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Most Common Credit Card Fees Explained

November 17, 2021

Credit cards have changed the way we pay for many of the things we buy. They are convenient, easy to use, and much safer for large transactions than carrying cash. Although it’s now hard to do some things without credit cards—such as booking a hotel room or renting a car—the true cost of having and using them is often higher than it may seem because of fees.

Not all credit cards have the same features and fees. Some credit cards, in fact, don’t have any fees at all. If you are thinking about applying for a particular credit card, it’s important to find out about the fees so you can know the true cost of having it.

The following are the most common credit card fees explained. Be sure to watch out for them before you apply for your next card.

Annual Fees

Many credit card issuers require you to pay an annual fee each year just to keep and use their card. These fees are common on cards that offer a lot of perks like reward points and travel miles. The annual fee is one way that credit card issuers pay for these perks.

Annual fees vary a great deal depending on the card issuer and can range from $50 to $550. This fee may be missed at first because some credit card issuers waive the fee for the first year. When the second year rolls around and the fee suddenly appears on their statements, it can come as a surprise.

Foreign Transaction Fees

Credit cards are important lifelines when traveling abroad. If you find yourself in a situation where you need to pay for something that you hadn’t planned for, you can just swipe your card if you don’t have enough local currency.

But this convenience may come at a price. Some credit card issuers charge a fee for each transaction you make in a foreign country. This fee typically ranges from 1% to 3% of the purchase price, and it can add up if you have to make multiple purchases.

Balance Transfer Fees

Transferring debt from a credit card with a high interest rate to a credit card with a lower interest rate may sound like a great way to save some money. It may not be worth it, however, if you are charged a balance transfer fee.

Balance transfer fees are usually between 3% and 5% of the amount transferred. The fee can be significant if you are transferring a large balance. Whatever savings you may realize from transferring a balance could be outweighed by the fee.

Cash Advance Fees

Getting a cash advance with your credit card is quick and convenient. But the cash advance fee that shows up on your next credit card statement could make you wish you had obtained your cash another way. Cash advance fees typically range between 3% and 5% of the amount of cash you obtain.

Over-the-Limit Fees

Although no-limit credit cards do exist, most credit cards have a limit on the amount that you are allowed to charge. If you exceed that limit, you could be charged a fee.

Instead of having your transaction denied when you exceed your limit, many card issuers will allow the transaction to go through, but with an over-the-limit fee charged to your account. These fees vary depending on the card issuer, but may be as high as $35.

Returned Payment Fees

Many people enjoy the convenience of paying their monthly credit card statements online. You can now link your bank or credit union account to your credit card account and make payments with the click of a mouse.

But if you attempt to pay your credit card statement electronically but you don’t have enough money in your account to cover the balance, you may be charged a return payment fee. This fee could be as high as $40.

Card Replacement Fees

If you ever lose a credit card, it’s vitally important that you call your credit card company as soon as possible and let them know what happened. The lost card will be canceled and a new one will be mailed to you.

Losing a credit card can be more than an inconvenience in some cases. Some credit card issuers charge card replacement fees that may be between $5 and $15. A card issuer may be willing to waive this fee, however, if you have been with them for several years and you ask to have it waived.

Credit Card Fees? Sign Up for a Hassle-Free Credit Card Today!

Since credit card fees aren’t any fun to deal with, why not choose a credit card that keeps it simple? Yes, they do exist.

Fibre Federal Credit Union offers Visa Platinum and Classic Credit Cards that keep it simple, with no annual fee, no balance transfer fee, and no cash advance fee. These cards were designed to save you money by not having rewards programs that are paid for with fees and high interest rates. You can enjoy a low interest rate, 24/7 fraud monitoring, and other important features instead of pricey perks that you don’t need.

Learn more about our credit cards and how to apply today!

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