In 1985, California passed a law (Civil Code section 1748.1) that prohibited merchants from adding a surcharge (an extra fee) when customers pay by credit card instead of cash.
Credit card surcharges allow merchants to pass on processing fees to customers who pay with credit cards. These surcharges are legal in most US states, although some states still have restrictions or outright bans.
Q: Are there any states where credit card surcharging is prohibited? Yes, as of the latest updates, credit card surcharging is prohibited in Massachusetts, Connecticut, and Puerto Rico. Merchants must stay informed of changing laws to ensure compliance.
Some states do not allow a merchant to refuse cash, however a merchant may not be able to accept a credit card for various reasons including a technical issue, the card being declined, suspected fraud as in someone trying to use a stolen credit card or a legitimate credit card without permission by the cardholder.
Yes, a credit card company can sue you if you stop paying your bills. Typically, credit card companies will contact you several times before escalating the matter to legal action or charging off the debt to a debt collection agency.
Write a letter to the credit card company explaining why you aren't going to pay. Describe the steps you took to resolve the problem with the merchant. (Alternatively, you might be able to dispute the charge online.) Mail to the correct address.
You may accomplish this by including the credit card surcharge on your invoice or displaying a sign at your office. If you're using an online payment solution, this notice should be automatically included on your payment page.
Consumer Financial Protection Bureau Releases Final Rule on Credit Card Late Fees, with Overdraft Fees on Deck. On March 5, 2024, the Consumer Financial Protection Bureau (Bureau) announced the final rule governing late fees for consumer credit card payments, likely cutting the average fee from $32 to just $8.
Both of these fees are meant to help a business make up for any processing fees it may have to pay when you make a payment. For this reason, fees should not exceed the processing fee amount. If businesses attempt to charge more, they should be reported to your card issuer.
A surcharge adds an additional fee, tax, or cost to the transaction when customers pay with a card. You can add fees of up to 3% for Visa and 4% of the transaction for Mastercard. Surcharging is not legal in Connecticut, Oklahoma, Massachusetts, and Maine, and some states cap surcharge fees, like Colorado at 2%.
Use a different payment method.
Merchants often charge convenience fees or surcharges when credit cards aren't a standard payment method. If you have a rent, utility or tax bill, consider paying by check or electronic transfer instead.
Use cash where you can
The easiest way to avoid card surcharges is to pay by cash. While businesses can charge a surcharge for paying by debit or credit cards, they can't charge a surcharge for paying by cash.
There are a few ways of legally passing on credit card fees to customers. Some are direct, and some are indirect. Adding a surcharge to cover the credit card fee is the more direct method while incentivizing cash payments is indirect.
A law called the Fair Credit Bill- ing Act forces lenders to follow specific “billing error” procedures to resolve the dispute. You must send your letter of dispute to the address provided by the lender for this purpose, and it must be received within the 60 day period.
Under the law, businesses must take steps to ensure that charges to customers' credit cards, debit cards, phone bills, and other accounts are authorized.
Q: Where are credit card surcharging and convenience fees illegal? As of January 2023, only two states and one jurisdiction still outlaw the use of credit card surcharges. They are a result of non-qualified transactions of different communications methods.: Connecticut, Massachusetts, and Puerto Rico.
7-year credit rule and your credit score
Under the Fair Credit Reporting Act, in most cases, debts can only appear on your credit report for seven years. After that period is up, the debt can no longer be reported. Also, if you've had a delinquent account on your credit report, creditors can hold the debt against you.
What is the 5/24 rule? Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.
To avoid a credit card surcharge, you can pay with alternative methods such as cash, debit cards, or mobile payment apps. Some businesses also offer discounts for non-credit card payments, providing an incentive to choose other payment options that help avoid credit card surcharge.
Businesses cannot impose any surcharge for using the following methods of payment: consumer credit cards, debit cards or charge cards. similar payment methods that are not card-based (for example, mobile phone-based payment methods) electronic payment services (for example, PayPal)
You typically have 60 days from when a charge appears on your credit card statement to dispute it, but if there's fraud involved, there's no time limit. Some card issuers allow up to 120 days for disputes related to billing errors and issues with the quality of goods and services from a merchant.
A credit card hardship program is a financial arrangement that allows those facing such situations to negotiate more manageable payments on outstanding credit card debt. The specifics of a hardship program depend on your credit card issuer and your financial position.