Most of us are familiar with credit card fees like annual and foreign transaction fees but those are just two of the numerous credit card fees you could pay if you aren’t careful. It’s important to understand the various credit card fees so you can avoid them.
Typical Credit Card Fees
Most all credit cards charge these fees, many of which are avoidable depending on how you use your credit card and make your payments.
If you don’t pay at least the minimum due on time, you will likely be charged a late fee. A first time late fee is federally capped at $27. If you’ve been late in the past six months, the charge may go up to $38. Pay at least the minimum on time to avoid this fee.
Not all cards have an annual fee but many of the “premium” cards do and often it’s waived for the first year. It’s a fee for the “privilege” of having the card. Sometimes it can be worth paying if the card offers perks that you use but make sure the value of the perks is more than the annual fee. There are plenty of cards that don’t charge this fee. The fees can range from less than $100 to several hundred dollars per year.
A finance charge is the interest you pay when you carry a balance on your credit card. The charge will depend on your APR and the balance you carry. You can avoid paying finance charges by paying your balance in full each month.
Balance Transfer Fee
If you are carrying a balance, a good way to pay it down more quickly is to roll it over to a credit card that is offering a 0% APR for a certain length of time. This allows you to pay off the balance and not be charged any interest.
You are charged this fee to move the balance from one card to another. The fee is usually 3-5% of the amount transferred. There aren’t a lot of cards that don’t charge this fee but sometimes you can find one.
Cash Advance Fee
You can use your credit card like you use and ATM card to take out cash. You will be charged a fee for doing so, usually a flat fee or a percentage of the amount withdrawn, whichever is greater.
Taking out cash via a credit card should be a last resort, not only will you pay the fee; the interest will start accruing immediately. There is no grace period as there is when you make a charge with your card.
Returned Payment Fee
If you pay your credit card bill with a check and the check bounces, you will owe a returned payment fee. The fee can be as much as $35. If you have never had a returned payment before, it’s worth calling the credit card company and asking if they’ll waive the fee.
If you pay your balance with a check, make sure that you have sufficient funds before dropping it in the mail.
Expedited Payment Fee
The CARD Act forbids most fees related to paying a debt but if you require phone based customer service to help you make a last minute payment to avoid a late payment fee, you may be charged for the service. Since the CARD Act, though, this fee is not one you’ll come across much anymore.
Over the Limit Fee
Credit cards have a set limit but you can charge over that limit if you opt in to allow over limit transactions to go through and by doing so you agree to the over the limit fee.
A first time violation is usually $27 and subsequent fees may be $38 but the credit card company can charge a fee of their choosing as long as it’s “reasonable” compared to the amount of your overage.
You can easily find out your remaining credit available by looking on-line or calling the credit card company.
Foreign Transaction Fee
This fee is charged when you charge something in a foreign currency which can happen when you use your card internationally or if you buy something on-line from a site outside the US.
The card issuer has to covert the transaction to US dollars to process it and charge a fee for doing so. The fee is typically 3% and is charged in US dollars. This is one of the easier fees to avoid. There are many credit cards available with no foreign transaction fee.
These rare credit card fees are charged only by very few credit cards or only in rare circumstances.
Credit Limit Increase Fee
You won’t encounter this fee with most cards but if you have a secured card, you may. Credit One Visa Platinum, for example, charges up to $49 for credit limit increases. This is another easily avoided fee as most cards don’t charge to increase you credit limit.
Card Replacement Fee
Most credit card companies don’t charge to replace a lost card but getting that card can take up to ten business days. If you need your card rush shipped, you may be charged anywhere from $6-30.
If you don’t have the credit to be approved for a traditional credit card, you may find that you can be approved for secured or other subprime credit cards. One of the fees that these cards charge is a processing fee.
What this charge is for is vague but it can be as much as $100 and must be paid before you are even issued the card. Secured cards generally have more fees than a traditional card but there are plenty to choose from that don’t charge this fee.
Most credit card fees are avoidable. Make sure you know what fees your card may charge and under what circumstances. If you have been charged a fee, it’s worth the few minutes it takes to call the credit card company and ask that it be waived. Just be more careful in the future.