Even the most basic credit card can carry "expenses" in the form of fees. Some are immediately apparent — like an annual fee — while others are often tucked away in the card's fine print. Whether you’re on the hook for these expenses often depends on how effectively and responsibly you use your credit card.
To get maximum benefits from a credit card while paying as little as possible, focus on our helpful tips.
- Get familiar with credit card fees:
No matter the credit card you’re looking at, its fees can be found within the credit card terms and conditions in a table called the Schumer Box. While the terms and conditions give you the rundown of card details, such as your grace period and how the issuer handles your personal information, the Schumer Box lists only your card’s costs.
You might have seen this handy little table while scoping out your next credit card: it’s named after congressman Chuck Schumer, who introduced the legislation that required credit card companies plainly list the costs of a card on promotional materials.
Scan the Schumer Box for a high-level overview of a card’s expenses — and to determine whether a card is too heavy-handed with its fees. It’s the most helpful place to start when you’re comparing cards.
Common fees to look out for
Some fees are the cost of a credit card’s convenience, while others are penalties for failing to pay your statement on time.
Though fees vary by card, here are the most common types you’ll find (and if you see a card with an unusual fee that’s not listed here, like a monthly maintenance fee, pause before signing up):
Annual fee. How much you’ll pay each year to keep your card account open. Fees range from $95 to as high as $550, depending on your card’s perks and features, though not all credit cards require an annual fee.
APR. Annual percentage rate — or amount of interest your balance attracts if you don’t pay it in full each month. APRs range from 15% to 24%, though they can be higher or lower depending on your card and credit score.
Balance transfer fees. A fee for moving a prior debt onto your new card to pay it off under new rates and terms — and ultimately save on interest. Fees typically represent 3% to 5% of your transferred amount.
Cash advance fees. A flat rate or a percentage fee of 3% to 5% on the amount you’re advanced. These advances can also attract a higher APR than your typical purchase.
Foreign transaction fees. A charge of 1% to 3% on top of purchases made using your card overseas. Travel cards often waive this fee as a perk.
Late payment fees. A fee of up to $39 added to your statement for missing a payment deadline on your credit card.
Overlimit fee. A fee of $25 to $35 tacked on to your balance for spending over your maximum credit limit
Security deposit. A cash deposit of $50 to $200 required to open and use a secured card designed to build credit. If you keep up on payments, you can typically get this deposit back — and graduate to an unsecured card.
Figure out the type of card you want:
The type of credit card you want can affect the card expenses you face. For example, if you qualify for a luxury card but don't have stellar credit, you may face a higher APR than a cardholder with stronger credit.
Different types of cards can also carry different types of fees. For example, rewards cards tend to carry annual fees more often than standard credit cards thanks to their many perks and benefits. Balance transfer cards often charge balance transfer fees, and secured credit cards often require a security deposit.
Once you've narrowed down the type of card that fits your needs, you can compare fees and factors across that card type to find a fit with your financial goals.
Pay your statement balance in full each month:
If you pay off your credit card each month, you avoid paying interest on the charges in your statement. It's among the easiest ways to control expenses.
Set up autopay on your account to make sure the month's balance is always paid in full so you never have to worry about late payment fees.
Stay away from cash advances:
It's worth stressing: Avoid cash advances! The fees that come with a cash advance are never in your favor and can put a real dent in your balance. Plus, cash advance APRs skew higher than your card's purchase APR.
Stay well below your credit limit:
Traditional credit card wisdom dictates that you keep your credit utilization — or the percentage of credit you're using at any given time — to around 30% or less. This looks good on your credit report and can boost your score, plus it helps you avoid needless overlimit fees.
Use your perks:
Among the not-so-secret ways to take the sting out of an annual fee credit card is by taking advantage of its perks. Sure, a luxury card might run you several hundred dollars each year, but these cards also come with perks worth hundreds, such as travel statement credits, airport lounge memberships or an annual free night stay at a hotel. These perks lower your "cost" for these cards, or they can even let you gain greater value than the cost.
Remember that these cards can offer a great value, but only if you actually use those benefits. Otherwise, the annual fee is an unnecessary expense and you could be best served by another kind of credit card.
If you know the hidden costs of credit, what you need out of a card and how to use one once it’s in your wallet, you can avoid unnecessary credit card fees — and worrying about your credit card chewing too deeply into your bank balance.
Understand, however, that misusing your credit card — even only a few times — can lead to unwelcome expenses that can grow exponentially larger if you don’t fix the underlying problem.
About the author, Steve Dashiell
Steve Dashiell is a staff writer with the credit cards team at finder.com, helping readers narrow down cards to fit any lifestyle and budget and maximize rewards.
Steve's written more than 150 articles (and counting) with expertise that's backed by more than seven years of writing in finance, e-learning, recruitment and medicine, including owning an editorial small business. He earned a BA in English language and literature from the University of Maryland.