Avoiding credit card fees charged by local businesses

Credit card fees have become more common at local restaurants and bars. Although the fee can be avoided by paying your bill with cash, what is the threshold for determining when it's okay to pay by credit card? A simple rule is to use your card's cashback rewards percentage for dining as the threshold.

For example, let's say you've finished dining at one of your favorite restaurants and your bill is $100. If you pay by credit card, the business will charge a 3% fee for using this payment method. Since 3% of $100 is $3, this surcharge would increase the total to $103. However, if your credit card offers 3% cash back on dining, using it to pay the bill would earn you a reward of $3.09 (because that is 3% of $103). So, you would do slightly better than breaking even, with a net gain of $0.09.

As long as the credit card fee percentage is no more than your credit card's reward percentage for that purchase category, then there is no need to pay with cash instead. It is effectively the same as paying with cash, so you can still enjoy the convenience of using your credit card as usual. By following this simple rule, at worst, you'll break even or come out slightly ahead.