What Is a Credit Card Convenience Fee? How to Avoid It

By Diana Kelly Levey · October 15, 2022 · 8 minute read

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What Is a Credit Card Convenience Fee? How to Avoid It

If you, like 80% of Americans, use credit cards, you’ve probably been hit with a convenience fee — an additional charge levied by merchants — at some point. Perhaps it was tacked on when you bought concert tickets online rather than at the box office or assessed when you paid your rent online with your plastic. Or maybe you only noticed it when reviewing your monthly bill. Whatever the case, you may well have asked yourself if this is a fair fee and how you can avoid this kind of charge in the future.

We can help! Read on to learn more about credit-card convenience fees, when and why they are charged, and whether you can avoid them.

What Is A Convenience Fee?

A convenience fee is a flat fee that’s tacked on to the cost of your transaction that you, the cardholder, are expected to pay. It is typically charged by merchants when a customer uses a credit card in a payment channel that it’s the usual one for the business. For instance, if a trade school usually accepts payments in-person and you choose to pay online, you might be assessed the additional fee for the convenience of not turning up at their place of business. A convenience fee may be either a small percentage of the transaction’s total or a flat fee charged when you use a credit or debit card with the merchant.

This fee is the result of a lawsuit between retailers and the brands (Mastercard/Visa) that was settled in January 2013. To make a long story short, the verdict permits merchants to add a surcharge when a customer uses a credit card. It helps to understand why retailers fought for this right: When merchants allow a customer to use a credit card as a payment method instead of cash or checks, they (the retailer) are charged a credit-card processing fee for the transaction. When you, the customer, receive a convenience fee, it reflects the merchant trying to offload that processing fee onto you. The convenience fee is what you pay for the “convenience” of being able to use a credit card for a transaction instead of cash or another form of payment. In some cases, a retailer will factor these fees into their business model and won’t pass along the additional charge. That is why you may notice that convenience fees strike you as somewhat random.

Example of a Convenience Fee

In general, the consumer pays a convenience fee when purchasing a product or service in an alternative way than paying in person. One example of a convenience fee is purchasing tickets for a play over the phone or online. Anyone who’s ever reserved seats for the theater knows that you often pay a lot more than the ticket price for the final purchase amount. You may be hit with a credit card convenience fee for this purchase as well as other fees! Buying a ticket in person at a ticket office for a show will often help you avoid convenience fees.

Another example of these convenience fees at work can be found at the gas station. When you fill up your tank, you may notice that the price for gas is about $0.10 cheaper per gallon if you pay with cash than with a credit card.

Why Do Convenience Fees Exist?

Many credit card holders already get hit with an annual fee and monthly interest fees; so why do you have to pay even more money for using plastic as a payment method? The main reason you’re getting stuck with these convenience fees is because the merchants have to pay processing fees to payment networks. The payment networks or payment processors work with the financial institutions that issue your cards (like SoFi), and the card network (Visa, Mastercard, Discover, American Express) to make sure the transaction is secure and processed smoothly. The bank that issues the cards often charges the merchant a fee for allowing them to accept this card – a credit card processing fee. Sometimes, payment networks also charge the merchant a fee. Often, credit-card processing fees cost the merchants between 2% and 4% per transaction. That’s why the merchant might pass those fees on to you, the consumer, as a convenience fee.

This is also another reason some small businesses may not accept credit cards at all: They don’t want to have to pay the fees associated with taking them or pass them on to you.Other merchants choose not to accept certain credit cards, like Discover or American Express, since those companies tend to collect higher fees per purchase.

Credit Card Company Rules on Convenience Fees

Here’s the breakdown for how some of the major credit-card brands handle fees.


Rules for Merchants on Convenience Fees


Merchants can add convenience fees on all nonstandard payment methods, except for income tax payments in some states.

Retailers are required to register the surcharge with the payment network. They must also display a notice of the surcharge at the point of sale — both in-store and online. You’ll usually see the additional fee on your receipt.


Only select government agencies and educational institutions can charge credit card convenience fees.

Retailers must register the surcharge with their payment network. They must also display a message about the surcharge at the point of sale — both in-store at the checkout and online. You’ll usually see the additional fee on your receipt as well.

American Express Only government agencies, educational institutions, utility companies, and rental companies can charge credit-card convenience fees.
Discover The retailer cannot charge convenience fees to Discover cardholders unless it charges the same fees to those using credit cards from other card issuers.

Convenience Fees vs Surcharge Fees: What’s the Difference?

When thinking about the additional charges you wind up paying, you may have wondered what the difference between convenience fees and surcharge fees are. Let’s explain.

A surcharge fee covers the cost of you having the privilege of using a credit card. It’s added before taxes. Sometimes called a “checkout fee,” it is usually a percentage of the sale and it’s optional for the merchant to add a surcharge fee onto a transaction. Each specific credit card company has rules about surcharge fees.

Credit card surcharges are prohibited by law in 10 states. If you’re a merchant doing business in Colorado, Utah, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas, you’re not allowed to add a surcharge to a purchase. So if you’re a customer in those states and paying with a credit card, you might be able to avoid some additional fees.

In comparison, a convenience fee covers the cost of doing a transaction with a credit card instead of another payment method. Sometimes this is charged as a percentage of the transaction. Other times, it is charged as a flat fee, regardless of the cost of the products or services purchased. A retailer might add $3 to $5 to the transaction completed with a credit card, regardless of what or how much was purchased.

How Can Convenience Fees Be Avoided?

When you’re trying to avoid credit card convenience fees, you can choose to pay with a method other than plastic, such as cash, check, or money orders at some merchants. For example, if you’re paying for college tuition, you might be able to set up an online payment using an electronic check, money order, or personal check. At some schools, this could save you nearly 3% per payment transaction. If one semester of college tuition was $5,000, avoiding a convenience fee charge could save you about $150.

That being said, if you have a high-rewards credit card, conducting an expensive transaction might be beneficial if you can get cash back.

So, it’s important to scan for notices about convenience fees. When making a purchase at a bricks and mortar location, look at the point of entry and at the checkout area to see if they have messages posted about surcharges or convenience fees. You could always ask before purchasing a product or service if paying by cash will save you money. This often works well in service businesses. If you’re paying someone to install or service an appliance in your home, for example, paying with cash could save you a chunk of money if it allows you to avoid fees. If you are purchasing something online, look carefully at the charges before hitting “purchase.” Credit card fees are fairly common today, so you want to be alert to how they can crop up – and avoid them when you can!

The Takeaway

Knowing that credit card convenience fees (and surcharge fees) exist, whether they are legal in your state, and how to avoid them can help save you money in the long run. Oftentimes, these fees are added at the merchant’s discretion, and you may — with a little sleuthing and a work-around or two — be able to avoid them. Using a credit card can be an expensive proposition, so it’s good to know how you can trim some of these additional charges. Using cash or a check can sometimes be the most economical path forward.

Get Money-Smart With SoFi Checking and Savings

Avoiding additional fees and paying you interest for the privilege of holding your money are two benefits SoFi can offer you! With our online checking and savings accounts, eligible accounts will pay no account or overdraft fees, plus you’ll earn a competitive APY.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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