When Surcharges Pay Off: Should You Swipe for Rewards Anyway?
While credit cards are certainly a more convenient option than carrying cash and waiting for change at the cash register, many vendors have implemented fees for customers who use them. You may have found fees of anywhere between 1% and 4% at the local corner store, your favorite restaurant, a wedding venue, and more.
To make things even more confusing, many credit card companies offer rewards for customers who use their services. When you’re faced with credit card surcharges of 3%, which are added onto the total at the register, you may wonder if it's worth paying them to get those points, cash back, and other rewards.
Ultimately, there’s no universal answer to this question. Instead, you’ll need to consider each transaction, the “swipe fees” that you’re facing, how many points you can accumulate, and more. Keep reading to learn more about how you can decide when it's worth it to pay credit card fees and when you should keep your card in your wallet and choose cash instead.
Understanding Surcharges: How They Work and Why They Exist
Before we dive into how to decide when paying credit card surcharges and when they’re not worth it, it’s a good idea to understand what they are and why they exist. Credit card surcharges have always existed, but for years, they were the responsibility of the merchant. In the past, stores, restaurants, and other vendors were expected to pay credit card fees on every transaction that involved the use of a credit card.
However, a law that was passed in 2013 allowed merchants to start passing these fees on to the customer. These costs, which are often called swipe fees or interchange, average approximately 2% of the transaction amount. Part of the law did place a cap of 4% on the swipe fees that were passed on to customers. It’s also worth noting that the law only applied to credit transactions, not debit transactions.
Merchants also have a little bit of leeway when it comes to passing these fees on to the customer. They can either add a fee of somewhere between 1% and 4% onto the transaction, or they can offer a discount if the customer chooses to pay with cash. You’ve probably noticed this at gas stations that list cash prices and credit card prices. You also need to be aware that some states have outlawed this practice, which means you may not see these fees being tagged onto your bill.
Earning Rewards That Outweigh the Cost
Now that you know how these surcharges work and why you’re seeing them, it’s time to start doing some math. Hypothetically, let’s assume that your credit card allows you to earn 3% cash back when you use it at a restaurant, and that your favorite restaurant charges a 3% fee to customers who pay with a credit card. In this example, the 3% that you earn offsets the 3% fee charged by the restaurant. This means that you’re breaking even.
Now, let’s assume that your credit card gives you 2% cash back on restaurant purchases. If the restaurant still charges a 3% surcharge, this means that you’re losing 1% every time you use your card there.
The Citi Strata Premier Card is a great example of this principle. Right now, this card offers three ThankYou Points for every dollar spent at a restaurant. As of June 2025, The Points Guy (TPG) Citi Points are worth about 1.8 cents per point. Which means that these points equal a return of about 5.4% at restaurants. This means that this card is usually worth using in this scenario.
One of the best ways to make sure that your rewards outweigh the cost is to do some research before you have to make a decision. Don’t wait until you’re sitting in the restaurant to decide if you’re going to use a card that offers rewards points. Instead, spend some time doing your homework and check out some sites that offer a credit card value calculation. This allows you to know when it’s worth using your credit card, and when you should pay cash or use a debit card.
What About the Welcome Bonus?
As is the case with any sort of credit card promotions, there’s not a single answer that applies to every transaction. Many credit card companies offer welcome bonuses, a lump sum of points that you can earn if you spend a designated amount. It’s important to read the fine print when evaluating these bonuses, as many people assume that they get a welcome bonus simply for signing up for the card. That’s never the case. Instead, credit card companies require you to spend a certain amount within a designated time period.
Let’s consider another hypothetical situation in order to understand when to pursue the welcome bonus and when to let it go. Imagine that you get a new credit card that offers 100,000 points as a welcome bonus. However, to get those 100,000 points, you need to spend $6,000 on the card. Based on industry averages, we’ll assume that you have to spend that amount within 90 days to activate the points bonus.
For many people, spending $6,000 in three months is a difficult task. This may mean that you have to put virtually every expenditure on that card, including those that come with hefty surcharges. For instance, you may have to put your $2000 monthly rent on the card, which can become tricky, as some landlords don’t accept credit card payments. This means that you’ll need to find a third-party platform that you can use to pay your rent, and since some of those platforms have credit card surcharges, you may end up paying hundreds of dollars more to activate your welcome bonus.
If you find a third-party platform that charges a relatively small surcharge, the 100,000 points may be worth it. However, it requires you to do some digging to find the right platform. Keep in mind that credit cards don’t offer such large amounts of bonus points simply to make things easier for you. They make their money by charging interest on the money that you spend. There’s no such thing as “free points,” so you’ll need to be mindful when spending money to earn points.
Going Beyond Points: Unlocking Extra Benefits
Points and cash back aren’t the only rewards that credit card companies offer. Once you’ve spent a certain amount of money, many credit card companies offer other perks, including a large number of bonus points, trip protection, extended warranties, and purchase insurance. You can also unlock elite status with certain card companies, which makes them even more appealing to use.
When evaluating these added perks, you’ll have to consider the benefit that you’ll receive and how much that benefit means to you. For instance, if you unlock nights at a luxury hotel chain, but you don’t enjoy traveling, the benefit isn’t worth much to you. This means that if you have to spend $5,000 to unlock those nights, it’s probably not worth it, as you’re unlikely to enjoy the bonus.
You can also look into the perks provided by credit cards that are affiliated with certain companies. For instance, motorcycle enthusiasts often use a Harley-Davidson credit card that allows them to earn points that can be redeemed for free oil changes and other services. In these instances, the surcharge at a restaurant may be worthwhile, as repairs and maintenance can be costly.
For frequent travelers, paying a 2% surcharge may be worthwhile if they can redeem points for free nights at hotel chains that are affiliated with their credit card. These perks can often offset the cost, especially if it’s money that you were going to spend anyway.
Rewards vs Fees: Making the Right Choice
It’s been said that nothing in life is free, and that’s certainly true when it comes to the rewards that you can earn by using a credit card. While credit cards are excellent resources for people who want to “buy now and pay later,” the rewards offered by companies are ultimately designed to get people to use their cards and eventually repay the money with interest.
The decisions that you make when it comes to rewards and fees depend on a wide range of factors, including how high the credit card surcharges are and how likely you are to use the rewards earned. Don’t go into any transaction without having done your homework so you can be sure that the fees are worth it for you.