You’re in line at your local coffee house during your lunch hour. You have limited time but need that caffeine fix. The line stops suddenly. And right in front of the sign asking customers to pay with exact change or use a cashless method due to the nationwide penny shortage, someone is painstakingly counting out coins. You see that the cashier’s expression matches your mood caused by the delay. Is this 2009? Who pays with cash anymore?
It turns out many people — consumers fed up with credit card fees and turning (back) to cash.
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Nearly one-third (31.6%) of survey respondents in CardRatings.com’s Cardholder Satisfaction Survey said they would avoid paying by credit card if the merchant adds a fee. For those who had encountered surcharges, more than half (55.9%) of women said they would try to avoid using a credit card if the merchant charged a fee, compared to 46.7% of men. People with lower incomes were more sensitive to fees, too: 54.2% of those earning less than $70,000 per year said they avoid using credit cards if there’s an added fee, compared to 48.5% of those with incomes of $70,000 or more.
The (Many) Drawbacks of Cash
Cash is a hassle. It’s not secure; if you lose it or it gets stolen, you have no recourse.
It’s also dirty, carrying thousands of bacteria. But, experts at the University of Cleveland said that handling money isn’t likely to make you sick. Research from 2022 also found that the possibility of dollar bills transmitting potentially deadly viruses is “very low.”
Beyond that, cash is inconvenient. It slows down check-out lines. Coins are heavy, and cash takes up more space in your wallet than a debit card or a digital wallet app on your phone. Plus, if you use cash instead of a rewards credit card, you could literally be leaving money on the table.
Changing Payment Behavior
In spite of the drawbacks, people are opting to pay with cash. That’s because businesses are passing the interchange fees charged by their payment networks (the credit card processing companies) onto customers. Of those surveyed, 61.6% of respondents have experienced surcharges.
Meanwhile, some entertainment venues, theme parks, restaurants, and other places are shifting to a cashless business model for speed and convenience. Even cashless venues may add a surcharge, but many waive that fee if the customer pays with a debit card. Some places, including Six Flags theme parks and some AMC Theaters that have gone cashless, have machines onsite where you can convert cash to a prepaid card. In essence, the landscape of how we pay for goods and services is changing dramatically. While only 14% of retail transactions use cash, according to Federal Reserve data released in August 2026, 80% of customers used cash in the past 30 days and 90% said they plan to continue using cash.
The History of Credit Card Surcharges
For many of us reading this, credit card surcharges weren’t around when we were young. In 1976, credit card surcharges were banned by federal law. Then again, we might not remember either way because kids didn’t carry debit cards in the 1970s and ‘80s. We begged our parents or dug through couch cushions for quarters to bring to the candy store or the video game arcade.
By 1984, the US government allowed the nationwide ban on credit card surcharges to expire. But some states enacted legislation prohibiting surcharges. Mastercard and Visa also prohibited merchants from passing on interchange fees to customers in the form of surcharges. Credit card companies didn’t want merchants to discourage customers from using credit cards. In 2013, following a class-action lawsuit against Mastercard and Visa, the payment processors changed their rules to allow merchants to add surcharges to customer purchases in states where it wasn’t prohibited by law.
When Did Surcharges Become So Prevalent?
Until recent years, though, few merchants passed those fees onto customers. Stores and restaurants felt the benefits of accepting credit cards outweighed the cost. A report from CapitalOne Shopping revealed that shoppers spend an average of 144% more when they pay with a credit card compared to cash. Before this decade, most merchants happily paid the fees in exchange for larger sales, chalking it up to the cost of doing business.
Recently, stores, restaurants and attractions have started adding fees for credit card use. Only six states have laws banning surcharges, according to the National Federation of Independent Business. If you live or shop in California, Connecticut, Maine, Massachusetts, Oklahoma, or Texas, you don’t have to worry about seeing signs declaring that you’ll pay 2% to 4% more for using a credit card.
Ways to Avoid Fees
There are other ways to avoid fees, of course.
Pay with Cash
This is an easy one, unless you’re in a location that doesn’t accept cash.
Use a Debit Card (But Be Careful)
You can use a debit card but make sure to instruct the cashier to run it through as debit, which typically means entering your PIN.
Use a Prepaid Card
Places that have cash-to-card machines allow you to avoid credit card fees. But read the fine print to ensure you can use the card anywhere — not just at that venue — and that there aren’t any fees associated.
Use a Rewards Credit Card
You won’t actually avoid the fees, but if you earn 5% cash back and pay a 2% surcharge, you’ll offset the fee and earn 3%. Make sure to pay your balance in full when it’s due, otherwise you could pay even more in interest.
In a time when everything seems to be going up in price, avoiding credit card surcharges is just one way to stretch your dollars a bit further.
