Are rewards credit cards worth it with surcharges, transaction fees? We explain.
Heather Bernhardt is a small business owner. But she has a rant as a business owner and a customer.
She can't stand the growing practice of businesses charging consumers a surcharge to use their credit card.
"Let me tell you, if you own a small store, you own a store, whatever, restaurant, and you charge me a surcharge for using a credit card, I'm not coming back," Bernhardt said in a Tiktok post. "Eat it. It's good customer service."
Bernhardt's ire about credit card surcharges is not unique.
In two separate national surveys of consumers, shoppers have said they are sick of being nickel-and-dimed to pay a surcharge that used to be a cost of doing business.
What is a credit card surcharge?
The practice of charging consumers a surcharge on transactions is allowed based on a 2012 settlement between credit card networks and a group of U.S. merchants, according to an article by Wallethub. The surcharges, can range from 1.5% to 3%.
The practice of passing along credit card transaction fees to consumers by adding a surcharge to their bill began showing up during the COVID-19 pandemic, when more consumers were moving to e-commerce and in-person businesses and restaurants were dealing with higher costs, said John Kiernan, WalletHub editor.
However, the 2012 settlement only covered credit card transactions and not debit cards or pre-paid gift cards. Visa and Mastercard rules prohibit transaction fees for debit card transactions, but enforcement is pretty lax since that is not widely known, especially among smaller businesses and consumers, Kiernan told Paste BN. For credit card transaction fees, the consumer is supposed to be notified in some manner before the transaction takes place. If not, the consumer can file a dispute with the credit card issuer, Kiernan said.
Additionally, some states, such as Connecticut, Maine and Massachusetts, have state laws that prohibit credit card surcharges for consumers, Kiernan said.
Customers don't like being nickel-and-dimed with surcharges
The credit card surcharge fee usage is widespread in practice and also causes widespread annoyance.
In a recent study by WalletHub, 87% of people said "they are being nickel-and-dimed when they are asked to pay an extra fee for credit card payment processing." More than 4 in 5 Americans said they were charged a fee for paying with a credit card and 2 in 3 consumers said they would not use their credit card if they were charged a fee.
More than 3 in 5 people also said they thought it was unfair for merchants to pass their payment processing fees on to their customers.
Kiernan said the practice of adding the surcharge for credit card payments – or offering a discount for cash, which is common at many gas stations – has been growing in recent years.
"I think businesses and consumers for that matter, are always going to kind of push the boundaries and try to test the waters to see what they can get away with," said Kiernan.
Once businesses started seeing that other companies were charging the surcharge without much backlash, they started doing it, too, he said.
In a J.D. Power 2025 U.S. Merchant Services Satisfaction Study released in January, 34% of merchants said they were adding surcharges for customer purchases made using credit cards.
In the latest data from the JD Power US Credit Card Satisfaction Study, 82% of shoppers who said they faced a surcharge for using credit cards chose an alternative method of payment. John Cabell, managing director for payments intelligence said the survey did not ask whether any of those customers walked away from the transaction.
Consumers anger at the surcharges
Consumers don't like such add-ons, said Ted Rossman, Bankrate senior industry analyst.
"A surcharge is kind of a way to raise prices without raising prices," Rossman told Paste BN. While they may be legal, "in the court of public opinion...most people would frown upon any sort of add-on."
Consumers may complain to management, or on social media, which "is actually even worse because they're telling all their friends about this bad experience," he said.
Most shoppers aren't carrying cash and they are fighting both inflation and other rising costs, Rossman said. Businesses are also facing similar headwinds.
"People feel like everything costs enough already, so businesses are looking to shift some of the cost burden onto the customer," he said.
Many customers are stuck paying the surcharge since they aren't carrying cash or don't have a debit card, said Rossman.
But some customers are pushing back.
Rossman said he doesn't understand the philosophy of businesses adding surcharges since it angers customers and probably loses sales.
"We're not going back to a cash-first economy," said Rossman, adding that such extra fees are "a deterrent to sales."
Bernhardt owns Blackbird Boutique in Marine City, Michigan. She sells women’s clothing, gift items and small home decor pieces. Bernhardt said it's hard enough to compete as a small business owner and she wants to please her customers. She doesn't tack on a credit card surcharge.
But she was mad enough recently after visiting another store that charged her to use her debit card – she didn't know it wasn't allowed until a reporter notified her – that she put her rant on TikTok. In her video, Bernhardt said businesses should either eat the cost or "bake it in" to the price of the goods, which she doesn't do.
Such surcharges are bad for business, she said.
"You've probably lost a customer and you're not getting that returning customer and future sales," she said.
Is a cash rewards or rewards credit card worth it with surcharges?
If more consumers are having to pay surcharges, is it worth using a credit card to earn cash-back rewards or other perks?
Rossman said consumers should weigh how much they're paying in a surcharge versus what they're earning in rewards. Consumers should also pay their credit card bill each month to avoid paying extra interest fees, he said.
But credit cards can also offer extra perks, such as extended warranties, purchase protection or travel insurance, so that is something to think about as well, said Rossman.
Consumers can also get ahead by picking the right credit card, said Kiernan.
"Set yourself up to ignore a lot of this if you have the right card or right collection of cards," he said. "There are a number of cards that give you 5% cash back in custom categories and you can pick two categories a quarter; the categories you spend the most in."
Use those cards for your common purchases, then "even if you get charged the surcharge, you're still coming out ahead," he said.
You won't come out ahead in all transactions since the surcharge may be more than what you are earning in rewards, he said. But there are credit cards that also give you initial points or cash-back bonuses, he said.
"If you're making a bunch of small purchases, even if they have a small surcharge added on, if you're saving $1,000 at the end of the day, it's still coming out way ahead," he said.
Some consumers will use multiple cards, or debit cards or store credit cards, which may offer better rewards or incentives, Kiernan said. Some consumers may also opt to do automatic payments via their bank account or link their checking account to a retailer or business account to get a discount, he said.
Kiernan suggests having a credit card with good rewards and then having a debit card on hand for the times when a retailer wants to charge a surcharge for the credit card.
But remember, he cautions, that debit card transactions come right out of the checking account and the fraud protections on debit cards are not as strong as credit cards.
Betty Lin-Fisher is a consumer reporter for Paste BN. Reach her at blinfisher@USATODAY.com or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.