New Credit Card Fees Kick in Sunday
Starting Sunday, paying by credit card could get more expensive.
Under the terms of a $7.2 billion settlement reached last summer between
credit card companies and merchants, merchants will be free to impose a
surcharge on customers paying by credit card.
How big a surcharge depends on how much the merchant pays in processing
fees, but the amount legally permissible will be between 1.5 percent and
4 percent of your purchase price.
No one knows how many merchants will exercise this right, but Gerri
Detweiler, director of consumer education at Credit.com, expects the
number to be small, at least at first.
Smaller merchants, she says, typically feel gouged by processing fees
and are more likely than big chains to pass the cost along to their
customers. Service providers, she says—your accountant, your massage
therapist—are the most likely to pass the charge along. Among big
retailers, however, only gas stations have historically distinguished
between cash and credit customers, offering a discount to customers
paying cash or imposing a surcharge for those using credit cards.
By law, merchants intending to pass the cost along will have to post
notices at check out informing consumers of the extra charge. Online
merchants will have to post a similar notice to their home page.
Ten states prohibit credit card surcharges, so if you're making a
purchase in any of the following, you won't have to worry about being
penalized: California, Colorado, Connecticut, Florida, Kansas, Maine,
Massachusetts, New York, Oklahoma and Texas.
You also don't need to worry if you're paying by debit card, since those
are excluded from the settlement agreement. Nor do American Express
customers need worry: AmEx's contract with retailers forbids them from
levying a surcharge.
Detweiler offers this advice to affected consumers: "Always have a back
up method of payment," she suggests, so you can avoid paying the new
charge. "Have a debit card, or slip and extra $20 in your wallet."
And also, she suggests, tell your merchant if you object to the new
charge. "If enough consumers complain, a merchant will fear losing
business and won't choose to pass the charge along. I don't think people
are going to like being penalized for paying the way they want to pay."