When Businesses Can and Cannot Charge You a Credit Card Fee

Charging a credit card fee is legal in most situations, but the rules depend on where you live and what type of business you are

Whether a business can charge you extra for paying with a credit card is not a simple yes or no. Federal law allows most businesses to pass along the cost of accepting credit cards — but only under specific conditions. State laws add their own rules on top of that, and some states ban the practice entirely. The key is understanding what your state permits and what the business must disclose to you before they charge the fee.

The federal rule comes from the Dodd-Frank Act, passed in 2010. It says merchants can charge you a fee for using a credit card, as long as the fee does not exceed the actual cost they pay to accept that card. That cost is called the interchange fee — it is what the credit card company charges the merchant. But this federal permission does not apply everywhere, and it does not apply to all types of businesses.

Key Takeaways

• Federal law allows most businesses to charge a credit card fee, but only if it does not exceed what they actually pay the card company in interchange fees.
• Ten states — California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas — ban credit card surcharges entirely.
• Businesses must disclose the fee before you complete the transaction, not after you have already committed to the purchase.
• Debit cards, prepaid cards, and cash discounts are treated differently under federal law and may have different rules in your state.
• If a business charges you a fee that violates your state's law, you can report it to your state's attorney general or consumer protection office.

Which states ban credit card fees altogether

Ten states have made it illegal for any business to charge you a fee for using a credit card, no matter what the card company charges them. Those states are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. If you live in one of these states, a business cannot legally add a surcharge to your bill because you chose to pay with a credit card.

Some of these states have narrow exceptions. For example, New York allows a surcharge only if the business is a gas station or a seller of gasoline. California bans surcharges but allows a business to offer a discount for paying with cash or another method — the practical effect is similar, but the legal framing matters. If you see a fee in one of these states, it is worth reporting it to your state's attorney general office, because the business may not know the law has changed.

What the federal rule actually allows

In the 40 states where credit card surcharges are not banned outright, federal law says a business can charge you a fee — but only if that fee does not exceed the interchange rate the business pays to the card company. The interchange rate varies by card type and by merchant category. A grocery store might pay 1.5 percent to accept a Visa, while a restaurant might pay 2.2 percent. The business cannot charge you more than what they actually paid.

This rule applies to credit cards issued by Visa, Mastercard, American Express, and Discover. It does not apply to debit cards, prepaid cards, or gift cards — those have their own rules. Some states treat debit card fees differently from credit card fees, so even if your state allows a credit card surcharge, it may ban a debit card surcharge. Check your state's specific rules if you use a debit card regularly.

How businesses must tell you about the fee

A business cannot surprise you with a credit card fee at checkout. Federal law requires them to disclose the fee before you commit to the purchase. That means the fee must be clearly posted at the point of sale — on a sign at the register, on the menu, on the website, or on the invoice before you confirm your order. If you are buying online, the fee must appear before you click the final "complete purchase" button.

The disclosure must also be clear enough that an ordinary person would notice it. A tiny footnote or a fee buried in the terms and conditions does not meet the standard. If a business charges you a fee without disclosing it first, or if the disclosure was unclear, you have grounds to dispute the charge with your credit card company or report the business to your state's consumer protection office.

The difference between a surcharge and a cash discount

Some businesses frame the fee differently to stay within the law. Instead of charging extra for a credit card, they offer a discount for paying with cash. Legally, these are not the same thing in every state. A cash discount is generally allowed in more places than a credit card surcharge, even though the customer's out-of-pocket cost is identical.

California is the clearest example: the state bans credit card surcharges but allows cash discounts. A gas station cannot charge you 10 cents more per gallon for using a credit card, but it can charge you 10 cents less per gallon for paying cash. The effect on your wallet is the same, but the legal framing matters. If you live in a state that bans surcharges, ask the business whether they offer a cash discount instead — it may be their way of working within the law.

What to do if you are charged an illegal fee

If a business charges you a credit card fee that violates your state's law, you have several options. First, dispute the charge with your credit card company. Call the number on the back of your card and explain that you were charged a fee that your state does not permit. The card company can often reverse the charge and investigate the merchant.

You can also report the business to your state's attorney general office or consumer protection division. Most states have an online complaint form on their website. Include the business name, location, date of the transaction, and a description of the fee. If multiple people report the same business, it increases the likelihood that your state will take action. Some states have fined businesses thousands of dollars for repeatedly charging illegal surcharges.

How this affects online purchases and subscription services

Online retailers and subscription services follow the same rules as brick-and-mortar stores, but the disclosure requirement works differently. The fee must be shown before you complete the purchase — on the checkout page, not in a confirmation email afterward. If you are signing up for a subscription and the service charges a credit card processing fee, that fee must be disclosed before you enter your payment information.

Some online services try to hide fees in the terms and conditions or disclose them only after the first charge. This violates federal law. If you encounter this, take a screenshot of the checkout page showing what was and was not disclosed, then dispute the charge with your card company and report the business to your state's attorney general.

Frequently Asked Questions

Can a business charge me a fee for using American Express instead of Visa?

Yes, if your state allows credit card surcharges. The fee can be different for different card types because the interchange rate varies — American Express typically charges merchants more than Visa or Mastercard. The business can pass that difference along to you, but the fee still cannot exceed what they actually pay to the card company.

What if I paid with a credit card and was not told about the fee until after I completed the purchase?

Dispute the charge with your credit card company immediately. Federal law requires the fee to be disclosed before you commit to the transaction. Call the number on the back of your card and explain that the fee was not shown until after checkout. The card company can reverse it and may investigate the merchant for violating disclosure rules.

Does a business have to accept credit cards at all?

No. A business can choose to accept only cash, only debit cards, or only certain credit cards. But if they do accept credit cards, the rules about surcharges and discounts apply. They cannot accept your credit card and then charge you an illegal fee for doing so.

Can a restaurant charge me a fee for splitting the bill across two credit cards?

This depends on your state and how the restaurant frames it. If your state bans credit card surcharges, the restaurant cannot charge a fee for using a credit card, even if you split the bill. If your state allows surcharges, the restaurant can charge a fee — but it must be disclosed before you order, and it cannot exceed their actual card processing cost.

What if a business says the fee is for "processing" or "convenience," not for the credit card itself?

The label does not matter — what matters is whether the fee is tied to your choice of payment method. If the fee only appears when you use a credit card, it is a credit card surcharge under the law, regardless of what the business calls it. The same rules apply: it must be disclosed beforehand, and it cannot exceed the interchange rate in states that allow surcharges.