Why I Stopped Using Credit Cards in Restaurants

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It’s a decision that makes sense financially these days.


Key points

  • The benefit of paying for restaurant meals is to get money back on those purchases.
  • New restaurant policies have largely negated this benefit.

I like shopping with a credit card not only because it’s convenient, but also because I like being rewarded with cash back that I can use for other purposes. And since one of my credit cards offers 3% cash back on dining out, it’s been particularly beneficial in the past to use this card to pay for dining out.

But these days, I’ve mostly stopped using credit cards at restaurants. Here’s why.

The advantage is gone

It’s no secret that consumers and businesses are struggling with rising costs. Well, one expense that restaurants typically incur is credit card fees.

These days, in an effort to recoup costs, many restaurants have decided to pass these credit card charges on to diners. And that’s a trend I’ve noticed a lot in my neighborhood.

Now, if you’re wondering if it’s legal, the answer is yes. Companies box charging consumers credit card fees as long as they advertise it.

So, for example, a restaurant is absolutely allowed to charge a fee for passing a card or put different prices on its menu based on cash purchases versus credit card purchases. What he can’t do is take your card, swipe it and stick an extra on you without telling you.

Back to my decision to stop paying for restaurant food with credit cards: in a nutshell, it comes down to math. Although I can get 3% cash back on restaurant purchases, most places in my city charge 3.5% or 4% for using a credit card. So by swiping my card I lose money which means it makes more sense to pay cash.

Of course, that negates the convenience factor a lot. It’s annoying to have to keep going to the bank and withdrawing money to be able to pay for restaurant purchases. And eventually, if I end up grabbing food on a whim and don’t have any cash on me, I’ll just swipe my card and deal with the fact that I paid a little more.

But otherwise, my days of paying for restaurant meals with credit cards are behind me, at least until restaurants stop charging these fees. And that’s a bummer, because that means fewer credit card rewards — rewards that I like to accumulate all year and then use to pay for family trips and other fun things.

It’s not just the restaurants

While I’ve noticed a marked increase in restaurants charging credit card fees in my part of the country, it’s not just food service establishments that are doing it. I’ve also seen small retail stores go a similar route.

That’s why it pays to have cash on hand these days – and read the fine print before swiping a card. Although companies are required to disclose the fact that using a credit card will incur additional charges, these notices can sometimes be difficult to spot. And so you shouldn’t hesitate to ask the registry if you’re unsure if any charges apply.

Once inflation cools, restaurants and other businesses could revert to their old practice of not passing credit card charges on to consumers. But for now, that seems to be the trend, which means I’m going to go to the ATM and hand over cash when I choose to eat out.

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