Are there lots of fees with credit cards? When you’re applying for a credit card, you’ll have plenty of questions about the process and agreements involved with credit cards. At the top of the list will likely be questions about whether there are fees with credit cards.
As it turns out, there are fees associated with credit cards. This article will cover the different types of credit card fees so you know exactly how to handle them if they show.
Annual Fees with Credit Cards
One of the most common types of fees associated with credit cards is the annual fee. The statistics of this type of fee are as follows:
- Activation Condition- Annual fees are recurring yearly fees. They occur simply because you own the card and paying the fee allows you to keep using it. Only specific types of credit cards have annual fees, such as travel cards or ones with special benefits.
- Cost of the Fees- Annual fees vary wildly depending on the specific card in question, but the ones with better rewards attached to them usually have higher fees.
- Additional Notes-These fees are simultaneously the easiest and hardest to avoid, depending on your situation. You must decide if the rewards are worth paying the annual fee. If you don’t want to deal with annual fees, all you need to do is not sign up for a card that has them.
Interested in getting a credit card for yourself, with or without rewards? Then go ahead and contact Max Cash® to find out what kinds of cards we can offer you.
Balance Transfer Fees
Balance transfer fees are less common than the annual fee but can come as a result of very helpful service. The breakdown of these kinds of fees is as follows:
- Activation Condition- Balance transfer fees occur when you perform a balance transfer onto your credit card. A balance transfer occurs when you move the balance of a pre-existing debt over to your credit card.
- Cost of the Fees- Balance transfer fees usually end up costing you anywhere from 3% to 5% of the amount you’re transferring.
- Additional Notes- Balance transfers are a great way to finish up some pesky loans and potentially save money in the process, as they come with a 0% interest rate for the first few months. Just make sure you’re saving money overall, and that the fees aren’t more than you’d be paying on the debt to begin with.
Cash Advance Fees with Credit Cards
If you end up incurring cash advance fees, chances are you’re going to end up regretting it. The process that causes these fees to come into play is one that generally should be avoided. Here is the breakdown of these types of fees:
- Activation Condition- Cash advance fees occur when you use your credit card as though it were a debit card, using it to withdraw funds from an ATM. This action is known as a cash advance.
- Cost of the Fees- Cash advance fees generally cost anywhere from 2% to 5% of the amount withdrawn. However, the other costs are much higher. The interest rates that immediately apply to your card upon activation are sky-high, and compound quickly.
- Additional Notes- Since this is a generally disapproved usage of a credit card, the drawbacks are dire. Generally, avoiding the usage of the cash advance function of your card is advised, save for emergencies. Even then, it is often better to have an emergency savings fund instead.
Finance Charges and Purchase Fees
The next type of fee goes by two different names based on who you talk to. Some refer to them as finance charges, while others call them purchase fees. Regardless of the name, both refer to the same type of cost, and have the following stats:
- Activation Conditions-Purchase fees occur whenever you carry a partial, semi-paid balance on your card from one month to the next. This is different from not paying the fee at all, which is another type of fee we’ll cover later.
- Cost of the Fees- Purchase fees will vary based on the type of card. The better the rewards, the larger the purchase fees.
- Additional Notes- So long as you pay your balance in full monthly, you’ll never pay a cent in purchase fees.
Foreign Transaction Fees
It’s rather easy to guess what causes this fee. Let’s cover exactly what goes into foreign transaction fees:
- Activation Conditions-Foreign transaction fees occur when you use your card on purchases outside of the country where the card is registered.
- Cost of the Fees-The cost associated with a foreign transaction fee is rather small, only being a 1% to 3% additional cost. With enough frequent purchases though, they can stack up rather quickly.
- Additional Notes- Not every credit card features foreign transaction fees. Notably, travel cards avoid this issue altogether.
Late Payment Fees with Credit Cards
Yep, these fees are exactly what they sound like. These fees are the worst version of purchase fees.
- Activation Conditions-Late payment fees occur when you end up being late on a payment altogether, not even partially paying the cost of the fee.
- Cost of the Fees-Late payment fees, much like purchase fees, vary based on the type of card, as well as the offense count. Late payment fees are always notably higher than purchase fees.
- Additional Notes-Late fees can be avoided easily by keeping track of your due dates and making at least the minimum payment by then. If you still haven’t paid off the cost and fees the month after the original offense, your credit score will be drastically harmed.
Over-Limit Fees
Unlike other types of fees, over-limit fees are ones that you have to sign up to be charged. This makes them rather unique amongst other types of fees, and you’ll soon see why that’s the case.
- Activation Condition- After opting in and agreeing to them, over-limit fees will occur once you make a charge to your card that causes you to exceed your credit limit.
- Cost of the Fees-These fees are also rather unique in that they have a set dollar amount where other fees usually do not. On the first offense, the cost is an additional $25. On further offenses, $35 is charged.
- Additional Notes-In order to be able to go over the limit on their credit card, a user would need to agree to these kinds of fees. They prevent the card from being denied at registers at the cost of incurring these fees.
Returned Payment Fees
Unlike other types of fees, these do not occur as a result of you using your credit card in some way. These fees occur as a result of trying to pay your credit card instead.
- Activation Condition-Returned payment fees occur when you attempt to pay off your credit card debt, and your transaction is unsuccessful due to an insufficient balance in your bank account.
- Cost of the Fees – Depending on the card, this cost can vary. Generally, your cost will end up being somewhere in the $30 to $40 range.
- Additional Notes-It’s always a good idea to make sure you have enough money in your account before paying any bills. This pre-check can save you the hassle of paying returned payment fees.
As you can see, there’s a large variety of different types of credit card fees. And every type of fee comes with its own set of conditions, as well as different costs and other factors. So long as you can keep track of everything, you should become a credit card fee expert in no time! Want to know more about the potential use of credit cards? Check out the Max Cash section on credit cards for more information.
