- Credit Card Fees & How To Avoid Them
- 1. Annual fee
- How to avoid an annual fee:
- 2. Interest charges
- How to avoid interest charges:
- 3. Balance transfer fee
- How to dodge a balance transfer fee:
- 4. Cash advance fee
- How to avoid a cash advance fee
- 5. Foreign transaction fee
- How too avoid foreign transaction fees
- 6. Late fee
- How to avoid late fees
- Credit Card Fees and How to Avoid Them
- 5 Main Types of Credit Card Fees
- Annual Fees
- Balance Transfer Fee
- Cash Advance Fee
- Foreign Transaction Fee
- Late Fee
- Other Credit Card Fees
- Expedited Payment Fee
- Finance Charge
- Over-the-limit Fees
- Returned Check Fee
- Application Fee
- Credit Limit Increase Fee
- Card Replacement Fee
- What to look for
- No Annual Fees
- Low APR
- No Application Fee
- Exceeding Your Limit
- Carrying a Large Balance on a Card with High APR
- Return Check from Badly Timed Autopay
- Credit Card Processing Fees
- Processing Fees for Consumers
- Processing Fees for Merchants
- 10 common credit card fees (and how to avoid them)
- 1. Annual fee
- How to avoid an annual fee
- 2. Finance charge
- How to avoid a finance charge
- 3. Late fee
- How to avoid a late fee
- 4. Balance transfer fee
- How to avoid a balance transfer fee
- 5. Over-limit fee
- How to avoid an over-limit fee
- 6. Cash advance fee
- How to avoid a cash advance fee
- 7. Expedited payment fee
- How to avoid an expedited payment fee
- 8. Foreign transaction fee
- How to avoid a foreign transaction fee
- 9. Returned payment fee
- How to avoid a returned payment fee
- 10. Card replacement fee
- How to avoid a card replacement fee
- Remember: Credit card companies make money off fees!
Credit Card Fees & How To Avoid Them
“Consumers can avoid certain credit card fees altogether by doing their homework ahead of time,” says Jeff Bielski, vice president of marketing at Discover.
And if you are hit with a late fee, want a lower interest rate or even want your annual fee waived or lowered, call your credit card issuer. Our 2018 survey found that it’s easy to get rid of credit card fees if you ask.
These are six common credit card fees and what you can do to get them waived or lowered:
1. Annual fee
Many rewards credit cards come with an annual fee ranging from $25 to $550 and up (the Luxury Card Mastercard Gold Card’s annual fee is $995!).
Think of the annual fee as a price tag for all the rewards, perks and benefits you’re earning with that credit card. Generally, the more plum the card rewards, the higher the annual fee.
How to avoid an annual fee:
Some rewards cards waive the annual fee the first year, which is taking your card for a long test drive.
When a waived annual fee rolls around, and you decide it’s not worth it to keep the card, you can cancel it or ask your card issuer to downgrade your account to a lower or no annual fee card.
And if you’d rather not sign up for a card with a lot of bells and whistles and travel benefits you will never use, there are plenty of no annual fee cards.
“The best way to avoid common credit card fees is to be smart and choose cards with low fees,” says Evan Tarver, a financial analyst with FitSmallBusiness.com. “There are many cards available that offer cash back or rewards points without an annual fee.”
|See related storyWhen is an annual feeworth it?|
2. Interest charges
The costs of carrying a credit card balance are high and climbing higher.
CreditCards.com’s Weekly Rate Report found credit card interest rates hit a new high early at the end of June, with the average card APR climbing to 16.83 percent.
Card issuers tend to bump up their rates when the Federal Reserve increases its benchmark federal funds rate.
Surprisingly, a 2018 CreditCards.com survey found half of balance-carrying cardholders are clueless about their APRs. In this case, if you snooze, you lose by paying even more in added interest if you don’t pay off your balance every month.
How to avoid interest charges:
The easiest way to avoid any interest charges is to pay off your credit card balance in full each month.
If you are rolling over a lot of credit card debt or are making a big purchase, you can catch a break with a 0 percent balance transfer card. In either case, make sure you erase your card debt or pay for that spiffy outdoor grill before the no interest period ends.
3. Balance transfer fee
To transfer a balance, it usually will cost you 3 to 5 percent of the amount you are rolling over to the credit card, but there are exceptions.
“The balance transfer fee is hard to avoid,” says Linda Sherry, spokeswoman for Consumer Action.
How to dodge a balance transfer fee:
Some credit cards that currently don’t charge a balance transfer fee include: AmEx Everyday® Credit Card, Barclaycard Ring Mastercard and the PenFed Promise Visa Card.
|See related story6 steps to a successfulcredit card balance transfer|
4. Cash advance fee
If you get in a cash crunch, you might be tempted to take a cash advance on your credit card.
CreditCards.com’s annual survey found 98 of the 100 cards surveyed carried a cash advance fee, which is usually 5 percent of the amount advanced or $10 – whichever is greater.
The average interest charged on a cash advance is also much higher – the average was 23.68 percent – than the rate for credit card purchases. With a cash advance, there is no grace period, so the interest is charged from the time the cash is withdrawn.
On top of that, if you withdraw your money using your credit card at an ATM, you’ll usually pay an ATM fee.
“I don’t see why people take cash advances on credit cards,” Sherry says.
How to avoid a cash advance fee
Never put your credit card in an ATM to get cash. This may be tempting at a casino or if you run cash on vacation, but never, ever put your credit card in an ATM to get cash unless it’s a true emergency.
5. Foreign transaction fee
Major card issuers have been dropping foreign transaction fees – which typically add 3 percent to your purchase price on credit card charges made while traveling overseas or items purchased online from outside the U.S.
In 2017, CreditCards.com found the number of cards charging a foreign transaction fee had dropped to 56 of 100 cards. In 2018, the Costco Anywhere Visa Card by Citi was one of the latest to join the list of no annual fee credit cards.
How too avoid foreign transaction fees
Get a no foreign transaction fee card to take with you on your next vacation or business trip abroad.
|See related storyWhat is a foreigntransaction fee?|
6. Late fee
If you miss sending at least the minimum payment by your credit card’s due date, you’ll be hit with a late fee.
The first violation penalty fee held steady at $27 in 2018, and the subsequent violation penalty fee stood pat at $38. Late fee ceilings are set annually with annual adjustments to the Truth in Lending Act.
How to avoid late fees
Pay your bill on time each month and you won’t have to worry about late fees, Sherry says.
To ensure your bill is paid on time every month, set up automatic bill payments, Bielski says. Discover, he notes, waives the late fee the first time a cardholder is late making a payment.
If you don’t want to run the risk of getting hit with a late fee, the Citi Simplicity card might be the perfect card for you. Citi bills Simplicity as “no late fees, no penalty rate and no annual fee … ever.”
Note, though, that Simplicity has a cash advance fee of $10 or 5 percent of the amount, a 3 percent foreign transaction fee, and a balance transfer fee of $5 or 5 percent of the amount of each transfer, whichever is greater.
Credit card fees you can avoid. Death and taxes you can’t.
The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.
Credit Card Fees and How to Avoid Them
A typical credit card can have an annual fee, a cash advance fee, a foreign transaction fee, a balance transfer fee, and a late payment fee. Fortunately, many credit card users go years without incurring any of these fees. How do they do it? The key is to select low-fee cards, then use your leverage as a customer to request waivers from the fees you do incur.
Table of Contents
5 Main Types of Credit Card Fees
Different companies and types of cards have varying fees. These are the 5 main fees you need to know about:
Some cards charge you yearly just for having an open account, even if you don’t use the card. Depending on the rewards and how much you are charging on the card, this may or may not be worth it.
How do you know when the fees are worth it? The rewards you earn on the card should make up for the fees and then some.
If you are paying $400 per year to use a rewards card, you should be spending enough to earn over $400-worth of rewards.
There are two simple, proven ways to avoid annual credit card fees. The first is the easiest: Just choose from one of the many cards that don’t have annual fees.
While there’s no shortage, the best rewards programs tend to charge annual fees.
If you do the math and figure you’ll save more than you’ll spend, look for rewards credit cards that come with the first year’s fee waived. There are quite a few.
The other way to avoid annual fees almost sounds too easy to be true: Call the card issuer and ask to have it waived. You should calmly mention you’re considering canceling the card.
Immediately, you’ll be transferred to the “Retentions Department.
” In return for your commitment to renewing the card, these representatives are empowered to waive annual fees or offer rewards that are at least as valuable.
Best no-fee rewards card: The new American Express EveryDay card offers points in its Membership Rewards program that can be transferred to miles with 17 different airline programs.
Balance Transfer Fee
Credit card companies charge this fee anytime you move a balance from one card to another. It’s usually a percentage of the amount you transfer.
Credit cards with promotional financing offers are a fantastic way to avoid interest charges, but nearly all will add a 3 percent transfer fee to the amount transferred. The other way to avoid this fee: Get a card with promotional financing on new purchases before going into debt. This way, you can still enjoy interest-free financing without having to transfer a balance in the first place.
Best balance transfer offer: Currently, the Chase Slate is the only card on the market with a zero-percent APR balance transfer offer and no fee.
Cash Advance Fee
This fee applies when you make a cash advance transaction. Examples of cash advance transactions include:
- Withdrawing cash with your credit card
- Overdraft protection
- Credit card convenience checks
While a select few cards (such as the PenFed Promise) don’t have a cash advance fee, you should always avoid using your credit card at an ATM. In addition to cash advance fees, transactions at ATMs will immediately starting incurring interest — and will ly charge a higher interest rate. The least expensive way to access cash at home and abroad will always be to use your bank’s debit card.
Best card to avoid late fees: While it is best to avoid cash advances altogether, the PenFed Promise card has no cash advance fees or any other fees of any kind.
Foreign Transaction Fee
Some cards charge a percentage of your transaction if you buy something in a foreign currency.
Most credit cards impose a 3 percent foreign transaction fee on all charges processed outside of the United States. Thankfully, many cards today don’t have this stupid fee. Choosing one of these cards is the best way to consistently avoid this fee, but there are reports of card issuers waiving it on request.
The best card for travelers: The BankAmerica Travel Rewards card is one of the only cards available that has no annual fee or foreign transaction fee and includes an EMV smart chip for compatibility outside the United States.
If you are late paying at least your minimum payment by the due date, you will ly be charged a late fee.
The easiest way to avoid late fees is, not surprisingly, to always pay your bill on time. Try to keep up with your billing cycles the best you can.
But since everyone makes mistakes, you can get late fees waived just annual fees. While a few cards don’t charge late fees, most do. So, simply call your card issuer and request to waive them.
Nearly all card issuers will do this as a one-time courtesy to customers who are otherwise in good standing.
Best card to avoid late fees: The PenFed Promise card has no late fees — or any fees at all.
Other Credit Card Fees
The top five fees are the most important ones to know when you are looking for a credit card. Here are some other kinds of fees to keep in mind:
Expedited Payment Fee
If you’re running behind schedule and you need to expedite your credit card payment so it isn’t late, you may be charged an expedited payment fee. This costs less than paying the fee for a late payment.
This is the fee you’ve most ly already heard of. It’s the interest charge that applies to the balance you carry from month to month.
These fees aren’t as common anymore, but it used to be common for companies to charge a fee if you went over the limit on your credit card.
Returned Check Fee
This fee occurs when there is not enough money in your bank to pay your credit card balance. The payment won’t go through and you will be charged because the transaction bounced.
If you have a low credit score, you might be charged just for applying for a credit card.
Credit Limit Increase Fee
Some companies will charge you when you ask to have a higher credit limit.
Card Replacement Fee
If it’s been a short time since you last had your credit card replaced, your credit card provider may charge you to have it replaced again.
What to look for
Knowing about the different types of fees makes it easier for you to dig through the jargon and find the credit card that’s best for you. Here are a few things you should definitely look for:
No Annual Fees
When you’re shopping around for a credit card, make sure to check the terms for a annual fee. Cards with no annual fee, or a low annual fee that can be offset by rewards, are best.
Cards with low interest rates mean fewer interest fees down the road when you carry a balance.
No Application Fee
This is pretty self-explanatory. If you have a reasonably good credit score, you should never have to pay an application fee for a credit card.
Exceeding Your Limit
Even if your company won’t charge you a fee for going over your limit, you should always avoid it. It means you are using way too much of your credit and may be overspending.
Carrying a Large Balance on a Card with High APR
If you have a high APR, it’s best to pay off as much as you can (if not all) of your balance every month.
Return Check from Badly Timed Autopay
Auto-paying your bills can be very convenient. But if you have an irregular income or simply bad luck with the timing, your credit card payment could bounce.
Credit Card Processing Fees
Whether you are the one selling or the one buying, credit card companies will often try to garnish a fee from your transactions.
Processing Fees for Consumers
Be wary of processing fees when you are making credit card purchases. Especially when you are paying bills online; this can make a big difference. For example, your $46 water bill can turn into $50 when your provider adds a $4 fee to cover credit card processing. To avoid these kinds of fees online, see if you can use an e-check to pay instead.
Processing Fees for Merchants
If you are a retailer or independent business owner, part of your sales from debit and credit cards will go to the payment processor. These are called interchange fees.
They help processing companies cover the risk of these purchases. Debit cards are less risky, so their processing fee is usually lower than that of credit cards. The average interchange rate is 2% per transaction.
You may also have to pay monthly fees to the processors you choose to accept.
Did we provide the information you needed? If not let us know and we’ll improve this page.
Let us know if you d the post. That’s the only way we can improve.
Article last modified on January 5, 2021. Published by Debt.com, LLC
10 common credit card fees (and how to avoid them)
Credit card fees. We all deal with them, even if we don’t enjoy them.
It feels there’s a fee for just about everything. And keeping track of them is no easy task.
Late fees. Over-limit fees. Balance transfer fees. The list goes on …
They might be unpleasant, but credit card fees are still important to understand, especially if you’re dealing with credit card debt. Many people get mired in credit card debt because they’re not mindful about how they use it. That’s why we compiled a list of 10 common credit card fees and the main things you should know about them — including how to avoid them.
1. Annual fee
An annual fee is charged once a year for the convenience of having a credit card. Some credit cards come with annual fees. Others don’t. It’s one of the first fees you’ll see when applying for a credit card.
An annual fee can range from $20 to more than $200, depending on the credit card. Though some credit card companies waive the annual fee during the first year.
How to avoid an annual fee
Look for cards that don’t charge an annual fee or find a promotion that waives the first fee. If you have existing credit cards that charge annual fees, consider switching to one that doesn’t. If you review the features of different credit cards side by side and the difference is not that significant, opt for the one that doesn’t have annual fees.
2. Finance charge
A finance charge is a monthly interest charge. It’s added to your account when you carry a balance beyond your credit card’s grace period.
Finance charges are added every month unless you pay your balance in full. One exception is if your card offers a 0% interest rate. The amount of the finance charge depends on your balance, your credit card APR and the way your finance charge is calculated.
How to avoid a finance charge
Pay your credit card balance in full every month. It’s easy to incur debt with a credit card if you’re not careful about payments. If you don’t think you can pay your balance in full every month, then only avail of installment deals that offer 0% interest rates.
3. Late fee
A late fee is a charge you incur when you fail to make your minimum payment by the due date. Most credit card companies charge late fees. A few will waive your first late fee depending upon the circumstances.
Late fees are charged once for every billing cycle you’re late. Your first late fee can be up to $29, as of January 2020. Any late fees after that can be up to $39.
If you’re 6 months past due, your credit card will be charged off and is typically reported to the credit bureaus. If it’s the first time you’ve made a late payment, your credit card company may waive the fee if you ask them.
How to avoid a late fee
Pay at least the minimum amount due on time every month. If you are a little late in your payment, ask for leniency from your credit card company. If it’s your first time to be late, they might just let it go. It’s been known to happen and it sure wouldn’t hurt to ask.
4. Balance transfer fee
A balance transfer fee is charged when you move a balance from one credit card to another. The fee is a percentage of the amount you transfer (usually 3% or $5, whichever is greater) so larger balances come with larger fees.
Balance transfer fees are typically charged on balance transfer cards, which can be an effective way to save money while paying down debt. They’re a good way to take advantage of perks, a lower APR. That’s why these fees are often charged for credit cards that offer a promotional rate for an introductory period.
How to avoid a balance transfer fee
Look for cards that don’t charge a balance transfer fee or negotiate with your credit card provider. Most people think that credit card fees are set in stone, but you’d be surprised how much different credit card providers are willing to forgo in fees if you just ask.
5. Over-limit fee
An over-limit fee is charged when you exceed your credit limit. Credit card companies must get your consent for over-limit transactions; the Credit CARD Act of 2009 requires you to opt-in.
If you opt-in, an over-limit fee can be up to $35 per transaction. You can only be charged up to two billing cycles if you remain over your credit limit.
How to avoid an over-limit fee
Keep your balance below the credit limit or opt- over-limit fees. Be diligent about keeping track of your spending and don’t swipe with abandon.
6. Cash advance fee
A cash advance fee is charged when you use your credit card to get cash. Overdraft protection and convenience checks are two common examples of a cash advance.
The fee is charged for every cash advance transaction and is charged in addition to other credit card fees, an ATM fee. A cash advance fee is a percentage of the transaction amount (usually 5% or $10, whichever is greater).
How to avoid a cash advance fee
Avoid using your credit card for a cash advance. If you have the option to pay using your credit card, do so. If you don’t have any option but to pay in cash, use money from your savings account, emergency fund or another source instead.
7. Expedited payment fee
An expedited payment fee is charged when you need to ensure your payment is received as quickly as possible. A common example is when you expedite a credit card payment on a bill to avoid being late.
The fee is usually a flat rate (between $10 and $20) but is most often less than a late fee.
How to avoid an expedited payment fee
Schedule payments earlier in the month. Be very fastidious about paying your bills on time and in full. If this is something you have trouble with, there are many money management apps that can help you with bill due dates, payment reminders and the .
8. Foreign transaction fee
A foreign transaction fee is charged when you make a purchase in a foreign currency. You don’t have to be outside of the United States to be charged a foreign transaction fee. The fee can apply to all currency other than U.S. dollars. Some credit cards don’t charge foreign transaction fees. The ones that do usually charge about 3% of the transaction amount.
How to avoid a foreign transaction fee
Plan ahead and keep cash if you know you’ll be making purchases in other currencies or seek out a credit card that doesn’t charge foreign transaction fees.
9. Returned payment fee
A returned payment fee is charged when your bank returns your credit card payment. A common example is when your bank account has insufficient funds to complete a payment.
A returned payment fee is charged every time your payment is returned. The amount can be up to $35.
How to avoid a returned payment fee
Don’t make a credit card payment if you don’t have enough money in the bank. Keep track of how much money you have so you will not be taken by surprise.
10. Card replacement fee
A card replacement fee is charged if you request a new physical credit card. Many companies will give you one replacement card as a courtesy.
A card replacement fee can be between $5 and $15, and can also come with additional charges if you need a rush order.
How to avoid a card replacement fee
Ask nicely, and with good reason, if you’ve already used your one free replacement. Your credit card company wants you to keep using your card so they’ll probably be amenable to waiving your card replacement fee.
Remember: Credit card companies make money off fees!
The convenience of having and using a credit card comes with costs. If you’re applying for a new credit card, take note of these 10 common credit card fees and take them into consideration when deciding if an offer is right for you.
Credit cards are extremely useful, so long as you don’t abuse them. They’re also incredibly prevalent, so it’s not you can stop using them altogether. The key is to be smart about your finances so you can make the most your credit cards and avoid paying unnecessary fees.