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10 common credit card fees (and how to avoid them)

Credit card fees might be unpleasant, but they're still important to understand, especially if you’re dealing with credit card debt.

Jacob Palmer

Contributing Writer at Tally

February 11, 2019

Credit card fees. We all deal with them, even if we don’t enjoy them.

It feels like 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.

10 common credit card fees and what you should know about 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, like 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-out of 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, like 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 like. 

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 like you can stop using them altogether. The key is to be smart about your finances so you can make the most out of your credit cards and avoid paying unnecessary fees.