Credit Card Fees You Don’t Know About


credit card advice

Alexandra Leslie
By: Alexandra Leslie
Posted: February 10, 2016
Our personal finance experts dish out the most trusted credit card advice on the web, including juicy tips, tricks and secrets from inside the credit card industry.

Credit cards might often come with cash back, free flights, purchase protection and other benefits, but these perks do not always come for free.

All credit cards have some type of fees, and they can vary greatly from card to card. Not all fees will affect you — it all depends on how you use your card.

Before you apply for a new credit card, always read the full terms and conditions so you know what you are getting into. Read on to learn about the credit card fees you don’t know about.

1. Foreign Transaction Fees

Credit cards are accepted around the world, with Visa and MasterCard being the most globally accepted. But just because merchants from across the world will take your card for payment, it does not mean it is free for you to do so.

Many credit cards charge a foreign transaction fee, often between three to five percent, on all purchases made out of the country. This may not sound like much when it comes to small meals or museum admission, but it adds up if you put hotel rooms, train tickets and other large purchases on your card.

Using a credit card while traveling is safer than a debit card because you are better protected if it is lost or stolen, but you may take a hit with a foreign transaction fee depending on which card is in your wallet.

How to Avoid Them:

The only way to avoid this fee when traveling out of the country is to use a card that does not have this fee.

All Capital One cards fit the bill, and more issuers are now releasing cards without this fee. If you have an international trip coming up and all your cards have this fee, consider applying for a card that does not have one.

It can be your designated travel card. In the course of a long international trip, your savings will add up.

2. Over-Limit Fees

Did you max out your credit card? In other words, did you go over your predetermined credit limit?

You may think if you never spend over the set amount, you’re OK but that’s not always the case. If you stay very close to your credit limit and don’t properly account for upcoming interest, your next interest charge can be enough to set you over the limit.

“Expect to pay a fee

for your mistakes.”

In addition to a fee for spending over your limit, some creditors may freeze your account until you can pay off a certain amount.

How to Avoid Them:

Always stay well under your credit limit, ideally using less than 30 percent of your total available credit to keep your credit score in check.

3. Balance Transfer Fees

Many credit card issuers offer great deals on balance transfers, often with a 0% introductory APR for a year or longer. This transaction is a huge benefit for those carrying high-interest credit card debts. Moving it to a low-interest or no-interest credit card will help you save on interest in the long run.

What is not disclosed upfront? Expect to pay a fee — often three percent of the transferred balance.

How to Avoid Them:

There generally isn’t a way to avoid a balance transfer fee. However, this is a one-time fee only. Do the math to make sure transferring the balance is still your most affordable option.