Editorial Policy

Would You Pay Extra To Use Your Credit Card?

Allie Johnson

January 31, 2013

How would you feel about paying an extra $4 to the store every time you use your credit card to buy $100 worth of groceries, clothes or other merchandise?

Retailers are now allowed to charge customers so-called “checkout fees” of up to 4 percent on Visa and MasterCard credit card transactions, thanks to a recent federal court case settlement agreement. The case centered on the “swipe fees” merchants pay whenever a customer uses a credit card. Credit card companies charge these fees to merchants, and the new rules provide an avenue for merchants to recoup some of those costs.

If you’d balk at such fees, you’re not the only one. A CreditCards.com poll found that 65 percent of Americans say they would stop using their credit cards rather than pay a fee.

Many retailers won’t necessarily charge consumers surcharge fees, even though they’re now allowed to do so, according to most experts. For example, Target and Wal-Mart have stated they do not plan to charge the fees. If you encounter a merchant who is charging a checkout fee, here are four things you should know:

1) The new rules apply only to credit cards — not debit cards.

2) Retailers will be required to let customers know about the charge. There must be signage at the entrance to a store and at the point of sale, whether at a cash register or online. The fee also must be clearly printed on the receipt.

3) Merchants are not allowed to charge customers any more than they themselves would actually pay. So, if the card company charges the merchant a swipe fee of, say, 1 percent, that’s the most the customer could have to pay.

4) Customers in the 10 states that have banned the surcharge will not have to pay it. These states include California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Like many of the consumers surveyed by CreditCards.com, I’d avoid paying a checkout fee at all costs. I use credit cards partly because they’re quick and convenient, but also because I have rewards cards that make it financially savvy for me to use them often, then pay them off right away. My rewards cards offer up to 3 percent cash back, so interchange fees could easily cancel out my rewards.

If just a few merchants started charging fees, I’d probably avoid shopping at those places if it were convenient. For example, I could easily switch from one gas station to another one up the street. But if my favorite local Thai restaurant started charging the fees, I don’t think I could live without their green curry veggies. In that case, I’d probably switch to using a debit card or cash there.

If surcharges become a widespread practice, I’d rethink my overall spending behavior. I’d probably no longer use credit cards to rack up rewards. Instead, they would be safely stashed for emergencies, and I’d use my debit card or cash for most purchases.

One tough decision would be whether to use credit for bigger purchases and travel. Many experts recommend using credit, responsibly of course, for expensive items such as plane tickets and refrigerators. Credit cards offer consumer protections, such as the ability to dispute a purchase if the item is defective and the merchant won’t resolve the issue. Some cards also come with purchase protection, which might reimburse you if an item you bought with the card is lost, broken or stolen within a certain time frame after you buy it. But if you were buying a $1,000 sofa, and the furniture store charged a checkout fee, that could add up to $40 to the price. That’s a lot — probably enough to make me use another method of payment.

While it looks like consumers may not have to worry too much about these fees yet, it’s definitely worth thinking ahead about whether you’d be willing to pay checkout fees — or not.