Common credit card fees and how to avoid them

Written by
Brooklyn Lowery
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You’ve likely heard the horror stories related to credit card debt. They go something like this: “I applied for a card when I was in college and, before I knew it, I was staring up a $30,000 mountain of debt with no idea of how to climb it.”

That story, and others similar to it, point out the most obvious charge associated with credit cards: interest charges. Interest is the credit card “fee” most likely to set you back a sizeable sum, but it’s also a charge that’s easily avoidable all together. Simply pay your card off on time and in full every billing cycle to avoid interest charges.

So if you aren’t paying interest charges, you’re in the clear right? No fees to ever worry about with your credit card? Well, no, there are numerous other “hidden” fees that could come your way with a credit card. In some cases, these are unavoidable but perhaps worth it for one reason or another. In other cases, these fees can also be avoided if you know to do it.

What are credit card fees?

In a nutshell, credit card fees are one means by which banks make money from credit cards (merchant processing fees are another money-making means). These fees, outlined in a credit card’s “Terms and Conditions” are the money you pay for using a particular card.

Credit card fees are best divided into the following categories: standard usage fees, special feature fees and punitive fees.

Standard usage fees include such things as an annual fee, interest charges and card replacement fees. Special feature fees include additional services such as cash advance fees, foreign transaction fees and expedited payment fees. Punitive fees are those designed to “punish” you and include late payment fees, returned payment fees and over-the-limit fees.

None of these fees are truly hidden as they’re all openly discussed in your credit card agreement, but they are easy to overlook, so here are some of the most common credit card fees out there as well as tips for how to avoid them (or offset them if they are unavoidable).

Common credit card fees and their ranges

Typical min.

Typical max.

Annual Fee


No max

Interest Charges

0% during special offer periods

No max

Foreign Transaction Fees



Balance Transfer Fees

3% or $5

5% or $10

Cash Advance Fees

3% or $10

5% or $10

Late Payment Fees



Over-the-limit Fees


Limited to amount you went over your limit

Returned Payment Fees



Expedited Payment Fees



Card Replacement Fees



What is a credit card annual fee?

A credit card annual fee is the price you pay for the privilege of carrying a particular credit card. Think of annual fees as membership fees, of sorts, that aren’t related to how often you use the card. Like a gym membership, you can pay for it and never use the gym or you can pay the fee and put the gym to regular use; the same is true with credit card annual fees.

What credit cards charge annual fees? A wide range of cards charge annual fees. Cards for people with low credit scores or limited credit history and rewards credit cards often charge them.

Fee range: Annual fees vary widely. For instance, the CardNamediscontinued, a card geared toward people with CreditScoreNeeded credit, charges AnnualFees. The CardNamediscontinued, a premium rewards card, charges AnnualFees.

How to avoid an annual fee: Generally speaking, you can’t avoid the annual fee. Some cards waive it for the first year of card membership, but it will kick in after that. You could cancel the card after that first year, but it will ultimately damage your credit to regularly sign up for credit cards only to cancel them after a year (find out more about why that affects your credit score). Lastly, you can request a fee waiver. If you’ve been a regular and responsible user throughout the past year, you may receive some kind of retention offer or waiver. If you do have to pay the fee, make sure you can offset it so the card offers greater value than the cost you pay to carry it.

How to offset an annual fee: If you’re carrying the card in an effort to improve your credit, you may have to grit your teeth and pay the fee until you can qualify for a better card. On the other hand, for rewards cards with annual fees, ensure your rewards fully offset that fee and more. No one wants to just break even on a rewards card annual fee.

What are interest charges?

Interest charges are the fee a bank charges you on your credit card balance if you carry it beyond your billing cycle due date. Unless you pay off your balance, on time and in full, every cycle, you will be charged interest for the time there is a balance in your account.

Interest charges are determined by your card’s interest rate or APR, which can be found in your membership agreement and in the “Terms and Conditions.”

It’s important to know that interest charges are calculated and added to your account daily. They are calculated by dividing your card’s interest rate by 365 and then multiplying that total by your balance on a particular day. For example, let’s say you have a $3,000 balance, with an interest rate of 17.50%. You divide .175 by 365 and you get .000479. You then multiply .000479 x 3000 and you get 1.44. So, for today, you are charged $1.44 in interest, which is added to your balance.. Tomorrow (assuming you make no payments or purchases), interest will be calculated based on a new balance of $3,001.44.

What credit cards charge interest charges? Every credit card charges interest. Some might offer an introductory rate of 0% interest for a certain period of time, but that is only temporary and will eventually be replaced by the card’s standard interest rate. You might be thinking you have seen cards that don’t charge interest at all. These are not “credit cards,” these are “charge cards” and you are expected to pay your balance in full every month or face financial penalties.

Fee range: Interest rates vary widely from card to card. Moreover, a card will charge different customers different interest rates based on the customer’s “credit worthiness.” That is to say, based on their credit score and credit report. And interest rates change often in response to how the Federal Reserve adjusts the fed rate, which affects the Prime Rate, on which nearly all U.S.-issued credit cards base their APRs.

Generally speaking, rewards credit cards charge higher interest rates than non-rewards cards. Additionally, there are some cards out there that boast “low interest” rates, but that is relative, of course, depending on your credit worthiness and the other perks of the card.

How to avoid interest charges: The only way to avoid paying interest charges is to pay your balance, in full and on time, each month. If you do carry a balance, pay more than the minimum balance due each month, so that you can pay down your balance more quickly and limit your interest charges.

What is a foreign transaction fee?

A foreign transaction fee is a charge, usually a percentage of the purchase price, the bank assesses when you use your credit card to make a purchase in a foreign currency. It’s often associated with traveling abroad, but it can also come into play if you shop online with merchants that bill in a foreign currency. 

What credit cards charge foreign transaction fees? There’s really no consistent way to know whether a card will charge a foreign transaction fee, so it’s important to check your rates and fees document to be sure. Generally, travel rewards credit cards DON’T charge the fee, but that’s not a guarantee so always check.

Fee range: Foreign transaction fees generally range from about 2.7%-3%. It may not seem like much, but if you spend $5,000 on your vacation abroad and put all of it in on your credit card that charges a 3% foreign transaction fee, you’re looking at $150 in fees.

How to avoid foreign transaction fees: The best way to avoid foreign transaction fees is to use a credit card that doesn’t charge one. There are numerous excellent no-foreign-transaction-fee credit cards out there no matter your credit history or your rewards goals. In fact, a few issuers, including Discover and Capital One, boast that none of their cards charge these fees.

What is a balance transfer fee?

A balance transfer fee is what you pay, usually 3%-5% of the transfer amount, when you transfer a balance from one credit card to a different card, usually to secure a lower interest rate. It’s easy to overlook this fee when you’re shopping for an intro 0% APR balance transfer card and are focused on the zero interest period you’ll use to pay off your debt, but it could be significant, so don’t ignore it.

What credit cards charge balance transfer fees? Virtually every card that allows balance transfers also charges balance transfer fees. There are a few exceptions, including the CardNamediscontinued, but they’re rare and most likely among cards issued by smaller banks and credit unions.

Fee range: Balance transfers fees typically range from 3%-5% of the transfer amount with a $5 or $10 minimum. So, for example, if you’re making a $5,000 transfer to a card with a 3% balance transfer fee, you’ll pay a $150 fee.

How to avoid balance transfer fees: You likely can’t avoid the fee if you’re transferring to a card that charges one. You could shop for the diamond-in-the-rough card that doesn’t charge one or, if you haven’t made your purchase yet, you could look for a credit card with an intro 0% APR on purchases and avoid needing a balance transfer all together.

How to offset the balance transfer fee: Compare the balance transfer fee to the amount of interest you expect to pay on your current card debt. It probably won’t be difficult to offset the fee given how quickly interest compounds. Play around with the CardRatings balance transfer calculator to see if the balance transfer fee is worth it.

What is a cash advance fee?

A cash advance fee is the fee a bank charges you for withdrawing cash against your credit card limit from an ATM or through a bank teller (or sometimes through a convenience check). The transaction, a cash advance, functions the same as withdrawing money using a debit card, but with additional fees involved. 

What credit cards charge cash advance fees? Again, nearly every credit card, with very few exceptions, charges cash advance fees. The Navy Federal card mentioned above that doesn’t charge balance transfer fees also doesn’t charge cash advance fees in some cases (specifically, on advances conducted at a Navy Federal branch or ATM), but that’s the exception rather than the rule. That said, Discover cardholders can receive cash back at the point-of-sale with dozens of retailers. It works similarly to using a debit card and requesting cash back from the cashier. There are, of course, terms and conditions, but it’s a fee-free option.

Fee range: Cash advance fees usually range from 3%-5% of the amount of each transaction with a $5-$10 minimum. Sometimes the fee differs depending on how you complete the transaction, whether via ATM or bank teller, directly with the card-issuing bank or through another bank, etc.

How to avoid cash advance fees: This is another completely avoidable fee. Avoid cash advance fees by not using your credit card to withdraw cash and instead keep a debit card on hand for those instances when you may need to make a cash withdraw. In addition to fees, cash advances generally begin accruing interest immediately rather than after a grace period as is typical for purchases. Bottom line: A quick ATM withdrawal could turn into an expensive decision.

What is a late payment fee?

A late payment fee is a punitive fee banks assess when you fail to make your minimum payment by the statement due date. 

What credit cards charge late payment fees? Most credit cards charge late payment fees. A few, particularly credit cards for students, will waive the fee for the first late payment, but you shouldn’t count on that. Besides being bad for your wallet, missing payments will eventually impact your credit score.

Fee range: The late payment fee is often dependent on the size of your balance and typically ranges from about $15-$40. 

How to avoid late payment fees: You can certainly avoid these fees. Just make your minimum payment by the statement due date and you’re off the hook for a late payment fee. As an added bonus, paying your bills on time reflects positively on your credit report and factors into improving your score. Take proactive steps to pay on time by setting up automatic payments of at least the minimum amount.

What is an over-the-limit fee?

An over-the-limit fee is assessed when you spend beyond your set credit limit.

What credit cards charge over-the-limit fees? While virtually all credit card companies have the capability to charge over-the-limit fees, they hardly ever do. In fact, over-the-limit fees are largely a thing of the past thanks to the Credit Card Act of 2009, which changed the rules around these fees dramatically.

Companies can no longer charge whatever they want as an over-the-limit fee. Instead, they are limited to the amount you went over your limit. Furthermore, companies must give cardholders the chance to “opt-in” for the ability to even go over their limit and therefore, potentially be liable for an over-the-limit fee. If you don’t opt-in, your credit limit remains fixed, you cannot exceed it and you can’t get hit with an over-the-limit fee. If you attempt to charge over your limit, your card will simply be declined.

It’s worth noting that if you repeatedly push the credit limit on your card to the maximum, banks have other measures they can take, such as reducing your limit, raising your minimum payment, demanding earlier payment or even cancelling your card.

Fee range: As stated above, card companies can only charge you a fee equal to the amount you’ve gone over your limit.

How to avoid over-the-limit fees: Avoiding this fee is quite easy – simply don’t opt-in to the ability to exceed your credit limit. You have nothing to gain – and potentially a fee to pay – if you do.

If additional expenditures are absolutely needed, you could ask your credit card company to increase your credit limit, either temporarily or permanently. Remember to keep your credit card charges within your budget; otherwise, you set yourself up to face interest charges.

What is a returned payment fee?

The “returned payment fee” is charged when such a payment does not go through or is rejected by your bank for insufficient funds or other reasons. In the old days, this was referred to as a “returned check fee” as checks were the preferred method for paying credit card bills. However, these days most people pay online, either using a one-time payment method or by setting up an automatic monthly payment.

What credit cards charge returned payment fees? As far as we know, this is a fee charged by every credit card company and would fall under the category of “punitive fees.” The threat of this fee is intended to make sure your payments go through cleanly.

Fee range: Generally, card companies will charge $25-$40 for a returned payment. You can find how much your card company charges on the “Terms and Conditions” page for your card.

How to avoid returned payment fees: The easiest way to avoid this fee is to make sure you have enough money in your account to cover your payment. Also, when given the chance to choose your own monthly payment date, choose a week during the month when you are not already paying multiple other bills. This will improve the chances of having enough money in your account to cover the payment.

What is an expedited payment fee?

An expedited payment fee is a fee charged by a credit card company or another financial institution in exchange for “fast-tracking” your payment. The Credit Card Act prohibits banks from charging you when you make a standard payment, but if you run out of time to make your payment and need the help of a customer service representative to rush the payment through, you can be charged a fee (though it isn’t terribly common).

What credit cards charge expedited payment fees? It’s an option for any bank, so you’ll want to ask for details should you require the service.

Fee range: Unlike normal processing fees, which are done on a percentage basis, the expedited payment fee is a flat fee ranging from $5-$25 depending on your credit card. While a fee of $20 (as an example) might seem steep, it is likely less than a late payment fee. Additionally, preventing a late payment from appearing on your credit report will save you much more in the long run.

How to avoid expedited payment fees: The only way to avoid this fee is not to use the service. This is a classic example of a “special usage fee.” If you afford yourself of the service, you could be charged the fee. This should serve as a reminder to plan your budget and your bill payments appropriately.

What is a card replacement fee?

As the name suggests, a card replacement fee is the fee you are charged if you need the company to issue you a new card. This might be because the card was lost or stolen or because your card was somehow damaged.

What credit cards charge card replacement fees? The vast majority of credit card companies will issue a replacement card for free, but they can charge fees.

It might take as long as seven to 10 business days for a replacement card to arrive in the mail. Should you need the card sooner, the company will likely accommodate you; however, expediting the card will likely incur a fee. Additionally, some companies charge a fee if the card needs replacement while you are abroad or if you have requested replacement cards on multiple occasions.

Fee range: Generally, the fee runs between $5 and $10.

How to avoid card replacement fees: When dealing with a company that charges for replacement cards or if you need the replacement immediately, you can simply ask nicely. If you have a responsible record of card usage and statement payments, they might decide to waive the replacement fee. Additionally, if you need a new card because yours is damaged, but you’re also nearing the expiration date on the card, your issuer will likely issue a new card soon anyway with an updated expiration date. Perhaps you can get by with the damaged card or by using a digital wallet until the new card arrives. Obviously, if your card number has been compromised, you’ll need to replace the card sooner rather than later.

Final Thoughts

Credit cards offer a lot in the way of benefits and perks, from added security to money-saving rewards, but they can also mean incurring some fees along the way. Luckily, many of the most common credit card fees are completely avoidable with responsible use and awareness.

Brooklyn Lowery
Editor & Credit Card Expert

A journalist for nearly 20 years, Brooklyn has published work on a broad range of topics including personal finance and business as well as travel and human interest pieces. As a finance expert, she has provided commentary on credit cards, card rewards and personal finance...Read more

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