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You pop into a local coffee shop and go to buy a $5 latte. You’re about to swipe your trusty rewards credit card — no reason not to get points on a purchase you’ll pay off at the end of the month, right? — when you see a sign by the register: “$10 Minimum for Credit Cards.” What gives?

A Payments Primer

Payment card transactions don’t come free — merchants have to pay a network and/or bank to essentially accept their plastic and process your charges. The Durbin Amendment (part of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed after the financial crisis) caps the interchange or “swipe” fees financial institutions can charge on debit cards at 21 cents per transaction. But no such cap exists for credit cards — so accepting that payment method could prove costly, particularly for small vendors. (According to the National Retail Federation, the exact amount of a swipe fee can range from about 1.5% to 3% per transaction, depending on the type of credit card, and also varies by merchants’ card volume and other factors.)

That’s generally why you’ll stumble upon a credit card minimum from time to time: The retailer is aiming for the purchase to at least cover the fee; otherwise, it’s losing money on the sale.

Are Minimums Legal?

The Dodd-Frank Act may not have capped swipe fees on credit cards, but it did make minimums permissible. Per the legislation:

In general. — A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability —(i) of any person to set a minimum dollar value for the acceptance by that person of credit cards, to the extent that — (I) such minimum dollar value does not differentiate between issuers or between payment card networks; and (II) such minimum dollar value does not exceed $10.00

That’s a fancy way of saying the networks can’t prohibit minimums up to $10 in their merchant contracts.

“Prior to that change in federal law … the credit card network rules did prevent minimums,” Jason Oxman, CEO of the Electronic Transaction Association, said.

And they generally still do on debit cards, since that payment method wasn’t included in that portion of the Dodd-Frank Act.

Over-Charging Avoidance

Given this nuance, you can generally avoid coughing up any extra dollars to meet store minimums by using your debit card or, even, cash, if you have some on hand. If you do decide to go ahead and buy some extra items using your favorite plastic, keep a close eye on your statements. (A best practice regardless of what type of card you use, since you’ll want to monitor for fraud.)

Paying a minimum to use your credit card may seem harmless, but even small charges can add up over time. And enough of them could wind up hurting your credit score, since high credit card balances could hurt your credit utilization rate. (You can see where you currently stand by viewing your free credit score each month on Credit.com.)

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Image: Jacob Ammentorp Lund

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