9+ Often-Overlooked Types of Credit Card Fee That You Need to Be Aware Of

Credit cards are powerful tools that can help you achieve your financial goals. However, if you are using your credit card as your preferred payment method, the chances are that, sooner or later, you’ll run into unexpected fees.

The good news is that, with the right tips and knowledge, you can avoid these fees and make the most of your credit card features and reward programs. Get to grips with some of the most commonly overlooked credit card fees with the guide below. 

Annual Fee

Many credit card issuers charge clients between $49 and $550 a year just for having the card. This is more common for cards that offer significant rewards programs and premium perks and, in this case, the annual fee is just a small price to pay to unlock advantageous rates, discounts, free goods, and cashback benefits. 

However, you can avoid this fee by choosing a credit card with fewer perks or that waives the fee for the first year of membership. 

Cash Advance Fees

Cash advances are a convenient and efficient way to get out of an uncomfortable situation or afford an urgent purchase. However, withdrawing cash from your credit card is a service that comes at a cost (usually 3-5% of the cash advance amount). 

But, not all credit card fees are created equal and, while some are necessary, others you can avoid – including cash advance fees! To do so, consider paying for expenses through a POS or online. This might increase your credit card balance, but it gives you access to lower interest rates and even interest-free grace periods. 

Foreign or International Transaction Charges

Whether you are buying international goods or you are paying with your credit card abroad, you’ll need to be aware of the foreign transaction charges your credit card issuer might apply. Depending on your provider, this fee could range between 1% and 5% of the purchase amount. 

Inactive Account Fees

It isn’t unlikely to apply for a new credit card at a convenient moment, such as when you are dealing with an unexpected expense or when a credit card issuer is running a promotion. 

But after you have obtained your credit card, it is important to use it regularly to avoid inactive account fees, which occur when a card hasn’t been used for a predetermined period of time (generally 12 months). 

Interest Charges

Interest charges are one of the main costs associated with credit card usage. And yet, the impact that interest rates can have on credit card balances is often overlooked! 

Today, average interest rates stand at 18%, which marks a 25-year high. In turn, if you have unpaid credit card balances, you should make sure that you are still operating within your interest-free grace period to avoid seeing your debt swell overnight!

Late Payment Fee

Using your credit card as your preferred payment method for everyday purchases can be an excellent way to accumulate valuable perks, and can even help your household save money in the long term. 

But when using this payment method, it is paramount to keep on top of repayments! Being late on your payments can lead to fees ranging between $29 to $40, and your credit card issuer might even withdraw rewards or promotions.

In the case of consistently late payments, or payments that are late by 30 days or more, your credit card issuer might cancel your card and your credit score might be scarred for up to seven years.

Dishonored or Returned Payment Fee

If a payment bounces because you don’t have enough money on your card, you might be charged a $40 returned payment fee. This could also happen if you have scheduled a payment towards your credit card bill but you don’t have enough funds in your card to cover the full amount of the payment. 

Balance Transfer Fee

With Americans having an average of 4 credit cards per person, transferring a balance between cards isn’t uncommon, especially for those clients who can take advantage of a low-interest rate card or promotions. 

However, when transferring a balance, keep in mind that the transaction can lead to fixed fees ($5-$10) as well as charges as high as 3-5% of the amount transferred. 

Over-the-Limit Fee

As the name suggests, the over-the-limit fee is an additional charge of $25-$50 that is applied when you spend an amount greater than your credit card limit. 

For this fee to occur, you’ll have to opt-in and give your permission to the merchant to approve a payment greater than your spending limit. Without doing so, transactions that are too large will be automatically declined. 

Other Fees To Watch Out For When Using Your Credit Card

Although new fintech technologies allow users to view, download and save their statements at the touch of a finger, some credit card issuers might apply an additional charge for clients who request to get their statements reprinted. 

Another charge you should be aware of is the replacement fee. This charge occurs if you lose or damage your credit card and you request a new one. Even in this case, today’s credit card issuer will provide clients with a replacement card at no extra cost. 

Although the ones above are some of the common fees you should watch out for, no two credit card contracts are exactly the same. So, the best way to avoid unnecessary charges is to get to know your credit card agreement in depth – and use your credit card responsibly!