Charging credit card fees is legal in most situations, but federal law and state rules set strict limits on when and how much a business can charge you

The short answer: a business can charge you a fee for using a credit card, but only if they follow specific rules. They cannot charge you more than what the card network (Visa, Mastercard, American Express, Discover) allows them to charge. They cannot charge different prices to customers who pay with cash versus credit. And they cannot charge you a fee just for the privilege of using your card — the fee must be tied to a real cost they incur.

The reason these rules exist is that credit card processing costs money. When you swipe your card, the merchant pays a percentage of the sale to the card network and the bank that issued your card. That cost is real. But Congress and state legislatures decided merchants cannot simply pass that cost to you in a way that punishes credit card users or hides the true price of what you are buying.

Key Takeaways

  • Merchants can charge a fee for credit card use only if the fee does not exceed what the card network allows them to charge you — typically 2% to 3% of the transaction.
  • A business cannot charge you a fee for using a credit card while offering a discount to cash customers; that is the same thing legally and violates the law in most states.
  • Fees for credit card use must be disclosed clearly before you complete the purchase, not hidden in fine print or added after the fact.
  • Some card networks prohibit certain types of fees entirely — for example, American Express does not allow merchants to charge fees on American Express transactions in most situations.

The federal rule: the Durbin Amendment and card network rules

The Durbin Amendment, part of the Dodd-Frank Act passed in 2010, does not directly ban credit card fees. Instead, it requires that any fee a merchant charges you cannot exceed the merchant's actual cost of accepting that card. In practice, this means a business cannot charge you 5% just because they feel like it — they have to show that accepting your card actually costs them that much.

But here is the catch: the card networks themselves (Visa, Mastercard, American Express, Discover) set their own rules on top of federal law. These rules are stricter than the Durbin Amendment. Visa and Mastercard, for example, typically allow merchants to charge you a fee of up to 2% or 3% of the transaction, depending on the card type and the merchant's agreement with the network. American Express generally does not allow merchants to charge a fee on American Express transactions at all, though there are narrow exceptions for certain business-to-business transactions.

If a merchant charges you more than the card network allows, the merchant is breaking their agreement with the network, not necessarily breaking federal law. But the card network can fine the merchant or drop them from the network entirely.

State laws that ban or restrict credit card fees

Ten states have their own laws that go further than federal rules. These states ban merchants from charging any fee for credit card use, period. Those states are California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont.

In these states, a merchant cannot charge you a fee for using a credit card, even if the fee is small and even if they disclose it clearly. The only exception in some of these states is for commercial or business-to-business transactions — a business buying supplies from another business may face a fee, but a consumer cannot.

In the remaining 40 states, merchants can charge a fee as long as they follow the card network rules and disclose the fee before you pay. Some states require the fee to be disclosed at the point of sale (on the menu, the price tag, or the checkout screen). Others require disclosure only before the transaction is final.

The difference between a fee and a surcharge

The terms "fee" and "surcharge" are often used the same way, but they can mean different things legally depending on the state. A surcharge is typically a percentage added to the price of the item because you are paying with a credit card. A fee is sometimes used to mean a flat dollar amount, like $2.50 per transaction.

In states that ban credit card fees, the ban usually applies to both surcharges and flat fees. In states that allow them, the card networks usually cap percentage surcharges (typically at 2% to 3%) but may allow flat fees as long as they are reasonable and disclosed.

What you cannot do is charge a "cash discount" that is really a credit card surcharge in disguise. For example, a gas station cannot say "Cash price: $3.00, Credit card price: $3.10." That is a surcharge, and it is illegal in many states even if the station calls it a discount. The law sees it as the same thing.

When a business must disclose the fee to you

If a merchant is allowed to charge you a credit card fee, they must tell you about it before you agree to pay. This is not optional. The disclosure must be clear and in plain language — not buried in tiny print or in a terms-of-service document you have to scroll through.

For in-person transactions, the fee should be posted where you can see it before you hand over your card — on a sign at the register, on the menu, on the price tag, or on the checkout screen. For online transactions, the fee must appear on the checkout page before you click "confirm purchase." For phone transactions, the merchant should tell you the fee before you give them your card number.

If a merchant charges you a fee without disclosing it first, you have the right to dispute the charge with your card issuer. Your bank or credit card company can reverse the charge and investigate whether the merchant violated the card network rules.

What counts as a valid reason for a credit card fee

Not every fee a merchant charges is a credit card fee. A merchant can charge you a fee for other reasons — for example, a convenience fee for paying a bill online, a processing fee for a wire transfer, or a service fee for expedited shipping. These fees are separate from credit card fees and are governed by different rules.

A convenience fee is allowed in most states and by most card networks if the merchant is offering you a way to pay that costs them more than the standard way. For example, a utility company might charge a convenience fee if you pay your bill online with a credit card, because the company has to pay the card network a processing fee. But the company cannot charge the convenience fee if you pay by check or automatic bank transfer, because those methods do not cost them as much.

The key difference: a convenience fee is tied to the method of payment you chose, not to the card itself. A credit card fee is tied to the card. If a merchant is charging you because you used a credit card, it is a credit card fee and must follow the rules above. If they are charging you because you chose an optional, faster payment method, it may be a convenience fee and may be allowed even in states that ban credit card fees.

What to do if you are charged an illegal fee

If you believe a merchant charged you an illegal credit card fee, your first step is to contact your card issuer — the bank or company that issued your credit card. Explain the charge and ask them to investigate. Your card issuer can dispute the charge on your behalf and may reverse it while they investigate.

You can also contact the merchant directly and ask them to remove the fee. Many merchants do not realize they are breaking the rules, especially if they operate in multiple states and are confused about which rules apply where. A polite phone call or email often resolves the problem.

If the merchant refuses and your card issuer will not help, you can file a complaint with your state's attorney general or consumer protection office. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. These agencies investigate merchant practices and can take action if a pattern of illegal fees emerges.

Frequently Asked Questions

Can a restaurant charge me a fee if I pay with a credit card instead of cash?

It depends on the state. In California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont, no — the restaurant cannot charge a fee for credit card use. In other states, the restaurant can charge a fee if it is disclosed before you pay and does not exceed what the card network allows (usually 2% to 3%). The restaurant cannot offer a "cash discount" that is really a credit card surcharge in disguise.

What if the fee is not disclosed until after I have already paid?

Contact your card issuer and dispute the charge. Merchants are required to disclose fees before you complete the transaction, not after. Your bank can investigate and may reverse the charge. You can also file a complaint with your state's attorney general or the CFPB.

Can a business charge a fee for paying with a debit card?

The rules are different for debit cards. Visa and Mastercard prohibit merchants from charging a fee on debit card transactions in most cases. However, some merchants may charge a "convenience fee" for certain payment methods (like paying a bill online) that is not specific to debit cards. Check with your card issuer or the merchant if you are unsure.

Is a "convenience fee" the same as a credit card fee?

No. A convenience fee is charged for using an optional, faster payment method — like paying a bill online instead of by mail. A credit card fee is charged specifically because you used a credit card. Convenience fees are allowed in most states and by most card networks, even in states that ban credit card fees, because they are tied to the payment method, not the card itself.

Can American Express merchants charge me a fee?

American Express generally prohibits merchants from charging a fee on American Express transactions. If a merchant charges you a fee for using American Express, report it to American Express directly. American Express takes these violations seriously and will investigate.