Have you ever noticed an extra fee added to your credit card payment at a gas station or convenience store? That extra fee is called a surcharge fee. In simple terms, a surcharge fee is an additional fee charged by a merchant to a customer for using a credit card to make a payment. In this article, we will dive deeper into what is surcharge fee are, how they work, and how you can avoid them.
What is Surcharge Fee?
A surcharge fee is an additional fee that a merchant adds to a customer’s bill when they use a credit card to make a payment. This fee is charged on top of the price of the product or service that the customer is purchasing. The surcharge fee is a percentage of the transaction amount and varies depending on the merchant.
How Do Surcharge Fees Work?
Surcharge fees are typically charged by merchants who accept credit card payments. This fee is added to the total amount of the purchase made by the customer. For example, if you buy a product worth $100 and the merchant charges a 3% surcharge fee, you will be charged an additional $3, making the total payment $103.
The reason why merchants charge surcharge fees is that they have to pay a fee to the credit card processing company for each transaction. This fee is known as the interchange fee, and it is usually a percentage of the transaction amount. The merchant adds a surcharge fee to recover this cost.
Is it Legal to Charge Surcharge Fees?
In the United States, surcharge fees are legal in most states, except for 10 states where they are prohibited. These states include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. In these states, merchants are not allowed to charge surcharge fees for credit card payments.
However, merchants are allowed to offer discounts for payments made with cash or debit cards. For example, if a merchant charges a 3% surcharge fee for credit card payments, they can offer a 3% discount for payments made with cash or debit cards.
How to Avoid Surcharge Fees?
If you want to avoid surcharge fees, you can take the following steps:
- Use Cash: The easiest way to avoid surcharge fees is to use cash to make payments. This way, you will not be charged any additional fees for using a credit card.
- Use Debit Cards: Debit cards are also a good option to avoid surcharge fees. Many merchants do not charge surcharge fees for debit card payments.
- Look for Merchants that Don’t Charge Surcharge Fees: Some merchants do not charge surcharge fees for credit card bill payment. Look for such merchants and make payments with them.
- Negotiate with Merchants: If you are a frequent customer of a merchant, you can try negotiating with them to waive off the surcharge fee for your payments.
Also Read: Credit Card Over Limit Fee
Conclusion:
Surcharge fees are additional fees charged by merchants for using a credit card to make payments. These fees are legal in most states in the United States, except for 10 states where they are prohibited. If you want to avoid surcharge fees, you can use cash, debit cards, or look for merchants that do not charge surcharge fees. Negotiating with merchants is also an option to avoid these fees. With the above guide, you can understand what surcharge fees are and take necessary steps to avoid them.