Are Credit Card Minimums Legal?

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Credit card Q&A: “Are credit card minimums legal?”

The other day I was walking in New York City, and because it was so blisteringly cold, I decided to grab a cup of overpriced, hot coffee.

I didn’t have any cash on me at the time, just a few credit cards I typically use to make the majority of my everyday purchases.

$5 Minimum Purchase for Credit Cards?

After ordering a $4 latte, I handed the barista my American Express credit card, at which point she gestured to a sign that stated, “$5 minimum purchase for credit cards.”

In an effort to bump up my tab, I took a quick gander at some of the sandwiches and desserts available, but wasn’t all that interested.

Now this wasn’t the first time I’d seen such a notice, but I was somewhat taken aback, as I always am in such situations.

I told the employee to just charge my card for $5, and she did so, without blinking.

With my $5 cup of coffee in hand, I exited the establishment, feeling a bit annoyed, knowing I likely wouldn’t return as a result.

While my feelings were justified (a $4 cup of coffee has plenty of profit margin, even for a small retailer to take on the associated credit card processing fees), I do understand why retailers impose minimums, but not when the standard purchase falls below the minimum.

Is This Even Legal?

That said, “are credit card minimums legal?”

The answer is yes, it’s legal (law-wise), but contractually, retailers are not allowed to set minimums, at least for Visa and MasterCard.

If a retailer does set a minimum, they are violating the terms of their credit card contract and risk losing the ability to accept such cards in the future.

Of course, there’s not much the card issuers will do, considering the fact that credit card interchange fees, while perhaps reduced through merchant-imposed minimums, still result in big profits for the associated companies.

For that reason, you probably won’t be able to do more than complain, and if you choose to, it will likely fall on deaf ears.

Amex and Discover Allow Credit Card Minimums

Interestingly, American Express and Discover do allow credit card minimums, but only if all forms of payment accepted by the retailer are held to the same standard.

This, in effect, makes it highly unlikely for a retailer to fairly set minimums, as there’s a 99.9% chance they accept credit cards from all major issuers, including those who do not allow minimums (Visa and MasterCard).

So there you have it.  Now to solve the problem, you can do a number of things.  You can carry a small amount of cash to cover incidental purchases, complain in the hopes they waive the minimum, use a debit card, or simply walk away and go someplace else.

Did I mention that the coffee was a little bittersweet?

Read more: Merchants are now allowed to levy credit card surcharges.

Author: Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.