What are my rights regarding convenience fees for utilities?

Your Business Credit with Elaine Pofeldt

Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

My HOA fee is combined with my utility bill and I'm being charged a 5 percent convenience fee to use my card. Is this legal? 

While some states have laws capping convenience fees a company can charge, there are exemptions for some businesses, which allows them to charge a higher fee. 

Expert Q&A

Check out all the answers from our credit card experts.

Dear Your Business Credit, 
I read the CreditCards.com story about credit card convenience fees in California. My condo’s homeowners association (HOA) contracts with PayLease to collect HOA dues, which include each unit’s PG&E utility charge for electricity. If the owner prefers to pay by credit card, PayLease charges a $28+ convenience fee per month, for monthly HOA dues of $540.67, which is over 5 percent(!)

Per the info I just read on your site, this appears to be greater than Visa’s convenience fee allowance in California, which is 4 percent. Also, it seems PayLease’s convenience fee is sliding, based on the unit’s HOA dues versus a fixed fee. If I read correctly on your site, a convenience fee should be a flat rate. Have I interpreted the information correctly? Or perhaps we are still awaiting the impending Supreme Court decision about credit card convenience fees? - Sharon

Dear Sharon,
Ouch. It’s hard not to notice $28 convenience fee!

I ran your question past Jen Lee, an attorney with offices in San Ramon and Tracy, California, who frequently advises clients on debt-related matters and is a co-author of “Preventing Credit Card Fraud: A Complete Guide for Everyone from Merchants to Consumers.”

You may not welcome this news, but apparently, PayLease has the right to charge you and your fellow condo owners the $28 convenience fee.

Companies exempt from caps on convenience fees

“There is an interesting loophole in the law for utilities and public agencies,” Lee noted in an email. “CCP 1748.1, which is part of the statute regarding credit card transactions, Section 1748.1(f), specifically excludes charges for payments to an electrical, gas or water corporation and approved by the Public Utilities Commission.”

Code section, 1748.1 explains: “This section does not apply to charges for payment by credit card or debit card that are made by an electrical, gas or water corporation and approved by the Public Utilities Commission pursuant to Section 755 of the Public Utilities Code.”

So what does this have to do with PayLease?

“If the HOA has a payment service that includes utility payments, then they fit into the loophole and can charge a convenience fee for paying the bill with a credit or debit card,” Lee explained. “When I checked out PayLease’s website, it looks like they offer services to manage HOA, rent, utility bills all on one statement and for one payment, which then allows for the convenience fee for utility payments.”


Tip: Consider bringing the issue to your HOA board to negotiate a lower fee with the utility company.

It is this exemption that allows them to charge the $28 fee for providing the customers with the option of paying the bill by credit card or debit card. As to how high the fee can be, Lee explained, “Under PUC Section 755, the fees have to be approved by the commission for reasonableness.”

It sounds like you have a strong objection to the convenience fee so this may be something worth bringing up at your next condo association meeting. My guess is there are other owners who would enjoy the convenience of paying by credit card without the $28 fee.

Alternatives to paying with a card

In the meantime, if the convenience fee seems burdensome, it might be better to write an old-fashioned check. Many people are switching to electronic payments for their purchases, but writing a check can save you money in cases like this. If you want to do it online, your bank will also likely allow you to send a check through your banking app, which won’t feel much different from charging it to your card.

See related: How to avoid paying convenience fees on utility bills, Why utilities charge convenience fees to pay by credit card

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 02-17-2019