Credit card fees are legal in most situations, but the rules depend on who is charging you and what type of card you are using
Businesses can charge you a fee for paying with a credit card in most cases. The fee is legal as long as the business follows state law and the rules set by the card networks (Visa, Mastercard, American Express, Discover). However, some situations have restrictions — certain types of businesses cannot charge fees at all, and some states cap how much you can be charged.
The key distinction is between surcharges (a fee added to your total) and cash discounts (a lower price if you pay in cash). Both are legal in most places, but they are treated differently under the law, and one may be prohibited where you live.
Key Takeaways
- Most businesses can charge a credit card fee, but the amount and how it is advertised must follow state law and card network rules.
- Government agencies, utilities, and some nonprofits are prohibited from charging credit card fees in most states.
- A surcharge (added fee) and a cash discount (lower price for cash) are legal in different places — check your state's rules before assuming either is allowed.
- The fee must be disclosed before you complete the transaction, and it cannot exceed what the business actually pays to accept the card.
Who can legally charge a credit card fee
Retail businesses, restaurants, online merchants, and service providers can charge a credit card fee in most states. The fee is meant to cover the cost the business pays to the card network and the payment processor — typically 2 to 3 percent of the transaction, though it varies by card type and merchant category.
The business must disclose the fee before you pay. This means it should appear on the receipt, the invoice, the checkout screen, or a sign at the register — not as a surprise after you have already committed to the purchase. If you are not told about the fee until after you swipe your card, you have grounds to dispute it.
The fee cannot exceed the actual cost the business pays to process the card. If a business is paying 2.5 percent in processing fees but charging you 5 percent, that overcharge violates the rules set by Visa and Mastercard, and you can report it to your card issuer.
Who cannot charge a credit card fee
Government agencies — federal, state, and local — are prohibited from charging a fee for credit card payments in most situations. This includes paying taxes, renewing licenses, paying fines, or any other government service. Some government websites may charge a fee for a "convenience" service (like paying online rather than by mail), but the fee must be optional and clearly labeled.
Utility companies are restricted in many states. Some states prohibit them from charging any credit card fee at all. Others allow a fee only if the customer chooses to pay by phone or online rather than by mail or automatic bank transfer. Check your state's public utilities commission website to learn the rule where you live.
Nonprofits and charitable organizations face restrictions in some states. A few states prohibit nonprofits from charging credit card fees entirely. Others allow the fee but require it to be disclosed and capped at the actual processing cost.
Surcharges versus cash discounts — and which is legal where you live
A surcharge is a fee added to your bill because you chose to pay with a credit card. A cash discount is a lower price offered if you pay in cash instead. They sound like the same thing, but they are treated differently under state law and card network rules.
Most states allow surcharges on credit card payments, but a few prohibit them. Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas ban surcharges on credit card transactions. If you live in one of these states, a business cannot add a fee to your credit card payment, even if the fee is disclosed.
Cash discounts are legal in all 50 states. A business can offer you a lower price for paying in cash, and this is not considered a surcharge. However, the discount must be offered to all customers equally, and it cannot be used to disguise a surcharge — for example, posting a price of $100 and then saying "cash price $95" is effectively the same as a $5 surcharge, and some states treat it that way.
What the card networks allow
Visa and Mastercard set their own rules about credit card fees, separate from state law. A business must follow both the state law and the card network rules, whichever is stricter.
Visa and Mastercard both allow surcharges in states where they are legal, but the fee cannot exceed the actual cost the business pays to process the card. The business must also disclose the fee before the transaction is complete, and the fee must be the same for all credit cards of the same type (for example, all Visa cards, or all American Express cards).
American Express and Discover have historically been stricter about surcharges, but both have loosened their rules in recent years. Check with your card issuer if you want to know the exact policy.
How to dispute a credit card fee you believe is illegal
If you were charged a credit card fee that you believe violates state law or card network rules, contact your credit card issuer first. Call the number on the back of your card and describe the charge. The issuer can investigate whether the fee was allowed and may reverse it.
Document what you saw before you paid: take a photo of the sign, save the receipt, or screenshot the checkout screen. This proof helps the card issuer investigate. If the business did not disclose the fee before you paid, that is a strong case for a reversal.
If the card issuer does not help, you can file a complaint with your state's attorney general or consumer protection office. You can also report the business to your state's public utilities commission if it is a utility company, or to the Federal Trade Commission if you believe the practice is widespread.
Frequently Asked Questions
Can a restaurant charge me a fee for using my credit card?
In most states, yes — as long as the fee is disclosed before you pay and does not exceed the restaurant's actual processing cost. However, if you live in Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, or Texas, the restaurant cannot charge a surcharge. A cash discount is legal everywhere.
What if a business charges different fees for different credit cards?
This is allowed. A business can charge a lower fee for Visa than for American Express, for example, because the processing costs are different. However, all cards within the same network must be charged the same fee — the business cannot charge one customer 2 percent and another customer 3 percent for the same Visa card.
Can my utility company charge me a fee for paying online with a credit card?
It depends on your state. Some states prohibit utility companies from charging any credit card fee. Others allow a fee only if paying online is optional and the customer can avoid the fee by paying by mail or automatic bank transfer. Contact your state's public utilities commission to learn the rule in your area.
Is a "convenience fee" the same as a credit card fee?
Not always. A convenience fee is charged for using a faster or more convenient payment method — like paying by phone instead of by mail. Convenience fees are sometimes allowed where credit card surcharges are banned, but only if the fee is optional and clearly labeled. If the fee is really just a hidden surcharge, it may be illegal.
Can I refuse to pay a credit card fee I was not told about?
Yes. If you were not informed about the fee before completing the transaction, you can dispute it with your credit card issuer. The business should have disclosed the fee at the register, on the receipt, or on the checkout screen before you paid.