Surcharge for Using a Credit Card

Credit card companies make about $30 billion each year in credit card surcharges and fees, according to Scam Busters. Surcharges are extra fees tacked onto your bill for simply using a credit card, not interest charged on the account.

History

Federal law prevented surcharges on credit card transactions until 1984, according to Credit Info Center. After 1984, the federal government let the states make decisions about surcharges.

Function

Credit card payment networks charge merchants for each credit card transaction--usually 1.5 to 5 percent of the total bill, according to CPA Site Solutions. Some merchants pass surcharges onto the customer to avoid this fee.

Considerations

Several states ban credit card surcharges, but Visa and MasterCard disallow them completely on their networks as of 2010. Discover allows surcharges, but urges merchants not to charge customers.

Prevention/Solution

Retailers sometimes avoid credit card processing surcharges by offering lower prices to consumers who use cash rather than plastic--a legal tactic. Additionally, some government agencies provide legal protection from payment network surcharges--so they can legally pass it on to the consumer.

Tip

Scam Busters recommends reviewing your receipt on all credit card transactions to check for any surcharge.

References

• Scam Busters: How To Avoid Extra Credit Card Fees and Surcharges
• Credit Info Center: Making Purchases with Credit Cards - Some Commonly Asked Questions
• CPA Site Solutions: Merchant Credit Card Abuses