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The Most Common Credit Card Fees and How to Avoid Them

Sep 11, 2019 | 4 minute read

Credit Card Fees

Credit cards can be a useful way to help manage your money, if they are used the right way. Many also offer points, cash back, or other reward opportunities for making purchases. Plus, they can help you establish a strong credit history and credit score.

When they aren’t used as intended, there could be some consequences, such as credit card fees. By paying close attention when choosing a card, especially when reading the fine print, you’ll better understand all the details about the card and how to handle it. In order to use a credit card properly, it’s also good to know how not to use a credit card. With this list of possible fees, heighten your awareness of them to avoid and minimize credit card fees should you encounter them.

  1. Annual Fee. An annual fee is a fee paid every year to have a credit card. This fee is usually applicable to exclusive, premium, or travel credit cards due to higher signup bonuses and attractive rewards programs.
  2. Late Payment Fee. A late payment fee is an added charge when the minimum payment due isn’t paid on the due date. This fee can vary based on the card and is easily avoidable by setting up automatic payments or enrolling in a bill pay service. You can also set up alerts and get reminded when your payment is due. Paying a credit card bill late is a bad habit to fall into; pay your bills on time to avoid negatively impacting your credit score.
  3. Balance Transfer Fee and Rate. A balance transfer fee is charged when a balance is moved from one credit card to another. This fee varies by card issuer and is usually a percentage of the total amount transferred or a minimum fee of a few dollars. Before you choose a new card, look for one with no-to-low balance transfer fee. Additionally, some card issuers charge a balance transfer APR (annual percentage rate) that is different from the standard purchase APR; be aware of what this rate is because it tends to be higher than the standard purchase rate on any transferred balances, in addition to the fee.

Related post: What is a Balance Transfer?

  1. Cash Advance Fee and Rate. When you use your credit card to get cash instead of making a purchase, this is called a cash advance. A cash advance fee is what card issuers charge for a cash advance; most charge a flat fee or a percentage of the transaction, whichever is greater. Similarly to a balance transfer APR, a cash advance APR will be applied to the money received and many card issuers tend to charge a higher rate.
  2. Foreign Transaction Fee. A foreign transaction fee is most commonly applied to purchases made abroad or when shopping online with merchants who are headquartered abroad. This fee varies by card issuer.
  3. Interest Charges. Although interest technically isn’t a fee associated with credit cards, it is how much it will cost you when you use the credit line to make purchases, balance transfers, and cash advances. Your interest rate and how long it takes you to pay off your balance will determine how much you’ll pay. The best thing to do, if possible, is to pay your credit card off in full each month or pay more than the minimum payment.
  4. Over-the-Limit Fee. This fee is charged if your card balance exceeds your credit limit. In most cases, if you attempt to make a purchase over the limit, your card will likely be declined. This fee is less common since the Credit Card Act of 2009, but it’s still one you may want to look out for.1
  5. Returned Payment Fee. If a payment bounces or is returned due to insufficient funds, you’ll likely incur a returned payment fee. Before you make or schedule a payment, make sure you have enough funds in your account.
  6. Expedited Payment Fee. If you need to make a last-minute credit card payment by phone or a bill pay service to avoid a late payment, you may be charged an expedited payment fee. You should compare the cost of a late payment to an expedited payment; this option still may be a better choice to avoid the late payment charge and negative impact to your credit report.

When you apply for a credit card, it’s important to read through all the details and terms and conditions so you fully understand what to expect with the credit card you choose. Credit cards are a great financial tool to utilize, but they should be used responsibly.

Whether you’re looking to earn rewards or just want a lower than industry average rate, GECU offers a wide variety to credit card options to suite every lifestyle.2 Additionally, there is no annual fee3, convenient access through Online Banking and mobile app, and a special 0% introductory offer4 helping you save money and time. Compare our credit card options to find the right one for you.

 

 

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1 Credit.com How the Credit CARD Act of 2009 Affects You

2 Bankrate.com The Best Credit Cards of 2019

3 Fees: Regular purchase APR applies.

4 Purchases and balance transfers made in the first 60 days will have 0% introductory APR for 12 months. After the introductory period, the APR will be 9.49% - 18.00% depending on the card you choose and your creditworthiness. The APR may vary (increase or decrease) on a quarterly basis and is determined by adding our margin to the Prime Rate as published in the Wall Street Journal effective for the first day of January, April, July, and October of every year.