Hidden Fees and Cards: What You Need to Know

Watch out for these common credit card fees!

Let’s take a closer look at how credit card companies can chip away at your money, so you can take charge of your finances and keep more of your hard-earned cash.

Typical Hidden Fees of Credit Cards

Annual Fee

An annual fee is charged simply for the benefit of having the card. These fees can vary significantly, ranging from $20 to several hundred dollars.

Cards that offer appealing rewards or cashback typically come with a higher annual fee.

In other words, the more perks a card offers, the more you can expect to pay for the privilege of using it.

Penalty Interest Charges

Carrying a balance from month to month means you’ll incur interest charges.

However, if you regularly miss payments, you may end up facing a higher interest rate than initially advertised.

This penalty interest rate, known as the penalty APR (annual percentage rate), can soar to 30% or even more if you have several late payments in a short span.

To keep this financial burden at bay, make it a point to pay your balance on time.

International Transaction Charge

Are you a frequent traveler or someone who loves shopping on international sites?

If so, be on the lookout for foreign transaction fees that might show up on your credit card statements. Many cards charge around 2.5% for purchases made in different currencies.

To avoid these extra costs, think about choosing a credit card that doesn’t charge foreign transaction fees when you travel or shop from abroad.

Missed Payment Charge

Missing a payment doesn’t just impact your credit score; it can also hurt your finances.

Late payments usually incur additional fees that can accumulate quickly.

To prevent these annoying charges, make it a priority to pay your credit card bill on time each month, even if you can only afford the minimum.

Setting reminders on your phone or enrolling in automatic payments through your online banking can help you stay on top of it.

Replacement Card Fee

If your credit card goes missing or gets stolen, you’ll need to order a replacement. Some credit card companies might charge you a fee for this, but many will send you a new card for free at least once.

If there is a fee, it typically falls somewhere between $5 and $15.

Surplus Usage Fee

Every credit card comes with a credit limit, which is the maximum amount you’re allowed to spend.

If you go over that limit, your card issuer might approve the transaction but hit you with an overlimit fee, usually ranging from $25 to $30.

To avoid these fees, closely monitor your spending. Adhering to a budget and checking your credit card balance regularly can help keep you on track.

Cash Advance Charges

We’ve all been there—needing cash in a pinch. While cash advances can seem like a quick fix, they often come with some hefty fees.

Most credit card companies will charge you around 3% to 5% for each cash advance.

So, if you’re taking out a few hundred bucks, those fees can really add up fast!

Returned Payment Charges

It’s a bit of a nightmare when you set up a payment for your credit card but find out there aren’t enough funds in your account.

This can lead to your payment being returned, and guess what? Your card issuer might hit you with a returned payment fee, usually up to $40.

Just imagine—if you plan to pay off a $900 bill but only have $700 in your account, you could end up with a $40 charge on your next bill. Ouch!

Balance Transfer Costs

Thinking about transferring your balance to another credit card to snag a lower interest rate or to consolidate your debt?

Just keep in mind that there are usually costs involved. Most balance transfer fees range from 3% to 5% of the amount you’re shifting.

And a little heads up—some cards might bump up those fees if you don’t make the transfer within a certain timeframe after opening your account.

Like this content? We invite you to continue reading our next article and figure out some strategies to pay off your debt faster.

Written by

Everaldo Santiago