Common Credit Card Fees to Avoid

There are numerous types of fees attached to credit cards depending on your agreed terms and conditions. You should always read the fine print before accepting a new credit card, and make yourself fully aware of any subtle charges or fees that you may incur. Choosing the right card for your lifestyle is essential, as you may be charged by your borrower for spending too much, or for spending too little. Though financial regulators have stepped in and tried their best to make credit cards fair for consumers, credit providers continually come up with new ways to extract money from their borrowers. Make sure you are aware of what you’re signing up to. Below are some of the most common types of credit card fee.

Application and setup fees

These are sometimes called “processing fees” and are usually a one-time fee given out to those with poor credit. Under the Credit Accountability, Responsibility, and Disclosure Act of 2009, these charges are limited to 25% of your initial credit limit.

Annual Fees

As the name implies, these are fees that are charged yearly. These fees are charged simply for owning and using a credit card. You can ask your credit card provider to waive your annual fee if you are not happy with it, which often does work. Alternatively, some providers and credit cards do not charge annual fees, so it may be best to switch if you are not happy with your annual fee.

Cash Advanced Fees

These usually come in the forms of flat fees or percentages. Cash advanced fees are incurred any time you use your credit card to withdraw physical cash. For this reason, you should try to only withdraw cash using your credit card if it is an emergency and you don’t have any alternative methods available.

‘Over the Limit’ Fees

Legally, you no longer have to enable your credit card to spend beyond its limits. Doing this allows you to spend without worrying about accidentally breaching your limit and incurring an over the limit fee. These fees can be very expensive, though legally they cannot exceed the amount that you are over the limit by.

Late Fees

Late fees occur when you don’t pay your minimum balance on time. Although late fees are capped by regulations, if you’ve already had another late payment in the past 6 months then you’re going to give yourself a bad reputation and credit score going forward. Always try to pay your bills on time.

Balance Transfer Fees

These fees are charged whenever you perform a balance transfer. Balance transfers are seldom free, with many companies charging certain fees or percentages per balance transfer.

Returned Check Fees

You will receive a returned check fee if you attempt to pay a credit card bill using a bank account with insufficient funds (i.e. your check bounces). Bounced payments will incur a returned check fee every time that a check bounces, so don’t attempt repeat payments from a bank account with insufficient funds; you need to find another method of payment before you incur several of these fees in a row.