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by Maurie Backman | Published on June 17, 2022

It's great to shop local, but it's not always easy when prices are rising.

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Recently, I walked into a local dessert shop to pick up a frozen yogurt on a hot day. I hadn't visited that shop since last year, but I distinctly remember paying $4.50 for my usual order. When the cashier told me I owed him $6.00 this time around, I almost gasped.

And it's not just that local businesses in my area are raising prices. Many are also now imposing fees for using a credit card.

To be clear, this is a legal practice. Credit card companies charge businesses a processing fee, which businesses usually absorb themselves. These days, because everything's gotten so expensive, a lot of businesses are opting to pass those costs onto consumers who choose not to pay cash.

Of course, this situation isn't unique to my area. All over the country, small businesses are feeling increasingly squeezed, and so they're doing what they can to stay open. But that means charging more for their products and imposing credit card fees -- and sometimes, they aren't so well-advertised, which, frankly, isn't cool.

It therefore raises the question: Should you continue to support local businesses as they get more expensive? Or should you take steps to save cash by making your purchases elsewhere?

Local businesses benefit communities in different ways. First, they create jobs. If you have a teen who needs summertime or weekend work, guess what? You may become reliant on a local business to provide it.

Local businesses also help property values increase or hold steady. When those businesses shutter, on the other hand, home values can plummet.

Finally, local businesses lend to diversity from a consumer perspective. You might enjoy a wider range of speciality stores if you live someplace with a lot of independent businesses. And, you might enjoy better service than what you'd get with a big-box store.

That old saying "you get what you pay for" can apply to local businesses. You might spend more on food at a local restaurant as opposed to a chain, but the ingredients might be fresher and the food might be tastier. And when it comes to apparel, a pricier outfit from a local store might hold up longer than a low-cost alternative at a discount retail chain.

That said, there may come a point when you truly can't afford to support local businesses. And if you're reaching it, you may have to first focus on stretching your dollars -- even if that means buying budget clothing at a big-box outlet or online.

Furthermore, there's a difference between keeping up with rising costs and taking advantage of customers. The price jump at my local dessert spot is, in my mind, very extreme. And so I probably won't go there very often this summer, if at all. To me, that's just too huge a jump percentage-wise.

Plus, when the dessert shop employee rang up my bill, I was put in an awkward position of being asked (on screen) if I wanted to leave a tip. I'm all for tipping servers at a sit-down establishment, but all this person did was tap a lever on a frozen yogurt machine and hand me my cup. I know a lot of people simply click the "no tip" option in that situation and move on, but it made me uncomfortable. So that's another reason I'll probably take my business elsewhere.

Similarly, a local restaurant I used to like raised prices a lot without increasing portions. I really can't justify spending so much money there when there are tasty eateries down the road that suit my budget a lot better.

Plus, this restaurant started imposing a 3.5% surcharge on credit card purchases, only there's no sign on its door stating that. It only says so in tiny letters on the back of its menu. To me, that comes off as dishonest because it's very easy to miss the fact that credit card purchases now cost more.

If you're torn about supporting local businesses that are raising prices, you may want to think about how they're doing it. Those that are more transparent may be more worthy of your hard-earned money than those that try to sneak surcharges in and hope no one notices.

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Maurie Backman writes about current events affecting small businesses for The Ascent and The Motley Fool.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

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