Why the Supreme Court Is Talking About Credit Card Fees

Mar 30, 2017

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

As Congress prepares to vote on Supreme Court nominee Neil Gorsuch, the eight members who currently sit on the highest court in the land spent yesterday discussing a topic that resonates with plenty of TPG readers: credit cards.

No, they weren’t trying to figure out how to maximize sign-up bonus offers or earn free nights at major hotel chains. Instead, the legal debate centered on a business you’ve probably never heard of (Expressions Hair Design) and transaction fees that you probably never discuss (interchange fees). These are the fees that retailers pay each time you swipe your credit card, and naturally, they don’t like them. “Some merchants balk at paying the fees and want to discourage the use of credit cards, or at least pass on the fees to customers who use them,” Chief Justice John Roberts wrote in his opinion on the case.

While credit cards are convenient, some merchants aim to avoid the extra fee that comes with accepting plastic payments. Image courtesy of radifanil via Getty Images.

You’ve probably seen interchange-fee avoidance in action before. For example, one of my favorite bars in Chicago has a sign posted that says customers who pay in cash will save 3%. In many taxis, swiping a credit card to pay for a ride will generate a message that alerts customers of an additional 50-cent charge for paying with plastic. In New York and nine other states, though, Expressions Hair Design and other merchants aren’t allowed to post this type of messaging that educates customers on the benefits of paying in cash.

And that’s exactly what the case is about: communication. Expressions Hair Design and four other businesses in the lawsuit claim that restricting their ability to post signs about pricing restricts their First Amendment rights. The Supreme Court seems to agree. “In regulating the communication of prices rather than prices themselves, [the law in New York] regulates speech,” Roberts continued in a mile-long opinion letter that gave me a new appreciation for the art of speaking legalese.

So what’s next? More debates. The Supreme Court voted unanimously to return the case to a lower court for further examination. While merchants won’t be able to escape interchange fees, cardholders can avoid paying extra for the ability to pay with plastic. Check out “7 Best No-Annual-Fee Credit Cards for 2017” and “The Top 9 Low-Free Credit Cards for 2017” to find a card that doesn’t come with a hefty price tag. In the meantime, you can find me getting a trim at Expressions Hair Design.

Featured image courtesy of Phil Roeder via Getty Images.

Ink Business Preferred℠ Credit Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,600

CARD HIGHLIGHTS: 3 points per dollar on the first $150,000 in combined spending on travel, shipping purchases,  internet, cable and phone services, and advertising purchases made with social media sites and search engines.

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®
  • Earn 3 points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year
  • Earn 1 point per $1 on all other purchases–with no limit to the amount you can earn
  • Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards
  • Redeem points for travel, cash back, gift cards and more – your points don't expire as long as your account is open
  • No foreign transaction fees
  • Employee cards at no additional cost
  • $95 Annual Fee
Intro APR on Purchases
N/A
Regular APR
17.49% - 22.49% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.