Credit card surcharges: are they worth paying?

Many Australians love their credit card rewards and regardless of whether you’re preferred reward is flights, cash or merchandise, flashing the plastic for all purchases can be extremely tempting. Right after all, the far more you commit on your credit card, the much more rewards you will accrue, correct?


Properly perhaps, but often the cost of accruing those rewards can outweigh the price of making use of a credit card rather than, for instance, a debit card or money. A case in point is the great old credit card surcharge situation.

It costs firms funds to accept credit card payments and they are capable to pass these fees on their buyers in the kind of a credit card surcharge. These surcharges can vary drastically and some businesses, particularly taxis and airlines, have been accused of levying surcharges far in excess of their costs.

Back in March 2013, the Reserve Bank of Australia gave the go ahead to card providers (feel American Express, Diners Club, MasterCard and Visa) to limit surcharges and address instances exactly where merchants are clearly surcharging at a higher level than is justified. Even though average surcharge prices have apparently fallen over the 2 years because, they can nevertheless be oppressively higher. Not that high surcharges quit all consumers: according to a RBA discussion paper, around 5% of us are willing to spend much more than a 4% surcharge. Crazy!

How to use a credit card to your advantage

So – is it worth paying a credit card surcharge to enhance your rewards points balance? Or need to you attain for cold, difficult cash alternatively?

Of the cash rewards applications researched by CANSTAR in the most current Credit Card Rewards Star Ratings Report, none had a return (ahead of annual costs) higher than around 1.5% on invest by means of the card. Most returned significantly much less than this – in the variety of .5-1%. Credit card surcharges on the other hand generally in the variety 1-3% depending on the card scheme. While there might be a handful of cards whose price of return will outpace that surcharge, the vast majority of them will not. You will practically constantly be much better off utilizing another payment method rather than chasing rewards points.

Possessing said that, there are occasions exactly where it tends to make sense to pay a credit card surcharge – for example, some credit cards come with an extended warranty cover or merchandise protection insurance.

Even if you’re not seeking to alter your rewards card, it’s often interesting to see how your card stacks up. The market is consistently changing and you need to have to be positive you are not being left behind. Verify out our most current report and examine credit card rewards right here.

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Credit card surcharges: are they worth paying?