Credit card fees explained: 8 types you should know

Core Insights - Many Americans are seeking to reduce expenses, particularly credit card fees, which can accumulate significantly over time [1][2] - The Consumer Financial Protection Bureau (CFPB) reported that Americans paid approximately $120 billion annually in credit card interest and fees from 2018 to 2020, averaging $1,000 per household each year [2] Credit Card Fees Overview - Annual Fees: Average annual fee was $94 in 2020, with some cards charging fees in the hundreds, often correlating with the value of rewards offered [3][4] - Balance Transfer Fees: Typically range from 3% to 5% of the transferred balance, with some cards offering long introductory 0% APR periods [10][11] - Late Fees: Can be up to $41 for missed payments, though some cards do not charge late fees [14] - Interest Fees: Charged if the balance is not paid in full by the due date, with rates varying based on the card's APR [15] - Foreign Transaction Fees: Average fees range from 1% to 3% for purchases made outside the U.S. [16] - Cash Advance Fees: Typically range from 3% to 5%, with higher interest rates and no grace period for these transactions [18][19] - Returned Payment Fees: Can be up to $40 if there are insufficient funds for payment [20] Strategies to Avoid Fees - Pay Balance in Full: To avoid interest and late fees, consumers should only spend what they can afford to pay off each month [27] - Review Terms and Conditions: Understanding the credit card agreement can help consumers anticipate fees and adjust spending habits accordingly [28][29] - Choose No Foreign Transaction Fee Cards: Many travel credit cards do not charge foreign transaction fees, which can save money for frequent travelers [30][31] - Evaluate Annual Fees: Consumers should assess whether the benefits of a card with an annual fee outweigh the costs based on their spending habits [32][34] - Set Up Automatic Payments and Alerts: This can help avoid late fees and keep track of spending [35] - Negotiate with Issuers: Consumers can reach out to their credit card issuer to negotiate fees or seek assistance with mistakes [37]