# How do credit card grace periods work? **URL:** \ **Category:** Factual Questions\ **Created:** [January 27, 2019, 6:48pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490 "2019-01-27T18:48:02Z")\ **Posts on this page:** 9\ **Page:** 2
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [January 28, 2019, 4:26pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/21 "2019-01-28T16:26:35Z")
> [@bob\_2](#): > > In the UK, it’s illegal, since January 2018, to charge CC customers more than cash customers. I assume that this means that the dwindling number of cash customers is subsidising my ‘free’ credit. Card transactions overtook cash in the middle of last year according to the FT: > … My understanding is that in North America it was the opposite. Since merchants must pay a premium (1% to 4%) to the card company on transactions, there used to be a rule in the merchant agreement that they wouldn’t charge the customer more for using credit. That was ruled as a monopolistic uncompetitive action - credit card companies could not dictate retail prices that way. If something costs the merchant, they should be free to pass that on to the customer. We used to have a similar problem with debit - fees were set at 25 cents or more (IIRC up to 40 cents) per transaction; hence many merchants had “no debit under $5” (or $10) signs. Then the Canadian parliament got into the act and due to threats of regulation, fees are under control now. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [January 28, 2019, 4:44pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/22 "2019-01-28T16:44:18Z")
nm ---
**Author:** ![lingyi](https://avatars.discourse-cdn.com/v4/letter/l/d2c977/32.png) [@lingyi](https://boards.straightdope.com/u/lingyi)\ **Post date:** [January 28, 2019, 5:09pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/23 "2019-01-28T17:09:37Z")
Here’s an article that details the various fees that can be charged by the bank/CC merchant: [https://www.creditdonkey.com/credit-card-processing-fees.html](https://www.creditdonkey.com/credit-card-processing-fees.html) A couple of points brought up in the article that I’ve encountered: One of our vendors insisted on using Square (2.75% vs ~2.3%) for their payments which we hated because it incurred higher fees than using our CC merchant. Significant when you’re running $100s of thousands of dollars through it. And much higher than payment by check. The vendor loved Squqre Hand keying or phoning in CC charge was highly discouraged as it incurred higher charges. Even a wrong zip code incurred a higher fee than a completely matched CC charge. For example, Square’s fees are 2.75% for swipe or tap vs 3.5%+0.15 for keyed in. ---
**Author:** ![zimaane](https://avatars.discourse-cdn.com/v4/letter/z/a3d4f5/32.png) [@zimaane](https://boards.straightdope.com/u/zimaane)\ **Post date:** [January 28, 2019, 8:35pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/24 "2019-01-28T20:35:37Z")
> [@](#): > > Maybe. I’ve never been able to find a straight answer about how much it costs to handle cash. The studies all seem to be bankrolled by entities with vested interests in the results. There may not be an exact answer, but the fact that most businesses will charge the same price for cash as for credit suggests that the ‘cash handling fee’ is similar to the credit card changes, about 1 - 2 percent. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [January 28, 2019, 10:04pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/25 "2019-01-28T22:04:09Z")
> [@md2000](#): > > It used to be that credit card rules prohibited the merchant giving a discount for cash over credit. IIRC this was made illegal a while ago, so now merchants have the option. (In the good old days, there were gas stations that got around this by having a separate set of cash-only pumps with of course lower prices) But yes, the cost of people using credit cards or debit is figured into the price. That’s not quite right. “Cash” discounts have always been allowed by credit card agreements. But they must explicitly be that. That is, the cash price must be _lower_ than the advertised price, and the discount can only apply to cash, not to any other method of payment. Like, you can’t have a “cash debit card and check” discount, since that’s just a credit card surcharge. Some gas stations have had different cash and credit prices for as long as I can remember here. And they didn’t do it with a separate set of pumps. I don’t believe that’s changed (although the complexities of credit card merchant agreements and the law are vast, so I could be wrong). The thing that I know has changed is that it used to be against the merchant agreement to have a minimum purchase to use a credit card. This is now explicitly allowed (lots of places did it anyway). ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [January 28, 2019, 10:11pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/26 "2019-01-28T22:11:44Z")
> [@zimaane](#): > > There may not be an exact answer, but the fact that most businesses will charge the same price for cash as for credit suggests that the ‘cash handling fee’ is similar to the credit card changes, about 1 - 2 percent. That might be true, but I don’t know if you can draw that conclusion from the lack of a discount. A few other possible explanations: 1. Since cash discounts are rare, dealing with customer confusion over it isn’t worth the difference. It doesn’t take many confused customers (or, even worse, irate customers because the person in front of them just got a better price for the thing they’re buying) to erase those gains. 2. People who use credit cards tend to spend more than people who use cash. 2a. It’s not worth annoying your best-spending customers by _showing_ them they’re paying more. 2b. It’s a bad idea to provide incentives to your best-spending customers to switch to a form of payment that will cause them to spend less. ---
**Author:** ![Dahu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dahu/32/3416_2.png) [@Dahu](https://boards.straightdope.com/u/Dahu)\ **Post date:** [January 29, 2019, 9:50am UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/27 "2019-01-29T09:50:15Z")
> [@bob\_2](#): > > Barclays charge 90p per £100 to small businesses and 65p for cheques. > [@Joey\_P](#): > > My Brit to US math says that .009% _Nitpick:_ I think that’s 0.9% ---
**Author:** ![Dead\_Cat](https://avatars.discourse-cdn.com/v4/letter/d/9fc29f/32.png) [@Dead\_Cat](https://boards.straightdope.com/u/Dead_Cat)\ **Post date:** [January 29, 2019, 1:16pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/28 "2019-01-29T13:16:37Z")
Where small businesses offer me the option of cash or card, I usually ask them which they would prefer (since it makes no difference to me). Recently, they have all said that it doesn’t really matter to them. Whether that’s because a) they want to appear convenient to me, b) they don’t know/haven’t looked at their numbers that closely, or c) it costs them roughly the same to deposit cash at the bank as they get charged by the card companies for cards, I don’t know, but I suspect it’s c plus convenience for them in not having to go to the bank so often. ---
**Author:** ![glowacks](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/glowacks/32/5548_2.png) [@glowacks](https://boards.straightdope.com/u/glowacks)\ **Post date:** [January 29, 2019, 10:45pm UTC](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490/29 "2019-01-29T22:45:18Z")
> [@bob\_2](#): > > Barclays charge 90p per £100 to small businesses and 65p for cheques. > > [That page can't be found](https://www.barclays.co.uk/content/dam/documents/business/Accounts/BAR_9912312_Lo.pdf) That’s what the bank charges for handling cash. It does not include the costs the business faces because of having to deal with cash. These include losses to employee theft/carelessness and counterfeiting, as well as a portion of the compensation for the people who count the cash and deposit it in the bank. [Previous page](https://boards.straightdope.com/t/how-do-credit-card-grace-periods-work/828490.md?page=1)