lower base fare for booking online, but by doing this they MUST either use their credit card – which incurs the surcharge – or use the airline’s dedicated card, which few customers have.
So in reality there is little way of avoiding the extra fees; you can’t use cash!
How Much are the Surcharges?
One of the worst culprits in Australia is Tiger Air, which applies a surcharge of $7.50 for a single fare and $15 for a return fare.
Actual fees payable to the credit card company are approximately 1-2% of the transaction amount and even less for large buyers like Qantas, and just 20 or 30 cents for debit card transactions.
For a return fare of $150, the Tiger Air charges are 10% on credit or debit card transactions, which seems excessive.
The Picture in the UK
It’s not just in Australia where this is the case; consumer groups in the UK are complaining about this “fee gouging” going on with airlines and other retailers over there and it is the subject of an Office of Fair Trading investigation. Some consumer groups are pushing for the complete abolition of surcharges.
Over in the UK, it looks like card fees will soon have to be made plain and clear in the actual published price of the fare, so that credit and debit card surcharges cannot be hidden.
In both the UK and Australia right now, you see an advertised fare and will not discover the actual payable amount including taxes and surcharges until you are well into the booking process.
Will Australia Follow The Trend?
You may be wondering whether Australia will follow the trend of the UK in reviewing these practices and there are some indications that they will.
Treasurer Wayne Swan has made credit reform a major part of the government’s agenda and it is unlikely that excessive surcharges have gone unnoticed. The ACCC may be asked to investigate the matter closely some time in the near future.
Let’s hope this is the case because many Australian households are trying to reduce their debts and paying unnecessary and unfair surcharges (which also attract high interest each month they remain unpaid) are doing nothing to help the situation.
You! Yes YOU! I’m talking to YOU!
The number of Australians suffering from home loan, 
