From the world of public health came Meatless Mondays. Instagram brought us Throwback Thursdays. Now from the Canadian Federation of Independent Business (CFIB) and Canadian financial guru and author Gail Vaz-Oxlade comes Credit Free Fridays.
Here’s how it works: Canadians put away their credit cards on Fridays, choosing to pay with cash or debit instead. The small action gives small businesses a break, plus it encourages Canadian to spend smartly. The initiative was launched on November 8 at Wanda’s Pie in the Sky, a bakery in Toronto’s Kensington Market.
How Credit Cards Impact Small Business
The impact of using credit is mainly considered a consumer issue. However, it’s a little-known fact that businesses are charged high fees by credit card companies and banks for accepting credit cards as forms of payment. For small businesses, the charges can be particularly difficult to manage.
“Small businesses are finding it increasingly challenging to absorb the high fees they are charged by the credit card companies and banks,” said Dan Kelly, CFIB president, in a press release. “As consumers are often unaware that the merchant loses between 2-3.5 per cent of a credit card sale, Credit Free Fridays can be a great way to support small firms.”
A Weekly Interest Break
Leaving the plastic at home is also a great way to encourage good money management. When the money isn’t immediately coming out of your pocket, it can be easier to spend freely — and senselessly. Choosing to pay by debit or with cash forces consumers to limit their spending to what they can actually afford.
“Just because you have a $5,000 limit on your credit card, doesn’t mean you can afford to rack up that kind of debt,” said Vaz-Oxlade. “When you pay with debit or cash, you know that you can only spend what you have.”
As a personal finance blogger and as a daughter of two small business-owning parents, I think Credit Free Fridays is a great initiative — if only to raise awareness of the fees business owners must pay for accepting credit card payments. I’m not convinced that one day is enough to rein in Canadian credit card spending and debt, but it’s a good start. My tip? Save credit card use for the big, occasional purchases. For day-to-day spending — on items such as coffee, lunches, and groceries — try to use cash or debit.
Editor’s Tip: Looking for ways to minimize your credit card debt even further? Try switching to a low balance transfer option, which will give you a big break on interest for a special introductory period. One of the market leaders (and most popular on our site) is the MBNA Platinum Plus MasterCard, which offers a full year of ZERO interest on transferred balances – and, for a limited time, you’ll score a free $100 gift card when approved!