Credit Card Surcharge : When Merchants Charge You Extra

 When merchants charge you extra for using a credit card, it's called a "credit card surcharge." But this practice is now banned in many states.

Here's what you need to know about credit card surcharges, including which states ban the practice and how to avoid paying them.

What Is a Credit Card Surcharge?

A credit card surcharge is an additional fee that a merchant charges you for using a credit card. Surcharges are also sometimes called "checkout fees."

For example, let's say you're buying a $100 flight and the airline's website says that there's a $5 credit card surcharge. If you pay with a credit card, you'll be charged $105. But if you pay with cash or a debit card, you'll only be charged $100.

In most cases, the surcharge is a percentage of the total transaction amount. So, if you're buying something for $100 and the surcharge is 3%, you'll be charged an extra $3.

Credit card surcharges are different from service fees, which are fees that businesses charge for services like delivery or installation. Service fees are not banned in any states.

Which States Ban Credit Card Surcharges?

Currently, there are 10 states that ban credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Additionally, the city of New York also bans credit card surcharges.

In these states, businesses are not allowed to charge customers extra for using a credit card. If a business violates this rule, they can be fined.

How to Avoid Credit Card Surcharges

You can also use a credit card that doesn't charge foreign transaction fees. These cards can be used in any state, so you won't have to worry about surcharges.

Finally, you can use a rewards credit card that gives you cash back or points on every purchase. Even if the business charges a surcharge, you'll still come out ahead by earning rewards.

Bottom Line

Credit card surcharges are now banned in many states. If you're planning on using a credit card, call the business ahead of time and ask if they charge a surcharge. You can also use a rewards credit card that gives you cash back or points on every purchase.