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As first reported by The Wall Street Journal, Visa Inc. and Mastercard Inc. plan to increase the fees they charge merchants for processing credit card payments by more than $500 million according to a report from consulting company CMSPI. One possible consequence of these fee hikes could be retailers passing on this cost to you — the consumer — when you use a credit card for your next purchase.
If that happens, it makes it all the more important that you’re getting the most from each swipe by using a credit card that earns you cash back, airline miles or other rewards. Here’s what you need to know.
How do credit card processing fees impact you?
Credit card processing fees are fees that merchants pay credit card companies and financial services providers to authorize credit card transactions. These processing fees vary according to the transaction and the type of credit card. According to the CMSPI report cited by The Wall Street Journal, merchants could pay an additional $502 million each year in fees after the hikes in October 2023 and April 2024.
Behind-the-scenes card processing fees don’t usually grab the attention of customers, but they can affect what merchants decide to charge you if you pay using a credit card. A 2022 study released by The Straw Group (an analytics company specializing in the payments industry) found 23% of small businesses charge customers paying with a credit card an extra fee.
These can come in the form of “convenience fees” that a restaurant might pass on to a customer who pays for lunch with a credit card (for example) or a surcharge an online retailer tacks on for any order that’s paid with a card. According to the National Retail Federation (NRF), swipe fees cost the average American family over $1,000 each year.
Best credit cards that give you the most value for your money
While nobody can predict exactly how merchants will react to a fee hike, one possibility is that they raise the fee that they charge consumers for using a credit card. In that case, it will mean you want to make sure you’re paying with a card that gives you the most value for your swipe.
CNBC Select ranked, the Chase Sapphire Preferred® Card as one of the top travel credit cards available. It offers elevated rewards rates on travel and dining purchases with 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining, 3X points on online grocery purchases (excluding Target, Walmart and wholesale clubs), 2X points on all other travel purchases, and 1X point on all other purchases.
The card comes with a modest $95 annual fee and a large welcome bonus for new cardholders, which can be worth thousands of dollars in travel.
Chase Sapphire Preferred® Card
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Rewards
$50 annual Ultimate Rewards Hotel Credit, 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining, 3X points on select streaming services and online grocery purchases (excluding Target, Walmart and wholesale clubs), 2X points on all other travel purchases, and 1X points on all other purchases
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Welcome bonus
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 when you redeem through Chase Ultimate Rewards®.
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Annual fee
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Intro APR
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Regular APR
21.49% – 28.49% variable on purchases and balance transfers
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Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
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Foreign transaction fee
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Credit needed
If you enjoy cash-back and don’t want a card with an annual fee, the Chase Freedom Unlimited®, is a great option whether you’re looking to spend money at big-named companies or small local businesses. For no annual cost, cardholders earn 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services, and 1.5% cash back on all other purchases.
Chase Freedom Unlimited®
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Rewards
Enjoy 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases
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Welcome bonus
Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back. That’s 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on dining and drugstores, and 3% on all other purchases.
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Annual fee
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Intro APR
0% for the first 15 months from account opening on purchases and balance transfers
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Regular APR
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Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
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Foreign transaction fee
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Credit needed
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Member FDIC. Terms apply.
If you love food and enjoy cooking or going out to eat, the American Express® Gold Card earns a competitive 4X points per dollar spent at restaurants and 4X points at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X). Terms apply.
American Express® Gold Card
On the American Express secure site
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Rewards
4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases
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Welcome bonus
Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 6 months of card membership
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Annual fee
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Intro APR
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Regular APR
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Balance transfer fee
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Foreign transaction fee
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Credit needed
Bottom line
While there’s no telling exactly how this fee hike will impact you as a consumer, it’s possible that merchants will charge consumers more for using a credit card to pay for a purchase. Although there’s no simple solution to abate this possibility, you can ensure that you’re getting the most value out of your credit card by looking for perks that maximize each use.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
For rates and fees of the American Express® Gold Card, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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