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My credit card fee: What should I be paying?

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When you first sign up for a credit card, you will sometimes see fees on the bill that you may not understand. Many credit cards have some of the same fees (although some credit cards even waive some fees altogether!) and when you're trying to determine how to work out if the fee should be there and what it's for this article will help!

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It's also useful to know what kinds of credit card fees there are on different credit cards so that you can use this to compare different credit cards to find the best one for your situation.

Here are some of the common fees you may encounter on credit cards:

Annual Credit Card Fee

Many credit cards charge you to be able to use them with an annual fee. This annual fee is much like a membership fee, and is most often seen on rewards and perks benefit credit cards. Before you take on a credit card with an annual fee, make sure the benefits you will be getting (cash back, frequent flier miles, etc..) are going to earn you more than you will be paying in the annual fees. If not, you are losing money on the deal. You'll also find that occasionally credit card companies will waive the first years annual credit card fee.

Credit Card Set-up or Application Fee

Some credit card companies will hit you for cash as soon as you sign up with them. They will do this through a set-up or application fee. Essentially, they are charging you to sign up for usage of their card. The huge competition in credit cards in the Australian market is really helping to eradicate this fee. With many of the credit cards in the Aussie market now we are seeing that the annual fee will be placed onto the bill after the first month (if the first year's annual fee wasn't waived) and that's it with no setup fee.

Credit Card Balance Transfer Fee

For many credit cards, it's very useful to sign up for them and take advantage of their balance transfer offer with 0% interest. What that means is that you can transfer the money you owe on a high interest credit card to this new card and have no interest on that credit card for a set period of time. While this may seem like a great way to get ahead on your payments, being able to put more on the principal while not having to pay interest, make sure you check to see if there is a fee for the transfer and if so, how much it is. Sometimes there are fees to transfer that balance over. Make sure the cost is worth the benefit.

Credit Card Cash Advance Fee

Not many but a few credit card companies will charge you a fee if you withdraw cash using your credit card as well as charging you a higher interest rate on the money you withdraw (ostensibly because you are taking straight cash, not a product). Once again, because of the competition in the Australian credit card market, the consumer is the winner and now it is more normal to just see a higher interest rate on cash advances.

Credit Card Over Limit Fee

Keep your charging in check, or you may well find yourself paying an over limit fee. These fees are levied when you try to make a charge, but have reached the limit on your line of credit. It is essentially a punishment for not paying close enough attention to your spending and credit balances. These can occasionally be waived if you call your credit card company to complain.

Credit Card Late Payment Fee

If you don't pay your bills on time (or at least the minimum payment amount) most credit card companies will charge a late payment fee. This is an amount of money you will be asked to pay as a penalty for not paying your bill on time. Some credit card companies couple the late fee with a higher interest rate, meaning you will be also paying more on all the monies you borrow using that credit card in the future.

 

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Conclusion

Some of these credit card fees are avoidable, some aren't but now you've got some understanding of what the most common fees are you're much less likely to fall afoul of the credit card companies. This will allow you to minimise the amount of fees you have to pay each month.

When people are choosing credit cards, one of their main considerations is the interest rates for purchases, but there are a lot of other types of fees to consider as well.


Some of the fees that have to paid to acquire and maintain a credit card include annual credit card fee, application fee, balance transfer fee, cash advance fee, over limit fee, and late payment fee. Other than low interest rates, low rate credit cards offer affordable rates for all these fees as well, so that card holders will not be overwhelmed by the overall cost of owning a credit card.


There are many credit cards that are available to Australian consumers nowadays, and some of them include low rate credit cards such as ANZ First Credit Card, AMEX Blue Sky Credit Card, Woolworths Everyday Money Credit Card, Commonwealth Bank Low Fee Card, Aussie MasterCard, St.George Vertigo MasterCard, and ANZ Low Rate Card.

 

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