# HOA fees paid via credit card and charging a "convenience" fee



## SnowDogDad (Jun 24, 2014)

Hi everyone,
   Do any of your pay your HOA fees via credit card and get charged a "convenience" fee?   I pay lots of different types of taxes via credit card and always get charged a convenience fee, so it does not bother me. 

  But, I'm wondering if this happens for HOA fees and how people feel about it.

  I did a bit of research and it seems that some credit card processors don't like it when you charge a fee for credit card use.
Jim


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## Ken555 (Jun 24, 2014)

SnowDogDad said:


> Hi everyone,
> 
> Do any of your pay your HOA fees via credit card and get charged a "convenience" fee?   I pay lots of different types of taxes via credit card and always get charged a convenience fee, so it does not bother me.
> 
> ...




As of January 2013 merchants may surcharge for credit card payments except in those States which prohibit it. See http://en.m.wikipedia.org/wiki/Paym...ee_and_Merchant_Discount_Antitrust_Litigation for more info.

FWIW, Starwood does not surcharge.


Sent from my iPad


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## Bwolf (Jun 24, 2014)

One of our timeshares does this. The fee is intended to offset the fee the HOA pays the credit card company when owners pay by credit card.  So what if credit card companies don't like the fee being passed along to the person using the credit card for payment?  

If a MF is $600, and I pay by credit card, the fee charged by the credit card company may be $20.

$600 minus $20 is $580 net to the HOA.

The next person pays by check.  $600 minus no fee equals $600 net to the HOA.  

It seems reasonable to pass the fee along, so the HOA nets the same MF from each owner.


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## theo (Jun 24, 2014)

*No "free lunch"...*



Bwolf said:


> The fee is intended to offset the fee the HOA pays the credit card company when owners pay by credit card.  So what if credit card companies don't like the fee being passed along to the person using the credit card for payment?
> 
> It seems reasonable to pass the fee along, so the HOA nets the same MF from each owner.



I agree wholeheartedly. Use of a credit card means, by definition, that *someone* has to pay the 2 or 3 percent fee when that "convenience" gets exercised. 
IMnsHO, it is entirely reasonable for that cost to be passed along directly to the individual(s) choosing to cause that charge to be incurred in the first place. 
One could argue that a HOA failing to pass the charge directly along to the individually responsible party is essentially taking those fees out of resort funds instead.  

Personally, paying any owner's voluntarily incurred credit card fees for them is not a way that I want to see any of my resorts' operating money ever being spent. 
Then again, my perspective may be biased by experience serving on (independent facility) HOA's / BoD's, trying to responsibly monitor all resort-incurred costs.


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## mav (Jun 24, 2014)

I own 3 weeks at a lovely resort in the U.K. that charges a small fee to bill my main. fee to my credit card. I don't mind at all as I find it a very convenient way to pay my fees there. It is a small resort with only 11 units and it is  beautiful  and is very well run.  I'm a happy camper!


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## Patri (Jun 24, 2014)

theo said:


> I agree wholeheartedly. Use of a credit card means that *someone* has to pay 2 or 3 percent for that "convenience". It is entirely reasonable for that cost to be passed along to the person(s) causing the charge. One could even argue that a HOA failing to pass the charge along is instead essentially taking it out of resort money.



The flip side is if this causes more people to pay on time and resort avoids collection fees and expenses, it is worth it in the big picture. There would have to be an analysis on it, though.


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## tschwa2 (Jun 24, 2014)

For large resorts it bothers me a little.  I would probably rather that they add 1.7% to everyone's bill(splittling a little of difference for those that don't pay by cc).

For smaller resorts (less than 50 units), it doesn't bother me.  My first timeshare did and still does this.  It did bother me at first because it was my first experience with anyone charging more for using a cc.  Back in the early 90's they really encouraged you to pay be check and sent you to a third party vendor over the phone if you wanted to pay by CC. They encouraged me to think of it as a discount to pay be check and not as a penalty to by by CC.


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## SueDonJ (Jun 24, 2014)

Marriott doesn't charge a convenience fee but the MF packages include this or a similar statement:  _"As always, you have the option of paying by check, electronic bank transfer, or by credit card. However, we would like to request that you pay by check or by electronic bank transfer via the Internet. This would save our Association approximately $25.00 per unit week in credit card fees, and would allow us to continue to improve our resort."_

But the bonus Rewards Points that accumulate through paying MF's with a Marriott VISA are too good to pass up, so we'll keep paying by credit until they charge a ridiculous fee or stop allowing credit card use.  The $25 they mention isn't ridiculous IMO - it wouldn't bother me if they started charging it to those who use credit cards.


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## BevL (Jun 24, 2014)

We have a share in an RV park type place with quarterly dues. It's in the States, we live in Canada and I don't always have time to drive down there to pay it.  They charge a fee, it's a percentage of the bill, which is what I assume they get charged by putting it on my card.

I have the choice, so I don't find it offensive.


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## riverdees05 (Jun 24, 2014)

A few of mine charge the fee.  It seems to be more of the smaller independent resorts.


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## tashamen (Jun 24, 2014)

One of mine charges this kind of fee, so I always send in a check instead.  The other doesn't charge a fee, so I pay that online with a credit card that earns miles.


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## DaveNV (Jun 24, 2014)

A resort in Hawaii that I used to own charges a flat fee for MFs, but then "discounts" 3% if you pay by check. So if you just pull out the plastic, you pay the higher assessed fee.  On a MF of $1000, that's a $33 discount.  Enough incentive for me to haul out my checkbook.

Dave


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## rickandcindy23 (Jun 24, 2014)

BMWguynw said:


> A resort in Hawaii that I used to own charges a flat fee for MFs, but then "discounts" 3% if you pay by check. So if you just pull out the plastic, you pay the higher assessed fee.  On a MF of $1000, that's a $33 discount.  Enough incentive for me to haul out my checkbook.
> 
> Dave



This is a better way to do it.  Giving a discount for a check is a wise way to say, "Hey, you are paying more for the credit card," without really saying it.


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## mzd6socal (Jun 24, 2014)

*Check Cost*

But isn't there a cost with handling a check?  Someone has to route the envelope, open it, look up the account, and apply it to the account.  Then they have to deposit the check.  

With a CC, it is paid online and the account is automatically updated and money deposited.

Matthew


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## theo (Jun 24, 2014)

*Not exactly...*



mzd6socal said:


> But isn't there a cost with handling a check?  Someone has to route the envelope, open it, look up the account, and apply it to the account.  Then they have to deposit the check.
> 
> With a CC, it is paid online and the account is automatically updated and money deposited.



All of the personnel handling or processing a check at any and every level are basically "on the payroll" anyhow, performing their duties and responsibilities in the course of their work day, so there is really no "additional" *per transaction* cost.

With credit card usage (whether paid online, in person or by phone matters not at all) a mandatory *2-3% fee is imposed per transaction* by the credit card issuer. That cost may essentially be "invisible", but the fee does indeed get imposed for each and every credit card transaction. Invisible or not, *someone* has to pay that fee.


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## dioxide45 (Jun 24, 2014)

SueDonJ said:


> Marriott doesn't charge a convenience fee but the MF packages include this or a similar statement:  _"As always, you have the option of paying by check, electronic bank transfer, or by credit card. However, we would like to request that you pay by check or by electronic bank transfer via the Internet. This would save our Association approximately $25.00 per unit week in credit card fees, and would allow us to continue to improve our resort."_
> 
> But the bonus Rewards Points that accumulate through paying MF's with a Marriott VISA are too good to pass up, so we'll keep paying by credit until they charge a ridiculous fee or stop allowing credit card use.  The $25 they mention isn't ridiculous IMO - it wouldn't bother me if they started charging it to those who use credit cards.



Keep in mind though that there is also a line item on all of our Marriott resort financial statements for "Credit Card Fee". For our Grande Vista week it was about $17. So that means that Marriott is utilizing what tschwa2 mentioned. All the owners are paying a fee, but only a certain percentage of owners are actually paying by credit card.

I personally have no problem with having those that pay by credit card, we do, bear that fee. Why should those paying by check have to pay to make up for the shortfalls of those that pay by credit card?


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## pacodemountainside (Jun 24, 2014)

To me this is  a simple math calculation. Ignore convenience which is in eye of beholder.

Say one has air line card  and gets a free ticket for 30K  miles. So if one  puts $30K on CC and pays 3% in convenience  fees he is paying $900 for a domestic plane ticket.

Looking at  an isolated transaction of say $500 a 3% fee does not seem like a bad deal since you probably get  2-6 weeks to pay CC!


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## Ken555 (Jun 24, 2014)

theo said:


> All of the personnel handling or processing a check at any and every level are basically "on the payroll" anyhow, performing their duties and responsibilities in the course of their work day, so there is really no "additional" per transaction cost.
> 
> With credit card usage, on the other hand (whether paid online, in person or by phone matters not at all) a mandatory *2-3% fee is imposed* by the credit card issuer. That cost may essentially be "invisible", but the fee does indeed get imposed for each and every credit card transaction. Invisible or not, *someone* has to pay that fee.




I wouldn't so quickly dismiss this point. For instance, in my business we accept credit cards. I actually prefer our clients to pay via credit cards since we tend to receive the payments sooner, has much less overhead expense for us to process and is less apt to have an issue as with human error when processing a check. Even though there may be personnel available for this purpose, there is a direct cost for processing a payment. Similarly, there is a cost to sending an invoice. The more automated the invoice and payment process become the more efficient the company is and that may directly lead to improvements in other areas. For instance, the personnel that currently spend time processing checks may also have other responsibilities that would benefit from more of their time, etc. A minor fee for improving efficiency is always a good thing for the business.

On a related issue, I'd think that most HOAs would want to offer online check payment. Starwood doesn't, at least I don't think so, but I would think they should. The costs to the business for online check payment is much less than a credit card yet provides a similar efficiency benefit to the business. Small HOAs should offer this, in my opinion, and it's not difficult to setup.


Sent from my iPad


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## SnowDogDad (Jun 25, 2014)

Wow!  This is a all great feedback!  

Our resort (managed by Marriott) is not a typical timeshares.  Most owners own 13 weeks as opposed to one or two.  Thus, our HOA fees are... well.... astronomical. 

Our budget includes a fairly large line item (6 figures) for CC fees that we pay because about 2/3 of our owners pay via CC. 

2/3 of the owners pay.  But 100% cover the cost of the CC fees. 

If we were a typical retail business selling widgets, we would just build the CC fees in to our cost of business.  Indeed, that is what I do in my own business.  Frankly, our easiest/lowest-overhead transactions are the ones we process via credit card.

But, HOA fees seem a bit different.  And, they seem like something that a "convenience fee" would be appropriate.  Just to cover the cost of the CC transaction, though. 

I'm thinking about suggesting this to our board as a way to trim / reduce the HOA fees next year.  The owners that *want* to incur the fee will continue to use CCs.  Those that want to save a bit of money (say 2%) will write a check.   (And, honestly, since Marriott is our management agent, when I pay my HOA fees with my Marriott card, I get 5x Marriott Rewards.  So, I'd keep using my CC. 

I have my doubts as to whether Marriott would agree to do this since they probably just see the CC fees as part of dong business.  Plus, I wonder if some of our owners would lynch me for suggesting this.


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## tompalm (Jun 25, 2014)

SueDonJ said:


> Marriott doesn't charge a convenience fee but the MF packages include this or a similar statement:  _"As always, you have the option of paying by check, electronic bank transfer, or by credit card. However, we would like to request that you pay by check or by electronic bank transfer via the Internet. This would save our Association approximately $25.00 per unit week in credit card fees, and would allow us to continue to improve our resort."_.



Hilton sends the same thing and kind of puts you on a guilt trip.  I expect that they will start charging a convenience fee pretty soon.  It just seems to be the way of the future.  I pay everything by credit card and if there is a 2 percent fee, I feel that I break even with the Marriott points I get on my credit card.  It is just so much easier to pay online with the credit card.

I paid my Federal Tax, State Tax, car registration, General Excise tax and others with my credit card that charge a fee.  I don't care, it is worth it because I can pay online and it is easy.  So, I can't believe Hilton, State Farm insurance and a few others are letting me off the hook without the fee.


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## SueDonJ (Jun 25, 2014)

I thought it used to be illegal for providers to charge convenience fees and that's why we were told in our MF packages about the cost to the HOA?  And now that it's not illegal, that's why we're seeing more and more providers impose a pay-for-use convenience fee?  If Marriott does I'll happily pay it to rack up the Rewards Points.

Don't know why it's in my head that it's a matter of law.


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## tschwa2 (Jun 25, 2014)

SueDonJ said:


> I thought it used to be illegal for providers to charge convenience fees and that's why we were told in our MF packages about the cost to the HOA?  And now that it's not illegal, that's why we're seeing more and more providers impose a pay-for-use convenience fee?  If Marriott does I'll happily pay it to rack up the Rewards Points.
> 
> Don't know why it's in my head that it's a matter of law.



I don't think it was "illegal." The CC companies told vendors that they were not allowed to pass on the fees to the customers if they wanted to be able to accept that card.  My HOA got around this by saying they only accept checks or cash but if you wanted to pay by a cc you could do so by using a third party vendor that they are affiliated with and if you paid through them there was an extra charge. 

I think the new law said that CC couldn't dictate that vendors were not allowed to pass on the fees to customers.


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## SueDonJ (Jun 25, 2014)

tschwa2 said:


> I don't think it was "illegal." The CC companies told vendors that they were not allowed to pass on the fees to the customers if they wanted to be able to accept that card.  My HOA got around this by saying they only accept checks or cash but if you wanted to pay by a cc you could do so by using a third party vendor that they are affiliated with and if you paid through them there was an extra charge.
> 
> I think the new law said that CC couldn't dictate that vendors were not allowed to pass on the fees to customers.



Ah, thanks for the explanation.


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