What a lacklustre victory we collectors of credit card reward points have won.

At least for a while, we get to keep using our cards to earn points without any new surcharges applied at the cash register. But we've also been taught a lesson that there are no freebies in personal finance. Without realizing it, we may be paying in full for our own reward points or miles.

A federal Competition Tribunal ruling this week upholds rules set by Visa and MasterCard that prevent merchants from surcharging customers to recover the cost of offering credit cards as a payment option. Instead, we keep our current Don't Ask, Don't Tell arrangement, where retailers bury their card costs in the price of goods and services paid by everyone, whether or not they use a credit card.

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The implication here is that reward credit cards are more expensive than we thought. In addition to the annual fee, which can be as much as $120, there's the hidden cost that retailers have added to their prices to cover fees levied by Visa and MasterCard. There's no need to belabour the 20-per-cent rates of interest on unpaid balances, because they're avoidable by paying off your full balance monthly.

The federal Bureau of Competition Policy, which took the surcharging issue to the tribunal, says the annual amount of credit card fees paid by merchants in this country is about $5-billion per year. The amount of fees charged by credit card companies to retailers range from around 1.5 to 3 per cent, with higher fees for premium cards.

Fortunately for points collectors, the entire population is subsidizing the cost of using credit cards by paying hidden markups on goods and services. If retailers were allowed to decline high-fee cards or levy a surcharge only to customers using these cards, there's reason to believe reward credit cards would take a major hit.

The financial industry research firm MarketSense had 5,098 people complete a survey last fall in which participants were asked how their card usage would change if retailers levied a 1-per-cent surcharge on credit card purchases. Forty-two per cent said they would spend a lot less on their credit cards, and 30 per cent said they would stop using or cancel their cards.

"The reaction from Canadian cardholders was almost unanimously opposed," said MarketSense's Mary-Anne Heustis. "This issue had the potential in our view to upset the whole payments landscape in this country."

The surcharging issue isn't dead. Finance Minister Jim Flaherty said he's monitoring a potential appeal of the tribunal ruling, and will raise the matter with a government committee that brings the financial industry, business and consumers together on matters related to the country's payment system.

Regardless of what happens to surcharging, it's now time for reward credit card holders to see what value they're getting. To start with, you need to generate at least $120 in tangible, negotiable value each year to offset fees charged by premium reward cards.

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MarketSense data show that holders of one of the most popular premium reward cards spend about $21,500 a year on the card, which could generate up to $500 to $550 in card fees for retailers. If even half that amount was recovered by retailers through higher prices on goods and services, it would further undermine the value of a reward credit card.

Everybody is affected by price markups that offset card fees levied by Visa and MasterCard, which means reward cardholders aren't alone in paying more. But this could change if retailers increasingly offer discounts to people who pay with cash (not that handling cash is without costs) instead of credit.

Ms. Heustis expects use of reward cards to be unaffected by the recent attention to the actual cost of using them. "It may have opened a few eyes, but I don't think it will have a dampening effect. People don't always make the economic rational choice. There's a lot of emotion embedded in this."

Now you understand why banks describe their reward credit cards as "gold" and "platinum," why they use images of beaches and palm trees so often and why they talk about "exclusive offers" and such. It's all about making you think you're being rewarded for being a good customer.

It's okay if you want to keep using your credit cards to generate reward trips and merchandise. Just remember that there are no freebies in personal finance.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).