Nowadays, you may pay for nearly something with a bank card. Nevertheless, some retailers cost an additional payment for that privilege — which is completely authorized. That surcharge is likely to be charged by your wedding ceremony venue, your landlord, the native nook retailer and even your utility firm.
So, for example you need to use your rewards bank card for a purchase order — is it nonetheless value it in case you are charged a transaction payment?
Usually, these charges are between 1-4%, however extra generally, you will see a 3% payment. Meaning, for each greenback you spend, you would be paying an additional 3 cents to swipe the cost. If the rewards you earn per greenback charged are solely value 2 cents every, then, no, you seemingly should not pay together with your bank card.
It is usually solely value paying a payment if the worth you are incomes on a rewards bank card is greater than the payment paid. However that math can get a bit extra concerned on some playing cards.
Let’s break it right down to see when it’s — and isn’t — value it to pay a payment to make use of your bank card.
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Incomes rewards which are value greater than the surcharge
All factors are usually not created equal. Earlier than you swipe your card, you will need to discover out the typical worth of rewards you will earn. TPG updates our factors and miles valuations each month since these currencies fluctuate and have completely different values relying on the way you redeem them.
For instance you are eating out and your native restaurant offers you a 3% low cost for paying your invoice in money versus paying with a bank card. The one manner it will make sense to make use of your bank card is for those who obtain greater than 3% in worth from the factors earned.
For instance, the Citi Strata Premier℠ Card (see charges and charges) earns 3 ThankYou factors per greenback spent at eating places. As of June 2025, TPG values Citi factors at 1.8 cents per level. That equals a 5.4% return at eating places, which implies this card gives higher worth on this state of affairs.
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However, for example you usually use your Citi Double Money® Card (see charges and charges) for your entire purchases, with a easy earn fee of two% again on each buy (1% once you purchase, 1% once you pay). Paying a 3% premium for dinner is difficult right here.
For those who maintain a premium Citi card just like the Strata Premier, you may switch your Double Money rewards to Citi’s switch companions to get TPG’s goal worth of 1.8 cents per ThankYou level. In any other case, you will get minimal worth out of your buy, making a money fee a greater worth on this state of affairs.
This is only one instance of many situations the place you will have to do some fast math to find out whether or not utilizing your bank card offers you a return on spending that surpasses the surcharge.
Different examples could embrace buying produce at a farmer’s market, paying for hire or making a purchase order at a small mom-and-pop store.
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Incomes a welcome bonus
Some welcome bonuses are simpler to acquire than others resulting from decrease minimal spending necessities. Nevertheless, some extremely fascinating bank cards with welcome bonuses require a considerable amount of spending.
Contemplate bank cards with welcome bonuses of 100,000 factors or extra, for instance. Generally, the one technique to meet the minimal spending requirement is to place each greenback you spend in your new bank card. For instance, for example the cardboard you are making use of for requires $6,000 in spending over three months to earn its welcome provide.
Let’s additionally say that the one manner you may meet the minimal spending quantity is by utilizing your card to pay your hire of $2,000 every month. That is $6,000 complete over the course of the three months during which you are engaged on this welcome bonus.
In case your landlord does not settle for bank cards instantly, many third-party apps let you pay your hire on-line, however all of them include a payment. Considered one of these apps, Plastiq, prices a 2.9% payment. This implies you’d pay $174 in surcharges over these three months.
Calculate the worth of the welcome bonus in opposition to the payment you are incurring for paying your hire by way of one in all these providers. TPG’s month-to-month valuations will help you determine how a lot your welcome bonus might be value. Examine that worth in opposition to the price of the charges you will pay, and see if the added price is value it.
Many occasions, the worth of a welcome bonus will enormously exceed the price of any charges related to paying hire with a bank card. TPG bank card author Olivia Mittak typically makes use of her hire to assist her meet excessive spending necessities for journey playing cards. Simply make certain the charges are value it to your particular state of affairs.
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Incomes additional advantages
Many bank cards provide elevated advantages after spending a sure sum of money on the cardboard every year, corresponding to bonus factors, award evening certificates and/or alternatives to unlock elite standing.
Relying on the profit you will obtain — and the way you really worth that exact profit — you may discover worth in paying transaction charges when crucial. The World of Hyatt Credit score Card (see charges and charges) gives some good examples.
For each $5,000 spent on the cardboard, you will earn two qualifying nights towards World of Hyatt elite standing.
This will help you obtain elite standing extra rapidly, decreasing the variety of nights you will need to spend in lodges to qualify for a sure standing stage. As well as, simply being a cardholder already offers you 5 nights towards standing.
For instance you pay $2,000 every month for hire, and also you resolve to place two hire funds towards the $5,000 spending requirement to earn two additional qualifying nights. Contemplating Plastiq’s 2.9% payment, you will be paying an additional $116 over these two months.
Whether or not that payment is value it to you relies on the way you worth these additional qualifying elite nights. For those who’re a Hyatt loyalist and also you stick with the chain not less than a number of occasions every year, these additional charges can positively be value it if it means gaining increased elite standing.
Nevertheless, if these two additional qualifying nights will not put you anyplace inside attain of the subsequent Hyatt standing tier, or for those who do not regularly keep at Hyatt properties, the additional payment is not value it.
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Backside line
Paying an additional payment to earn further factors or miles or to achieve further advantages could or will not be value it. All of it comes right down to the variety of factors or miles earned, additional advantages you might obtain and the worth you get out of all of that.
Earlier than you go forward and pay for transaction charges on each bank card swipe you make, do the mathematics on a plan of action. Just remember to’re getting extra worth than the surcharges you are paying or make sure you’re making tangible progress towards unlocking a higher-value aim in your playing cards.
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