Does It Even Pay to Use Your Credit Card at Restaurants Anymore?

There was a point when swiping my credit card at a restaurant wasn't even a question. After all, why not score some cash back for a purchase I was already making?

But over the past couple of years, a growing number of restaurants in my town have started imposing a credit card surcharge on customers. And it's not just my town. This past summer, my husband and I traveled to several states and found the same practice upheld there too.

It really raises the question: Is it even worth using a credit card at restaurants anymore?

When you lose out financially

My go-to credit card is my Costco Anywhere Visa® Card by Citi, which gives me 4% on gas up to a certain limit (which I don't come close to exceeding), 2% back on Costco purchases, and 3% back at restaurants. At one point, swiping that card at restaurants was an easy call. But these days, it doesn't always make sense for us.

There are some restaurants in my town that charge a 3.5% surcharge on credit card transactions. So even with my card giving me 3% back at restaurants, I still lose out financially in that situation.

Now, you may be wondering why restaurants have adopted this practice, and the reason is that tight margins and inflation have basically forced them to. Credit card processing fees are the third-highest expense for restaurants, behind food and labor costs, according to a report by The New York Times. So basically, to stay afloat, many restaurants have reached the point where they have to pass those fees along to customers.

Should you just pay cash?

Restaurants are required to inform customers if they'll be charged extra for using a credit card. So if you're not sure whether you're better off paying cash or using your card, run the numbers.

If you get 3% back from your credit card and you're being charged more than that in the form of a surcharge, cash makes more sense -- if you have it on you. If you're being charged a 2.5% fee but get 3% cash back from your credit card, use the card. And if you'll break even, then you might as well use your credit card simply to avoid another trip to the ATM.

In fact, I can admit that I'll sometimes use my credit card to pay a restaurant bill even when that's not the most cost-effective option, due to the convenience factor. It's annoying to have to constantly run over to the ATM, and I don't like the idea of keeping hundreds of dollars in cash in my wallet.

So if I'm looking at a 3.5% credit card surcharge but I know I'll get 3% back on my purchase, I'll sometimes just swipe my card at a restaurant despite coming out a loser in that transaction. But for the most part, I've started carrying more cash on me for the express purpose of being able to dine out without being charged a fee. And you may want to do the same.