10 Common Credit Card Fees (And How to Avoid Them)

Contributing Writer at Tally

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. 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 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: Look for cards that don’t charge an annual fee or find a promotion that waives the first fee.

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: Pay your credit card balance in full every month.

3. Late fee

A late fee is charged 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.

Late fees are charged once for every billing cycle you’re late. Your first late fee can be up to $28, as of January 2019. 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: Pay your minimum amount due on time every month.

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 transfers can be 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: Look for cards that don’t charge a balance transfer fee or negotiate with your credit card provider.

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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: Keep your balance below the credit limit or opt-out of over-limit fees.

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

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: 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 possibly. 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: Schedule payments earlier in the month.

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: 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: Don’t make a credit card payment if you don’t have enough money in the bank.

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: Ask nicely, and with good reason, if you’ve already used your one free replacement.

Bottom line: 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.

 

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