These days, you can pay almost anything with your credit card. However, some merchants charge an extra fee for the privilege – which is completely legal. Your wedding venue, landlord, local corner shops, and even your utility may charge a surcharge.
So, let’s say you can use a reward credit card to make a purchase – if you charge a transaction fee, is it still worth it?
Typically, these fees range from 1-4%, but more often, you’ll see a 3% fee. This means that for every dollar you spend, you may pay 3 cents extra to slide the fee. If the reward you charge is only 2 cents worth of per dollar, then, no, you probably shouldn’t pay with a credit card.
Usually, if your income on a reward credit card is worth more than what you pay for, it is only worth paying for. However, this math can make some cards more involved.
Let’s break it down and see when it’s worth paying for using your credit card.
Related: Credit Cards vs. Debit Cards: Which Smarter Choice?
Earn more rewards than surcharges
All points are not created equally. Before swiping your card, you need to find out the average of the rewards you will earn. Since these currencies, TPG has updated our points and mileage valuations monthly and has different value depending on how you redeem it.
Assuming you are dining out, your local restaurant offers you a 3% discount to pay your cash instead of using a credit card to pay your bills. The only meaningful way to use a credit card is if you get over 3% of the value from the points you get.
For example, Citigroup premiere card (See Rates and Fees) 3 Thank You Points per USD at a Restaurant. As of June 2025, TPG’s Citipoint is 1.8 cents per point. This equals a 5.4% return on the restaurant, which means this card offers higher value in this case.
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But, suppose you will usually buy all your purchased Citi double cash cards (see rates and fees), with a revenue rate of 2% per purchase (1% on purchase and 1% on payment). It’s tricky to pay a 3% premium for dinner here.
If you hold a premium Citi card such as Strata Premier, you can transfer the double cash reward to Citi’s transfer partner to get the target value of TPG at 1.8 cents, each thank you point. Otherwise, you will get the smallest value from the purchase, making cash payments better value in this case.
This is just one example of many situations where you need to do some quick math to determine if using a credit card will give you a return on spending that exceeds the surcharge.
Other examples may include buying produce at farmers’ markets, paying rent or making purchases at a small mom and popular store.
Related: Best Reward Credit Cards for Each Bonus Category
Receive a welcome reward
Due to the low minimum spending requirements, some welcome bonuses are easier to obtain than others. However, some highly desirable credit cards with welcome bonuses require substantial expenses.
For example, consider a credit card with a welcome bonus of 100,000 points or more. Sometimes the only way to meet the minimum spending requirement is to put every dollar you spend on a new credit card. For example, suppose the card you are applying for requires $6,000 to spend $6,000 in three months to get its welcome offer.
We can also say that the only way to get to the minimum spending amount is to use a card to pay the rent of $2,000 per month. This is $6,000 in the three months you work for this welcome reward.
If your landlord doesn’t accept credit cards directly, many third-party apps allow you to pay rent online, but they all charge. One of these apps, Plastiq, charges a 2.9% fee. This means you will pay a surcharge of $174 over the three months.
Calculate the value of the welcome bonus with the cost of paying rent through one of the services. TPG’s monthly valuation can help you figure out how much your welcome bonus is worth. Compare that value to the cost of the expense you are paying and see if the added cost is worth it.
Many times, the value of the welcome bonus will be significantly more than any fees associated with the credit card paying for rent. TPG credit card writer Olivia Mittak often uses rent to help her meet the high spending requirements of her travel cards. Just make sure the fee is worth it for your particular situation.
Related: Should You Use BILT Mastercard? Why it can change the game rules for renters
Earn extra benefits
Many credit cards increase benefits after spending a certain amount of money on the card each year, such as reward points, reward night passes, and/or opportunities to unlock elite identities.
Depending on the benefits you will receive, and how you actually evaluate that particular benefit – you may find the value of paying the transaction fee if necessary. The world of Hyatt Credit Cards (see rates and fees) provides some great examples.
Every $5,000 spent on the card, you will get two eligible nights to come to the world of Hyatt Elite identity.
This can help you reach elite status faster, thus reducing the number of nights you spend a certain level of identity in your hotel. Also, just the cardholder has provided you with five nights of status.
Assuming you pay $2,000 in rent per month, you decide to pay two rents to a $5,000 expenditure requirement to earn two additional funding format nights. Considering the 2.9% fee for Plastiq, you will pay an additional $116 over the past two months.
Whether this fee is worth it you rely on how you value those extra qualifications elite nights. If you are a big Hyatt and have to keep up with the chain at least a few times a year, then if that means getting a higher elite status, then these extras are definitely worth it.
However, if these two additional qualifying matches don’t leave you anywhere on the next Hyatt Status level, or if you don’t stay at Hyatt Hotel often, the extra fee isn’t worth it.
Related: The Best Hotel Credit Cards
Bottom line
Paying an extra fee to earn extra points or miles or getting extra benefits may or may not be worth it. It all depends on the points or miles you earn, the extra benefits you may get, and the value you get from all of them.
Make a mathematical payment when it comes to taking action before you continue to pay for the transaction fee for each credit card refresh you create. Make sure you get more value than you pay for, or make sure you make tangible progress in unlocking your high-value goals on your card.
Related: Credit Card Economics: View Fees You Seldom See
