Making Sense of Credit Card Fees

Summary: In addition to the APR (annual percentage rate) and the finance charges, most credit cards have a number of 'fees' associated with their use. Some fees are unavoidable with a particular card (like an annual fee or a program participation fee), while others are triggered by certain circumstances. The most common fees are listed below.

In addition to the APR (annual percentage rate) and the finance charges, most credit cards have a number of 'fees' associated with their use. Some fees are unavoidable with a particular card (like an annual fee or a program participation fee), while others are triggered by certain circumstances. The most common fees are listed below. To get a better idea of what your credit card may cost to use over the course of a year, check your card's terms and conditions and your user agreement to see which fees may apply to you.

Annual fee: An annual fee is charged for the privilege of having the card, whether you ever use it or not. Many credit cards offer no annual fee and a low interest rate to their best customers, or to those with excellent credit. If you're trying to recover from a bout with bad credit, your only choice may be a card with a relatively high annual fee. In that case, look for one with the lowest APR you can get, and be careful to avoid triggering other fees. Cash advance fee: When you use your credit card to get a cash advance, there is often a cash advance fee. It may be a flat fee per cash advance (say $5, no matter how much cash you borrow), or a percentage of the amount advanced - 5%. This fee is in addition to interest that you will pay on the amount. Balance-transfer fee Usually, when you transfer the balance of one card to another, the credit card company will charge you a balance transfer fee. Like the cash advance fee, it may be a flat rate, or a percentage of the amount of the transfer. Late-payment fee If your payment is not received and posted by your credit card company after the due date, you will be charged a late payment fee. The late payment fee will be added to your credit card balance. In many cases, if you are late with a payment more than once, or a certain number of times within a specified period, your interest rate will also rise in addition to the late payment fee. Over-the-credit-limit fee: If you go over your credit limit on your credit card, you will often be charged a flat fee in penalty. Credit-limit-increase fee: You usually must pay a credit limit increase fee if you request that your credit limit be raised. Set-up fee: When you open a new credit card account, the credit card company may charge a one-time setup fee which may be anything from $19 to $149. Return-item fee: This is essentially a bounced check fee. If you make a payment on your account by check, and the check is returned by your bank for non-sufficient funds, the credit card company may charge you a returned-check fee. Other fees: Depending on the credit card company, and the card offered, you may be liable for other fees, including fees for making payments by phone, for checking your account online, for establishing an online bill paying service or for providing other customer service. Be sure to read your credit card's terms and conditions to see what charges and fees you're liable for paying.