A credit card convenience fee is an extra amount of money a merchant charges for using a credit card in a transaction that’s unusual for them. That means, for example, giving your credit card information over the phone or buying something online (e.g. movie tickets) when paying in person is customary. Not all merchants will charge them, though. Plus, credit card convenience fees will never come as a surprise. A merchant must clearly inform you of them at the point of sale.
Here’s the scoop on credit card convenience fees:
A credit card convenience fee is an extra charge for paying by credit card in a way that’s not typical for a merchant – for example, by phone instead of in person.
Merchants must disclose whether they will charge a credit card convenience fee at the point of sale.
Credit card convenience fees and credit card surcharges are not the same thing.
A credit card surcharge is extra money you pay just for using a credit card instead of another type of payment.For example, something might cost $10 if you pay in cash but $12 if you pay by card. Surcharges are regulated more than convenience fees, as many states have drastically limited when merchants can charge them.
Taxes and college tuition are two types of transactions you can expect to pay credit card convenience fees on. In the case of taxes, the government is exempt from paying credit card processing fees, so the cost is passed on to you, the taxpayer. If you itemize your taxes, though, you may be able to deduct these fees.
All in all, you won’t see credit card convenience fees too often. Swiping your card in a store should not trigger one, for example, because that’s a typical way of doing business for the company. The same goes for shopping online from the likes of Amazon.com, since their business typically takes place on the web.
It is legal to charge a credit card processing fee in 40 out of 50 states if it’s a surcharge and in all states if it’s a convenience fee. A surcharge is an added cost just for using a credit card, while a convenience fee is a charge for doing a transaction that’s unusual for the merchant (e.g. over the phone). You’ll usually have to pay convenience fees on things like taxes and tuition, too. Credit card networks also restrict the cases where fees are acceptable. For example, businesses must clearly display any surcharges or convenience fee before a transaction takes place. In other words, they can’t add it on without your knowledge.… read full answer Here’s what you need to know about the legality of credit card processing fees: • There are two types of processing fees: convenience fees and surcharges.
• Convenience fees are for doing a credit card transaction in a way that’s not typical for the business (e.g. over the phone when they usually accept in person).
• A credit card surcharge is a fee just for using a credit card instead of another payment method.
• 10 U.S. states outlaw credit card surcharges: Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
• Merchants must always clearly disclose both types of credit card processing fees at the point of sale. If they add one without your knowledge, you should call your credit card network to complain.
• Merchants are allowed to charge no more than 4% of the purchase amount or the actual cost of processing your card, whichever is lower. Battles about surcharges have even gone to the Supreme Court, which upheld New York’s right to ban them. Be sure to look up your state’s policy. You should also know that if you get a refund on a purchase for which you had to pay a surcharge, you get your surcharge money back too.
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