With prices on the rise, many Americans are looking to cut down on their expenses. One common expense that can often fly under the radar: credit card fees.

When you use a credit card, you’re borrowing money from your credit card issuer to expand your purchasing power, build credit, or both. Just pay your credit card bill every month by the due date, and all is well and good, right?

Well, not really. There’s more to making timely payments every month to avoid a late fee. For example, overspending can result in an over-the-limit fee. Transferring your credit card debt to take advantage of a promotion may come with a balance transfer fee.

According to the Consumer Financial Protection Bureau (CFPB), from 2018 to 2020, Americans paid roughly $120 billion per year in credit card interest and fees. That translates to an average of $1,000 annually for each American household.

Fortunately, many of these credit card fees are avoidable. Some may be negotiable. There are, however, certain fees you can’t get around depending on the type of card you own. Here are the most common credit card fees and how they work.

1. Annual fees

An annual fee is a fee your credit card company may charge you for being a cardholder. Any type of card may carry an annual fee, but they’re most common among those with valuable perks and benefits such as cash back, points, and other rewards. A CFPB report found the average annual fee was $94 in 2020, though there are credit cards with annual fees well into the hundreds of dollars. Typically, the more lucrative your credit card rewards, the higher the annual fee you can expect to pay.

Take the Capital One Venture Rewards Credit Card ($95 annual fee) and the Capital One Venture X Rewards Credit Card ($395 annual fee), for example. These cards have a similar rewards structure, with 2x miles on every purchase. You’ll also earn 5x miles on hotels and rental cars purchased via Capital One Travel with the Venture card, but that’s boosted to 10x miles with the higher-fee Venture X, plus 5x miles on flights purchased through Capital One.

But rewards are just one factor; where you’ll really earn back the value of your boosted annual fee is in added benefits. The $395 Venture X card comes with a $300 annual travel credit for booking through Capital One Travel, an anniversary 10,000-mile bonus, airport lounge access, and more valuable perks you won’t find with the lower-fee card. If you would typically spend on these purchases anyway, the higher fee could be worth the cost.

Chase offers similar rewards cards with varying annual fees. With the Chase Sapphire Preferred® Card, which has a $95 annual fee, cardholders can earn 5x total points on travel purchased through Chase and 2x on other travel purchases. For a higher annual fee of $550, the Chase Sapphire Reserve® credit card offers 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through the Chase Travel℠ portal (after you max out the $300 annual travel credit).

You can avoid these kinds of annual fees and still get a lot of value from your credit card. If you find your spending isn’t high enough, or your use of a card doesn’t produce enough of the rewards it offers to offset the annual fee, choose a card without an annual fee. Most credit card issuers issue cards that carry no annual fee and still offer rewards.

Cash-back credit cards, for example, often have no annual fee. Chase Freedom Unlimited® is one no annual fee card with cash rewards in a number of categories: 5% cash back on Lyft purchases (through March 2025), 6.5% on travel purchased through Chase Travel, 4.5% on dining at restaurants (including takeout and eligible delivery service), 4.5% on drugstore purchases, and 3% on all other purchases (on up to $20,000 spent in the first year). After the first year (or $20,000), you'll earn 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, and unlimited 1.5% cash back on all other purchases.

Wells Fargo Active Cash® Card is another no-annual-fee example that offers simple 2% cash rewards on every dollar you spend — and a $200 cash bonus when you spend at least $500 within the first three months. And, if you prefer travel rewards, the Bank of America® Travel Rewards credit card could be a solid option. It carries no annual fee and earns 1.5x points on every dollar, plus a potential 25,000-point welcome bonus when you spend at least $1,000 within 90 days of account opening.

2. Balance transfer fees

If you’re looking to take advantage of a perk offered by a balance transfer card – an introductory period of low or no interest on a transferred balance – you’ll likely have to pay a fee to make the transfer and use the offer. That fee typically ranges between 3% and 5% of the balance you transfer, and in some cases may go up if you don’t make your transfer within a given period.

Some of the longest introductory 0% APR periods for balance transfers right now last 21 months. The Wells Fargo Reflect® Card offers 0% interest on qualifying balance transfers for 21 months from account opening (18.24%, 24.74% or, 29.99% variable APR thereafter) with a 5% balance transfer fee, with a $5 minimum. Bank Americard® credit card has a 0% intro APR for the first 21 billing cycles for balance transfers made within 60 days of account opening with a 3% balance transfer fee and ongoing 16.24%-26.24% variable APR.

The Citi Simplicity® Card also has a 21-month 0% APR period for balance transfers (if the transfer is completed within 4 months) with an ongoing 19.24%-29.99% variable APR. If you transfer your balance within the first 4 months of account opening, you’ll pay a 3% fee ($5 minimum) but after that the fee increases to 5% ($5 minimum).

Some balance transfer cards also carry longer-term rewards you can benefit from after you pay down your debt. For example, the Citi® Double Cash Card offers 0% APR on balance transfers for 18 months if you make your transfer within the first 4 months. The ongoing variable APR is 19.24%-29.24% and the balance transfer fee is also 3% within the first 4 months, then 5% (both with a $5 minimum). However, this card also offers cash back rewards equal to 2% on every purchase: 1% as you spend and another 1% as you pay down your balance.

3. Late fees

Credit card companies may charge you a late fee for missing a payment or failing to make the minimum payment on your due date. Not all credit cards, such as the Citi Simplicity Card or the Apple card, charge a late fee.

Some credit card issuers may offer grace periods or waive the fee for first-time offenders with a good payment history. Others charge the maximum late fee set by the CFPB. As it stands, credit card issuers can charge a late fee of up to $41 under the agency’s rules.

4. Interest fees

You may notice interest charges on your monthly statement if you fail to pay off your balance in full by your payment due date. Your fee will depend on your credit card’s annual percentage rate and the balance you’re carrying over from month to month. In most cases, credit card interest rates are variable rates that can fluctuate over time.

5. Foreign transaction fees

A foreign transaction fee is a charge for purchases made outside the U.S. or from a foreign merchant. Many companies that issue travel credit cards offer cards that don’t charge foreign transaction fees, including the Citi Premier® and The Platinum Card® from American Express (see rates and fees). Capital One, Chase, and other card issuers also offer cards with no foreign transaction fees. The average foreign transaction fee ranges between 1%–3% per transaction.

6. Cash advance fee

A cash advance is essentially a short-term loan in cash from your credit card, but it’s a costly option that’s best avoided if possible. Taking out a cash advance comes with added fees — including potential ATM fees when you make the transaction and cash advance fees charged by your card issuer.

Cash advance fees often range from 3%-5%, with minimums of up to $10. Consider a cash advance of $500 on a card that charges a 5% fee with a $10 minimum. You would pay a $25 cash advance fee in this case.

Those aren’t the only costs you’ll risk taking on. Cash advances typically carry a higher interest rate than your card’s regular APR. And there’s no grace period for these charges; they begin accruing the day you take out the advance.

7. Returned payment fee

You may be charged a returned payment fee by your card issuer if you make a payment to your credit card account and don’t have sufficient funds in your bank account for the payment to process. These fees can vary depending on your card but may range up to $40 per payment attempt.

You can avoid returned payment fees by ensuring you have enough money in your bank account before paying your monthly bill. Be especially careful if you set up automatic payments with your issuer — which can be useful for paying on time but requires you to pay attention to when money is moving in and out of your account.

Let’s say you set up automatic payments to pay your credit card’s statement balance each month, but you forgot you made a large purchase last month. This month, you don’t have enough money in the bank to cover the full amount due. If your bank declines the payment, it could result in a one-time returned payment fee on your next credit card statement (in addition to a late payment fee if you miss your payment date).

Like late fees, you may be able to negotiate your way out of paying this fee. You can call your credit card issuer to explain the situation, and you may find they’ll offer to waive the fee as a courtesy. The worst thing they can say is no.

8. Credit card processing fees

A processing fee is a small per-transaction fee merchants pay a credit card company to process the transaction. This fee, sometimes referred to as a swipe fee, is typically split between the bank or financial institution that issued your credit card, one of the four major credit card networks (Visa, Mastercard, American Express, or Discover), and the financial services company that processed the transaction.

As a customer, you won’t see these credit card processing fees on your monthly statement. However, these fees may explain why some businesses — like your neighborhood mom-and-pop cafe — don’t accept credit cards.

How to save money on credit card fees

Credit card fees might not break the bank, but over time, these charges can add up and put a dent in your budget. What’s more, if these fees become unmanageable and you can’t keep up with the payments, your credit score could take a hit when those missed payments appear on your credit report.

While not all fees can be avoided, there are ways to prevent paying additional — and preventable — credit card fees.

Pay your balance in full each month

The easiest way to avoid extra fees is to only spend what you can comfortably afford to pay off each month. Carrying a balance over from month to month will result in interest charges and late fees if you fail to make your minimum payment on time.

Make it a point to check your balance periodically to see how much you’ve spent. That way, when your payment due date rolls around, there are no surprises, and you can pay the balance in full.

Review your credit card terms and conditions

It’s never a bad idea to carefully review your credit card agreement and pricing structure. Again, there are likely to be fees you can’t avoid, but a careful reading of the agreement will give you essential information about what kinds of fees you can expect and how much you’ll be charged. Then, you can tailor your spending habits to avoid racking up any extra costs.

Consider a card with no foreign transaction fees

Do you have a travel bucket list? Or do you love to shop from merchants abroad? Foreign transaction fees can add up, but they don’t have to.

The four major credit card networks have global reach and their cards are often accepted when traveling or shopping abroad. Many credit cards offered by these networks don’t charge a foreign transaction fee.

Popular card options you might consider include the Capital One SavorOne Cash Rewards Credit Card, the Chase Sapphire Preferred® Card, or the Bank of America® Travel Rewards credit card.

Determine whether an annual fee is worth the cost

An annual fee, while technically an added expense, can also be a money saver depending on your spending habits. However, if you’re not using the card much, the costs may overshadow any benefit.

Take some time to review your credit card rewards program. Ask yourself how you plan to use the card — and be honest. Will you earn enough in rewards, points, or cash back to offset the annual fee? Will your credit card payments pay off your balance in full every month? Or will you carry a balance? If so, does the card have a high interest rate?

If you decide it’s not worth the cost, consider downgrading to a card without a fee. But if, for instance, you’re a frequent traveler and your credit card offers free checked baggage, you might save more money over time, even after paying that annual fee.

For example, the AAdvantage® Aviator® Red World Elite Mastercard® charges an annual fee of $99. However, cardholders get their first checked bag free, plus those of up to four traveling companions on the same domestic American Airlines reservation.

Currently, American Airlines charges $30 for each traveler’s first checked bag. If you’re traveling solo, your annual fee will pay for itself after just four flights — even sooner if you’re traveling with friends or family on the same reservation.

Set up automatic payments and spending alerts

An easy way to keep track of payment amounts and due dates is to set up spending alerts and automatic payments to avoid late payment fees and steep interest charges. Monitoring your monthly credit card activity will not only help you catch unauthorized purchases but also will keep you up to date on your balance so that you can easily avoid spending more than your credit limit and catch any fees you may be unknowingly charged. This will help keep your monthly budget in check and protect your credit score long-term.

Try not to lose your credit card

While rare, there may be instances where you’re charged a fee to receive a replacement card. In most cases, your credit card issuer will send you a new card free of charge. However, avoid paying any unexpected replacement fees by keeping your card in a safe place.

Ask your card issuer for help

Finally, don’t be afraid to reach out to your credit card issuer if you make an honest mistake (like miss a payment). Some fees can be negotiated, but you’ll never know unless you ask.

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