Credit card fees on county bills are high

2/11/2005

The insert in New Castle County sewer fee notices mentions that one can use a credit card to pay the fees, as well as the property and school taxes in the fall. The card holder is accessed a convenience fee, which varies with the type of tax payment and credit card used. For users of Discover Card, this is not a bad deal. Depending on how much is charged over the year, Discover Card holders can get up to a 1% cash-back bonus.

As an example, I would incur a $3 convenience free on a total sewer bill of $421 covering several properties. Using my Discover Card to pay a $3,000 combined school and property tax bill later this year, I would be charged $25.

Happily, the convenience fees in both cases are less than the 1% cash-back bonus I will receive. So far, so good.

If one does not have a Discover Card, one can pay using Visa, MasterCard or American Express cards through a collection agency called the Official Payments Corp.

I recently got a Visa affinity card from a major airline and was considering using it to pay county tax bills in order to rack up additional frequent flier miles. To my dismay, I found OPC's convenience fees are substantially higher. OPC's fee on the $421 sewer bill is $23.95, or 5.5% of the tax. For the $3,000 combined school and property taxes, OPC's convenience fee is $90, or 3%.

But here's the interesting point. If the $3,000 is for payment of the county sewer bill instead, OPC's fee is a whopping $139.95, equal to 4.7%. Some convenience! It seems that there is price gouging going on in its application of exorbitant fees.

Why should it matter what type of payment is charged? Credit card agreements generally prohibit a merchant from charging a customer more to use a credit card than to pay cash. I've known some merchants who have done essentially the same thing by charging a 3% credit fee, claiming a lower price is a cash discount.

If this is in violation of agreement with the credit card company, why is the county any different? New Castle County Executive Chris Coons and County Council President Paul Clark should look into the rates charged by OPC.