The Cost Difference Between Paying Cash and Paying a Convenience Fee

A beautiful young woman enjoying working at home on her laptop in cozy and bright apartment wearing yellow sweater and shopping online paying with credit card.
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If you have access to online bill pay and a debit or credit card, you can now pay almost any bill and make any purchase without writing a paper check or using cash. But these payment methods aren’t always free. Some billers and merchants charge a convenience fee if you use your debit or credit card — fees that can add up if you aren’t careful.

Read on to learn more about the convenience fees you may encounter when using a card, how much they can cost and when paying a fee makes more sense than paying with cash.

What Is a Convenience Fee?

A convenience fee is charged by a biller or merchant when you pay by credit or debit card rather than one of a company’s standard forms of payment. A convenience fee may be a flat amount or a percentage of a transaction or purchase. 

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It isn’t uncommon for government agencies, utility companies and colleges to consider electronic card transactions — debit and credit cards — non-standard forms of payment. Standard forms for these merchants are typically limited to cash and paper checks; some may also accept an ACH transfer from your bank account. 

So why do you get charged a convenience fee? Companies that accept cards can’t process those transactions for free. Some merchants consider card processing fees a cost of doing business, and others pass the fees on to consumers who pay by card.

How Much Are Typical Convenience Fees? Some Examples

The following billers and merchants commonly charge convenience fees for credit and debit card transactions. Here are the convenience fees you may encounter when paying with a card rather than cash.


Many utility companies charge a flat convenience fee for credit card payments. For instance, the third-party payment processor used by Tampa Electric charges $2.75 (per $1,000 transaction), so Pinellas County, Florida, charges a convenience fee of $3.75 (for each payment of $300 or less).

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College Tuition

You can often expect a fee when using a card to pay your tuition at several colleges and universities. Considering the cost of tuition, this can get expensive if the fee is percentage-based. 

For example, The University of Central Florida charges a 2% convenience fee. The school’s annual in-state tuition of $6,368 will cost you an additional $127 if you have to use your credit card to pay for classes.


To pay your tax bill with a credit card, you’ll need to use an IRS-approved third-party payment processor. A debit card transaction will cost you a maximum of $2.20. But a credit card transaction may cost up to 1.98% of the payment amount, which is an extra $1.98 for every $100 you owe.

Mortgage Servicers

Most mortgage companies don’t allow you to pay your mortgage with a credit card. However, a third-party payment processor such as Plastiq will charge the amount to your credit card and then write a check to your mortgage servicer on your behalf. It will cost you a 2.9% convenience fee, or $2.90 per $100. That’s a $29 fee for a $1,000 mortgage payment.

Peer-To-Peer Payment Apps

To use a credit card to send $100 to someone through Venmo, you’ll pay a 3% convenience fee. It will cost you 2.90% plus a fixed fee of 30 cents via PayPal.

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Paying Cash vs. Paying a Convenience Fee: Things To Consider

It makes good financial sense to avoid paying convenience fees whenever possible. However, avoiding this fee isn’t always convenient or cost-effective, especially if you can’t make payments using online bill pay or paper checks. It may leave cash as your only fee-free payment option.

Suppose you can only pay your water bill with cash or a credit card. Paying cash may mean driving to the utility company to pay in person. Therefore, the time and gas you save by paying online may make the flat fee for the credit card payment a financially better choice. If you can’t pay in person before your due date, paying a convenience fee to avoid an even higher late payment fee and keeping your account in good standing is the better choice. 


Convenience fees are sometimes necessary and occasionally worth it, but they shouldn’t become part of your everyday bill-paying practice. Habitually using your credit card to pay bills can land you in debt if you can’t afford to pay your balance in full each month. Interest on those payments and convenience fees can add up quickly. Even if you use a rewards card, any rewards earned likely won’t offset the convenience fee.

Determine how to make fee-free payments for every bill and use those payment methods as often as possible.

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