Make sure you’re aware of these credit card fees to avoid paying more than just interest.

4 minute read

When you think about it, having a major credit card with no annual fee is one of the best “free” services you’ll ever have. You can buy just about anything you want as long as you stay within the card’s credit limit and you don’t even have to pay interest as long as you pay your monthly statement balance by the due date.

However, even if you stay on top of paying off that monthly statement balance most of the time, you can still get slammed with an array of fees adding up to hundreds of dollars annually if you’re not careful.

Below are seven credit card fees that can rack up more credit card debt.

Click here to sign up for our free financial education email course.

1. Late payment fees

The most common fees paid by credit card customers are for late payments, according to research from CreditCards.com, a top resource for the credit card marketplace. When you pay past the due date, your credit card company can charge up to $29 for that first delinquency.

If you pay late again within a six-month period, the card issuer can charge up to $40 for the late fee. Even though paying just a few days or a week late consistently won’t show up on your credit report, you can easily rack up hundreds of dollars annually in late payment fees.

Find out: How to Avoid the Most Common Credit Card Fees

2. Returned payment fees

Sending a check or paying with your debit card online when you’re not 100% certain you have enough to pay the bill may seem like a good way to avoid getting stuck with a late payment fee. But if that payment doesn’t clear your bank, the credit card company may charge a fee anyway, this time for a returned payment.

The average credit card returned payment fee is about $34, according to the 2019 U.S. News Consumer Credit Card Fee Study. To make matters even worse, if the returned payment delays payment further, the credit card issuer could also slap on an additional late payment fee.

Find out: The 7 Hidden Ways Your Credit Card is Costing You Money

3. Cash advance fees

Next time you think about grabbing quick cash with a cash advance at an ATM, consider finding a different way to pay for what you want. You’ll nearly always pay a steep price for the convenience of a cash advance.

Your credit card company may charge up to $20 or more in upfront fees when you take a cash advance, according to major credit bureau Experian. In addition to typically paying a higher interest rate on a cash advance amount – more than 25% with some cards – you can also tack on the transaction fee charged by the bank that operates the ATM.

Find out: 8 Things to Know About Credit Card Cash Advances

4. Annual Fees

Annual fees should be no surprise, since they’re clearly stated in the credit card terms and conditions. If the card has an annual fee, you probably paid it when you signed up for the card and then forgot about it until a year later, when it popped up on your credit card statement.

A small annual fee of $79 isn’t a huge big deal, but the annual fee on some cards can be as much as $450, according to CreditCards.com. To make sure you’re not taken by surprise when your card’s anniversary rolls around, budget ahead for the annual fee so you can pay it off the same month you’re billed.

There are many cards with good rewards programs and benefits that don’t charge an annual fee. If you really hate annual surprises, maybe go with one of those cards instead.

Find out: How Do Credit Cards Work?

5. Balance transfer fees

When you transfer a balance from a high-interest credit card to one that has an introductory 0% APR for a year or longer, you can come out ahead by saving money on interest. However, most credit card companies charge a balance transfer fee ranging from 3% to 5% of the transferred balance.

For example, if you transfer a balance of $5,000 and the transfer fee is 5%, you’ll pay $250 to transfer the $5,000 balance. Even so, paying this fee could still be worth the cost if you would have paid more than $250 in interest on the previous card.

Find out: How to Transfer Credit Card Balances

6. Foreign transaction fees

Nearly half of all credit cards that charge a foreign transaction fee on purchases made in a different country or currency charge 3% or a minimum fee of $5 to $10 on the transaction, according to the U.S. News Consumer Credit Card Fee Study.

This fee isn’t as common as it used to be, however. According to the U.S. News study, nearly 40% of all credit cards and a slightly higher percentage of travel cards waive foreign transaction fees.

Find out: The Best Balance Transfer Credit Cards Left During COVID-19

7. Over-the-limit fees

When your credit card balance exceeds your card’s credit limit, the issuer may charge an over-the-limit fee of around $25 the first time that happens and $35 each time it happens again within a six-month period, according to personal finance site Bankrate.

However, the over-the-limit fee shouldn’t be more than the amount you are over. For example, if you go $20 over your credit limit, that amount is the maximum your credit card issuer can charge.

Did we provide the information you needed? If not let us know and we’ll improve this page.
Let us know if you liked the post. That’s the only way we can improve.
Yes
No

About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC