Credit Card Fees are Not Same in Different States

Last Update: May 21, 2020 Credit Cards Save Money

You have just taken all your groceries to the cash register in your local grocery store but there’s no cash in your wallet? You have just finished a delicious meal at a fancy restaurant and you are asking for a check? The time has come for you to check out of your hotel and you are standing at the reception desk waiting to pay? What is common to all these situations? A little help – it’s a payment method. Well, of course, credit card. This little thing has made our lives so much easier and more convenient on a day-to-day basis that it’s hard for us to imagine what our lives would look like without it. It’s cleaner, less time-consuming and, after all, much more posh to pay for something with your card than in cash. However, as attractive as this payment option might seem, there are still some tiny (or not so tiny) details that give us a reason to question how fair the system that uses credit cards is.

Why Use Credit Cards?

Ok, let’s begin by saying why they are good for you. Apart from the aforementioned benefits, there are numerous other perks of using them. If you know how to use them wisely, then you can get a signup bonus, get a reward or points for various services and purchases. It is much more risk-free to use a credit than a debit card when it comes to potential fraud, and it also gives you many insurance opportunities. Moreover, using this payment method will be of great help if you are trying to build your credit because each payment is reported to credit bureaus, thus seen as your record of payment. Finally, credit cards are accepted everywhere, both in the US and abroad, and there is no danger that they will be declined when you are paying for something. On the other hand, every once in a while we face a situation when we are not satisfied by our transaction for some reason. Now we will list some of these situations and explain why they happen.

Interest Rates

It’s so true. Credit card interest rates can sometimes be extremely expensive, which is a frustrating thing. From time to time, when you pay for an expensive product or service with a card that has a high interest rate, all fun stops and you cease to like what you have bought when you see your credit report. In addition, as much as it is useful for building your credit, there is the other side of the coin. What if you can’t pay off everything on time? That is when your interest rates start skyrocketing and posing a serious threat for your financial future.

As a matter of fact, here is an example of APR when using different types of credit cards:

  • Travel – 15.99% (airline – 16.24%, hotel – 16.12%).
  • Business – 15.37%.
  • Cash Back – 20.90%.
  • Student – 19.80%.

Moreover, some banks have significantly more expensive interest rates than others:

  • Citi – 29.99%.
  • Chase – 29.99%.
  • Capital One – 29.4%.
  • American Express – 27.24%.

With this in mind, you will want to be very careful with your interest rates and credit report. Not to say this is an extremely difficult thing, but it just needs to be monitored regularly.

Charging More at Certain Stores

You must have gone through a situation when the price on your receipt was slightly higher than the one indicated on a certain product, and we’re not talking about tax rates here. The thing is that all retailers may charge you more when you are paying with your card. The reason for this is the fact that retailers are charged 1% – 3.5% when you pay for their products with this payment method, it can hurt their income. Therefore, since January 2013, you can eventually be charged more money than the product label says. Nevertheless, in this trade-off, customers are protected as well:

  • You must be notified each time you are charged for paying this way.
  • Retailers must not make profit on surcharges.
  • Only credit cards are surcharged, not debit.

So, in theory, you are protected by federal laws, but you still need to have your eyes wide open when you are making transactions.

Higher Rates by State

The most unfair of all situations that we will mention in this article is definitely the one featuring American Express and American territories. Recently, the Consumer Financial Protection Bureau (CFPB) stepped in the operations of two Amex subsidiaries that offered Puerto Rico, the U.S. Virgin Islands and the rest of the U.S territories conditions that are second-rate when compared to those in the U.S. states. For hurting their customer’s finances, this bank has had to pay around $95 million so far as consumer redress.

According to CPFB, second-rate conditions included:

  • Charging higher fees and interest rates and offering less advantageous promotional offers.
  • Puerto Rican cardholders were charged higher average interest rates and annual fees than situated U.S. cardholders.
  • Imposing more stringent credit score cutoffs and lower credit limits; Stricter requirements were imposed to Puerto Rican cards when compared to similar U.S cards. As a consequence, some Puerto Ricans who had a score that is credit eligible in the US were denied credit.
  • Requiring more money to settle debt in the aforementioned areas
    Puerto Rican cardholders were given inferior terms for paying off their debt. On average, the difference between rates was almost 20% (73% in Puerto Rico vs. 55% in the US).

Amex agreed to redress more than 200,000 consumers who were affected by these terms. According to CFPB Director Richard Cordray, American Express reported this issue on their own and fully cooperated in the course of the investigation, so they will pay no civil penalties. However, this settlement drew attention to differences in terms that exist among different states. The other example is Citibank carry-on baggage loss insurance coverage, which is maximum $2,000 for residents of the New York State, compared to $3,000, which the most that residents of other states can get. These examples abide in the world of credit cards, and there is only so little we can do to prevent or avoid them. What we can do, however, is to read terms carefully prior to signing a contract with a credit card company, and thus be able to choose the lesser of two (or many) evils.

Tips for Using a Credit Card

  • Always read everything in the contract

Think of your credit card as of a long-term engagement. Make sure to carefully look at each point of the contract and take everything into account prior to signing a contract with a company.

  • Use your card for what you actually need and always pay on time

This is a very important piece of advice, since having a credit card makes you more relaxed when paying due to the fact that you don’t actually count money that you spend. That is the reason why we can easily exceed our credit limit. With this in mind, you should differentiate your needs and wants and make sure that you don’t spend too much because there is a risk that you damage your credit. Also, you will want to pay off all debts on time in order to avoid high interest rates.

  • Use bonuses, rewards and benefits

We have already mentioned this, but there are so many ways you can use to earn by paying with your card and using it in a smart way. You just need to find out about them and from time to time you will be pleasantly surprised by an unexpected surplus in your account.

  • Stay safe

One of the most important pieces of advice today is this one: No matter what you do, be careful with the information you provide when it comes to transactions. Identity theft and fraud have constantly been on the increase, and fraudsters never cease to find new ways to harm people’s finances. Therefore, you should always be aware of this and make sure you keep all your sensitive information confidential.


As it can be easily deduced from the examples above, using a credit card comes with both advantages and disadvantages, the latter becoming more and more prominent. This is not to say that you should stop using it and thus deprive yourself of all the benefits that it allows. However, it is our duty to warn you about these types of situations in order to raise your awareness of what might happen if you are too relaxed with this type of payment. It is simply necessary that you approach it very carefully, thus avoiding all negative features and embracing only positive sides of using a credit card.



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