Personal finance guru Gail Vaz-Oxlade helped launch a campaign on Wednesday to encourage consumers to use cash or debit cards on Fridays instead of credit cards.

“We need to be aware of the fact that financial institutions are raking in record profits on the backs of individual consumers and small merchants,” said Vaz-Oxlade, speaking at Wanda’s Pie in the Sky in Kensington Market.

Merchants pay processing fees when shoppers use credit cards, and specialty loyalty cards generally command higher fees, which in turn lead to higher prices for consumers, Vaz-Oxlade pointed out.

Vaz-Oxlade is the host of money management television shows ‘Til Debt Do Us Part, Princess, and Money Moron, and author of several best-selling books on money management and investing.

“You go into a store and buy a $200 handbag and you pay with your credit card because you want the points. The merchant ends up paying a $5 swipe fee. You pay with your debit card and the merchant pays a 5 cent swipe fee. As a consumer, you don’t think the $5 fee is being built into the handbag?”

Vaz-Oxlade said it’s counterproductive for consumers to use credit cards to build loyalty points if they can’t pay off their balances each month and end up paying interest of 20 per cent or more.

She said the average Canadian has $27,000 in debt, and credit cards are a big part of the problem.

The Canadian Federation of Independent Business (CFIB) and Interac Association have partnered to support the campaign. The CFIB has 109,000 small- and medium-sized businesses as members.

CFIB president Dan Kelly said small businesses pay $5-7 billion each year in credit card processing fees, and the cost of those fees is embedded in everything consumers buy.

He said people who don’t use credit cards or loyalty cards, or who have basic cards are subsidizing wealthy cardholders who receive premium cards with premium benefits.

“This Friday we’re asking consumers to take a break,” said Kelly, adding that if Canadians paid cash or used debit cards only one day a week, it would save $1-billion for everyone.

He said consumers are also less likely to spend money they don’t have if they pay using cash or debit.

Representatives from credit card companies and the Canadian Bankers Association say credit cards offer numerous benefits to businesses and consumers.

According to the Canadian Bankers Association, 64 per cent of Canadians pay their credit card balances in full each month.

Retailers receive guaranteed payment when they accept Visa, reduced cash handling costs and the opportunity to expand online with ease, according to a statement from Visa Canada.

“Further, by accepting credit cards small businesses are able to extend immediate unsecured credit to their customers and increase sales without bearing the credit risk, as they had in the past.”

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When a credit card is used as payment, merchants pay fees of between 1.5 to 3 per cent of the value of the purchase.

Credit card acceptance fees paid by Canadian merchants are among the highest in the world, according to Canada’s federal Competition Bureau.