Tips & advice on getting your finances back on track.
Last week, I stopped into my favorite local pizza restaurant and handed over my credit card to pay for dinner. I typically don’t check my receipts too closely. As a financial educator, I should be more careful. This particular day I noticed a charge of eighty six cents, a credit card surcharge. I asked about this charge and was told that they charge 4% on all bills in which a credit card is used for payment.
As someone who rarely carries cash anymore, I was frustrated that I had not noticed this before. I began investigating the legitimacy of these fees and found that many small local shops are charging this fee, which is completely legal in most states. The credit card surcharge is a processing fee that the credit card companies charge merchants for credit card transactions. Merchants then pass this surcharge down to their consumers. Merchants cannot charge this fee for debit cards or prepaid card transactions.
It is a requirement that the fee be disclosed prior to the transaction. I found in my pizza experience, this did not happen. The merchant must also post signs alerting consumers to this charge. In most cases the limit on a surcharge is 4%, some retailers charge a flat fee instead of a percentage. The surcharge needs to be printed on the receipt. Please make sure that you are getting your receipts. I am often asked if I want a receipt and will sometimes say no, to avoid more paper. Lastly, there have been situations reported in which retailers were charging a different fee for different cards. There cannot be a difference in the fee dependent on which card you use.
There are some simple ways to avoid these charges. You can always pay with cash. Another option is to discuss the fee with the merchant. I was quite clear that I will no longer patron the restaurant that charged me the fee. If enough people voice their opposition to the charge, the merchant may change their policy. Lastly, make sure that you are aware of the fee before paying it. Knowledge is truly power.
Kim Cole is the Community Engagement Manager for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month’s edition. All identifying information will be kept anonymous.
Please send your questions via email to DearKim@navicoresolutions.org