What Is a Convenience Fee on a Credit Card?

Quick Answer

Merchants may charge a credit card convenience fee to cover the fees related to the payment method. Convenience fees are typically an issue only when credit cards aren't the standard payment option.

Young woman in cafe using credit card for online shopping

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Merchants may charge a convenience fee when you pay with a nonstandard payment option, such as a credit card, or use a certain payment channel, such as your phone. Merchants may charge a convenience fee to discourage the use of credit cards, which are often more expensive to accept than other payment methods.

While the rewards you earn from a credit card can help offset some of the cost of the fee, the charge is often more than what you'd earn in cash back, points or miles. As a result, it's best to avoid credit card convenience fees in most cases. Here's what you need to know.

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What Is a Convenience Fee?

A convenience fee is a charge that occurs when you make a payment through a particular channel or with a specific payment method.

For example, a movie theater may charge you a convenience fee if you buy tickets online instead of in person, and paying a bill over the phone could incur a fee if the provider prefers that you make payments online.

Other merchants may assess a convenience fee if you opt to use a credit card instead of one of the standard payment methods, such as cash, check or electronic payment, for a particular transaction. Common situations where you may be charged a credit card convenience fee include:

Why Merchants Charge Credit Card Convenience Fees

Accepting credit cards can be expensive for merchants. Depending on the payment network, they may need to pay a merchant fee of around 2% or higher every time a customer pays with a credit card.

For merchants that take credit card payments frequently, such as a grocery store, this fee is just a cost of doing business. But for merchants that process the majority of their transactions via check, cash, debit card or ACH transfer, charging a convenience fee makes taking the occasional credit card payment worthwhile.

That said, not just anyone can charge a convenience fee on credit card transactions. Depending on the payment network, policies can vary:

  • Visa: Merchants are allowed to charge convenience fees as long as it's a flat fee (not a percentage), clearly disclosed and assessed on a transaction that allows the cardholder to make a payment outside of the merchant's normal payment channel (paying online instead of by mail, for example).
  • Mastercard: Only pre-certified government agencies, educational institutions and their third-party agents can charge convenience fees on Mastercard credit card transactions. The fee can apply whether the cardholder pays in person, over the phone, online or by mail.
  • American Express: In its latest merchant guide, American Express doesn't provide specifics on its convenience fee policy. However, it does say that merchants can offer incentives for non-credit-card payments as long as it's clearly disclosed, it's offered to all customers and the incentive doesn't discriminate based on card issuer.
  • Discover: The payment network states that merchants can't charge a convenience fee to a Discover cardholder unless it charges the same fee to a cardholder with a Visa, Mastercard or American Express credit card. Additionally, the fee cannot exceed the cost of acceptance.

What Is a Credit Card Surcharge?

A credit card surcharge is similar to a credit card convenience fee. The main difference is that surcharges can be assessed in any situation for the privilege of using a credit card. Depending on where you live and the payment network for your card, you could be charged as much as 4% of the transaction amount.

Three states (and Puerto Rico) have laws that prohibit credit card surcharges: Connecticut, Maine and Massachusetts. Other states have laws on the books that restrict or prohibit surcharges.

How to Avoid Paying a Credit Card Convenience Fee or Surcharge

For the most part, it's relatively easy to avoid both convenience fees and surcharges assessed on credit card transactions:

  • Be observant. To charge a convenience fee or surcharge, merchants typically need to clearly disclose the fee during the checkout process.
  • Use a different payment method. Merchants often charge convenience fees or surcharges when credit cards aren't a standard payment method. If you have a rent, utility or tax bill, consider paying by check or electronic transfer instead.
  • Look for cash discounts. While not technically a convenience fee or a surcharge, some merchants offer a discount if you pay in cash instead of a credit card. Cash discounts are more common with small retail and service businesses, such as auto shops and home contractors. Some gas stations may also offer this incentive.

The Bottom Line

Using your credit card for all of your everyday purchases can help you rack up more rewards and streamline your bill payments. But in some cases, you may be charged for the convenience of using a credit card over another payment method.

Depending on the amount of the fee and your card's rewards rate on the transaction, you could still come out ahead, but that's unlikely in most cases. As a result, it's important to watch out for convenience fees and surcharges and make sure you have an alternative payment method handy to avoid the extra cost.