How your Credit Card is Causing Inflation

Let's understand this with an example You want to buy an Iphone You visit nearby authorized store & find out there's a 7% discount offer available on your 'XYZ'  credit card.

But, what will XYZ credit card company gain by providing offer? Well, it will charge a commission (around 5-6%) from ABC Mobiles. This commission is called Merchant Discount Rate (MDR).

Now suppose, ABC Mobiles' margin was 8% But remember, it has lost 5-6% as commission (MDR) to credit card co. A 2% margin isn't lucrative for ABC, is it?

What will ABC Mobiles do now? It will ask the distributor for an increase in its margin from 8% to around 10-12% so it has at least a 4-5% takehome after paying commission (MDR) to XYZ.

But distributor can not increase retailer's (ABC) margin and bear  additional cost all by himself. The only way out is to urge Apple to: INCREASE THE PRICE of Iphone 12.

And in no time, Iphonel2 would become some 4-5% costlier, flashing in newspapers blaming it all on Inflation!  But you see where all of it began in first place?

So, now you know how Credit Card causes Inflation! Well, inflation isn't in your control. But a strategic saving & investment plan can help you beat inflation with ease.

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