How to Avoid Credit Card Convenience Fees

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A convenience fee is a charge some merchants levy when customers opt for a non-standard payment channel or method. Many credit cards offer rewards and perks, but the value of those rewards may not make up for the convenience fee that some merchants charge.

Merchants often charge convenience fees to discourage customers from using their credit cards to make payments. But that isn't the only situation in which you might pay an extra fee. In some cases, the charge isn't a convenience fee at all; rather, it's a surcharge.

As you look to maximize your credit card rewards, it's important to understand what convenience fees and surcharges are and how to avoid them.

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What Is a Convenience Fee?

Movie theaters, for instance, often charge a convenience fee when you buy tickets online rather than at the box office. Alternatively, you may be charged a fee if you pay some bills over the phone rather than online.

In either case, the fee applies to the payment channel, so you would pay it whether you use a credit or debit card.

Other merchants may charge a convenience fee to customers who want to use a credit card to make a payment. Common situations in which you might be charged a convenience fee for using a credit card include paying for:

  • Tuition
  • Taxes
  • Utilities
  • Peer-to-peer payments

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 or debit card, 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.


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. Where legal, any merchant can add surcharges as high as 4% of the transaction.

Ten states plus Puerto Rico have laws that prohibit credit card surcharges, including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

But courts have started to challenge some of these laws. Specifically, some federal appeals courts and the Supreme Court have determined that credit card surcharge bans violate business owners' right to free speech in how they communicate their prices.


In January 2018, a federal appeals court determined that the state's credit card surcharge ban violated business owners' rights to free speech. In response, the state attorney general's office has begun evaluating its options.


In 2015, a federal appeals court struck down the state's law banning credit card surcharges, claiming that it violated business owners' First Amendment rights.

The ruling was appealed to the Supreme Court, which declined to hear the case in 2017. But as of April 2018, the law is still on the books.

New York

In 2017, the Supreme Court ruled that lower courts needed to revisit the surcharge ban in the state of New York, stating that the law regulates free speech.

How to Avoid Paying a Credit Card Convenience Fee or Surcharge

For the most part, getting around a convenience fee is easy. Since only certain types of merchants charge them, you can simply use a different payment method and continue using your credit card for other everyday purchases.

In some instances, however, it might actually be worth paying the convenience fee. For example, you can pay your taxes through with a 1.87% convenience fee or $2.59, whichever is higher.

If you have a credit card that offers a rewards rate higher than 1.87% you can still profit off of the transaction.

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As for surcharges, merchants can't charge them without notifying you first. You'll either see a sign outside the shop or at the cash register mentioning the surcharge, or the cashier is required to tell you. Keep some cash or a debit card in your wallet so you can make the easy switch in situations like this.

That said, there is a legal distinction between offering discounts on cash payments and levying a surcharge on credit card payments. So, you may technically still be paying more without knowing it. Cash discounts are more common with small retail and service businesses, such as auto shops and home contractors. Medical providers, including physicians and dentists, may also offer a cash discount.

If you're thinking about using a credit card at one of these places of business, ask if they offer a cash discount. If they do, you may save more than you'd get back in rewards by using your credit card. If they don't, use your credit card as usual.

If a retailer adds a surcharge to your purchase without telling you or if you live in a state where surcharges are illegal, contact your credit card issuer immediately to dispute the extra charge. Also, you may consider submitting a complaint to the Consumer Financial Protection Bureau.