Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
^^^ What he said (otherwise I'd be paying for 1 shed twice!). EXAMPLE (this is the one I used in my email back to her): say the shed costs $5,000 and I can pay it in either one installment or two. ONE INSTALLMENT: $5,000 x 3.99% = $199.50 surcharge. TWO INSTALLMENTS: ($2,500 x 3.99%) + ($2,500 x 3.99%) = $99.75 + $99.75 = $199.50 surcharge.
Ha! She hasn't emailed me back, but I will likely see her in person this week to look at the sheds there and get a catalog.
Ok, so that is roughly 8% surcharge. Right? 3.99 x 2 = approx 8%. She didn't say anything wrong there.
I'm thinking about buying a shed so have been getting some quotes. Today I got one from a woman who gave me the shed price, which would be paid in 2 installments (half upon order, half upon delivery), and then said if I used a credit card there would an 8% surcharge.
I emailed back saying the shed price looked fine and I would write a check because I'd never heard of an 8% credit card surcharge -- the most I've heard of before is 3%. She emailed me back and said it's actually 2 transactions, the first swipe (upon ordering) at 3.99%, then the second (upon delivery) at 3.99%, so it adds up to about 8%. She suggested that I could pay in full upon placing the order and then the surcharge would be just 3.99%.
I emailed her back a very nice response saying that percentages don't work that way and it would be 3.99% whether paid in 1 installment or two (and I showed how that worked). But I was wondering, does she think that if it were paid in 5 installments, the surcharge would be just under 20%? Or 6 installments, just under 24%? Heck, pay once a month for a year but it'll cost you 48% extra for using a credit card!
Ok, so that is roughly 8% surcharge. Right? 3.99 x 2 = approx 8%. She didn't say anything wrong there.
Oh my gosh! NO, percentages don't work that way.
If the credit card surcharge on a $5,000 purchase is 3.99%, it will be 3.99% REGARDLESS of whether you pay the $5,000 in one installment, 2 installments, 3 installments, or whatever -- because each installment is of course SMALLER than $5,000. (There's NOT a charge for each swipe -- there's a 3.99% charge on the total dollar amount charged at that time.)
That's what I showed in the example I gave ... I'm not sure how you can read that and think that it's really an 8% surcharge?
Here it is again: EXAMPLE (this is the one I used in my email back to her): say the shed costs $5,000 and I can pay it in either one installment or two. ONE INSTALLMENT: $5,000 x 3.99% = total $199.50 surcharge -- which is 3.99% of $5,000. TWO INSTALLMENTS: ($2,500 x 3.99%) + ($2,500 x 3.99%) = $99.75 + $99.75 = total $199.50 surcharge -- which again is 3.99% of $5,000.
And here's what would happen if the $5,000 is paid in FIVE installments: ($1,000 x 3.99%) + ($1,000 x 3.99%) + ($1,000 x 3.99%) + ($1,000 x 3.99%) + ($1,000 x 3.99%) = $39.90 + $39.90 + $39.90 + $39.90 + $39.90 = total $199.50 -- which again, is 3.99% of $5,000.
Does that make more sense now, with a 3rd example? I've taught stats (not that this is stats, but still) and most of my students follow me pretty easily (some even say "Why did I think this was this hard?!!"), so I'm bummed that I'm not explaining it well enough.
Why buy from a business that charges you a CC surcharge? Can you find it for the same price or less somewhere else where you con't have to pay that extra charge?
Ok, so that is roughly 8% surcharge. Right? 3.99 x 2 = approx 8%. She didn't say anything wrong there.
Think you made the same error, friend. I had to puzzle it out for about twenty seconds, z'all right:
1) I want a box of widgets. Price is $100, say I'm in Oregon so no sales tax. But, they charge cc fee of 3.99%. Jeez, can I pay in two installments over some period (period length not relevant to calc)? Sure, she says.
First payment:
(.0399 x 100) + ($100/2) -= (Two being number of payments, n) = about $52.00.
Second payment:
(identical). Me and the widgets go home.
Total paid: $103.99 (or so), First plus Second.
2) Same widgets, same deal, but I'm a sport today: "I'll pay it all in one installment on my cc." That will be 3.99% fee, sir.
(.0399 x 100) + $100 = $103.99
Case 1), and Case 2), end of the period I walk out with a box of widgets, total cost $103.99. % fees are not not additive RE number of installments (n), rather the total only... but again: somehow my guts told me it was, had to puzzle it through real quick. It's a word problem, in a sense*
*Anything beyond Calc 1 in college stumped me, I'm not math whiz but do understand derivatives and integrals of functions, plus various spins on advanced geometry and some quantum field theory, but after that...to hell with it.
Buy your shed elsewhere. Somewhere where there is no fee for using a credit card.
Quote:
Originally Posted by Signs9
Why buy from a business that charges you a CC surcharge? Can you find it for the same price or less somewhere else where you con't have to pay that extra charge?
Almost all small businesses around here (including services) add a credit card fee these days (usually it's 3%) IF they allow the use of credit cards at all. Years ago, the credit card companies did not allow them to charge more for use of a credit card than for use of cash, but that changed quite a while ago (I don't know if a federal law changed or what).
I normally pay EVERYTHING by credit card because I get cash back, and then I pay the whole thing off every month, but I always have the cash to pay it off before I charge anything. So it just means I won't get the cash back (which of course is WAY less than the credit card surcharge.)
Quote:
Originally Posted by tnff
Think of how many they've been charging that 8% to over they years.
My first thought was, "They couldn't have done that because the correct credit-card charge (of 3.99%) would have shown up on the statement." But THEN I thought, "Wait, of course they would add the 8% surcharge and then run the credit card through" -- so I think you are right. The fact that she told me it was 8% up-front (if 2 installments) means they might be able to get away with this (if challenged) even if she then told me it was 3.99% per swipe (which she thought you could just add together) -- even though she also said (quite defensively) that they didn't make any money off it because it went to their credit-card processor.
And all this time I've just been thinking about it as a MATH problem! I am supposed to go by this week to look at sheds in person so I will ask. Hmmm ...
I guess the only thing to do is be glad that it wasn't offered on an installment plan of 60 payments?
Op, the only thing that would scare me here is the proprietor obviously doesn't have a whole lot of transactions. You may want to negotiate to pay via check upon delivery and installation. I'm fine helping companies get through their fake it to make it phase....but I don't do so in advance.
Why buy from a business that charges you a CC surcharge? Can you find it for the same price or less somewhere else where you con't have to pay that extra charge?
If you have a card that gives you 5% cash/statement credit back then it works to your advantage even paying a 4% fee. As long as you pay it off right away, that is.
The IRS was one of the first (that I know of) to charge a credit card fee, but still a lot of people with airline-miles cards used it anyway, to cash in on "free" tickets. It can make sense to pay a credit card fee if you do it right, or if all the businesses in a geographical area charge the same fee.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
She hasn't emailed me back, but I will likely see her in person this week to look at the sheds there and get a catalog.
