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What Are the Most Common Credit Card Fees?

Last Updated: September 24, 2024

7 min read

Table of contents

Interest

Credit card annual fee

Foreign transaction fee

Balance transfer credit card fee

Cash advance fee

Late payment fee

Over-the-limit credit card fee

Returned payment fee

Key Points:

There are many types of credit card fees, but not all credit cards charge the same fees, and the amounts can vary widely.
Some common credit card fees include annual fees, foreign transaction fees, and late payment fees.
Discover has no annual fee on any of our cards.

Credit card ownership has its perks. You can build a solid credit history and tap into a line of credit when you need it. And, in some cases, you can unlock benefits (like cash back) from rewards programs. However, you'll find a credit card fee is just part of the territory.

But responsible ownership of a credit card takes work. Credit cards have fees—it’s important to understand what they are and how to avoid them before they impact your bottom line. Different cards will have different fees, so you’ll need to compare across a range of potential charges to get a sense of what the best credit card is for your own spending habits.

To get you started, here are some of the most common credit card fees every cardmember should be aware of, along with some tips to help you avoid them.

Interest

If you don’t pay your statement balance in full each month, your card issuer may charge you interest on your balance. While credit cards give you the flexibility to take your time paying back what you owe, you may pay for the privilege of doing so.

The Truth in Lending Act (TILA) requires your creditors to tell you things like your credit amount, annual percentage rate (APR), and fees like finance charges and late fees.

TILA also says creditors need to tell you the total amount you’ll pay if you only make minimum payments and this amount should include interest. For credit cards, your card offer should provide this on the pricing schedule which you can access before your application. After you get a card, you’ll find it with your card/account information. It’s most accessible on your monthly statement.

You can use the Discover^® Credit Card Interest Calculator to find out how long it will take you to pay off a credit card amount including interest. The tool allows you to calculate by monthly payment amount or you can set a goal for how much to pay each month to have your balance paid off by a certain date.

Credit card annual fee

Some cards come with annual fees that charge to your card every year. Think of them as the price of admission to use and carry the card.

If you’re paying for a credit card, chances are you get something in return. To that end, annual fees are most associated with rewards and premium cards, as well as secured cards. (Note: credit cards can still have rewards without carrying an annual fee.)

Annual fees vary by card, both in cost and how your card issuer applies them. Some credit card companies bill them annually, and other cards charge a portion of the annual fee each month. If you’re signing up for a new card, look at the terms to see how and when an annual fee charge will appear on your bill.

Further, some cards offer promotions that waive the first year’s fee, so review the terms carefully to make sure you don’t have a surprise bill in year two of card membership.

Some credit cards don’t charge annual fees at all. Discover has no annual fee on any of our cards, even on student credit cards.

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Foreign transaction fee

If you plan to travel outside the United States, check if your card or the card you’re applying for charges foreign transaction fees. These are fees applied to non-U.S. purchases, often when you pay in currencies other than U.S. dollars.

Discover has no foreign transaction fee. This is a great option for students who might spend a semester abroad or if you have a trip planned and want to avoid international fees. On top of no foreign transaction fee, the Discover it Student Chrome Credit Card can help build your credit history.¹

Foreign transaction fees, according to the Consumer Financial Protection Bureau, are typically applied as a percentage of the purchase price rather than a flat per-transaction fee. A typical foreign transaction fee can be about 3%. That translates to a few cents on a pack of gum, or a few dollars on a nice dinner. Bear in mind that over the course of one week abroad, a 3% charge on every purchase could set you back hundreds of dollars.

It’s also important to be conscious of foreign transaction fees even when you’re not traveling. They may apply at home if you buy from an overseas vendor, such as an airline or from online merchants.

Balance transfer credit card fee

If you’re planning to make a balance transfer—meaning you’re moving debt from one card to another—make sure to read the terms and conditions carefully. Card issuers may charge a balance transfer fee ranging between 3 to 5% of the total amount transferred.

Balance transfer fees are typically a one-time charge for each balance you transfer. Before you transfer any balances, it’s important to factor in the fee. It could have an impact on how much (and whether) you’ll save money if you’re moving to a lower-interest card. You can use the Discover Credit Card Interest Calculator to compare the interest you’ll be charged if you continue making payments on your current card vs. what your balance transfer fee would be.

You may be able to avoid these fees by finding a credit card with no balance transfer fee or a card with a promotion waiving fees and/or interest on the transferred balance for a limited time. If that’s the route you choose, you may want to plan to pay off the transfer before the promotion expires to maximize your savings.

Cash advance fee

Cash advances are quick and easy, which makes them an attractive source for fast cash. If you’ve never used a cash advance or are new to credit cards (like college students), you should understand the risks of cash advances.

A cash advance fee is typically a percentage of the amount withdrawn. For example: with a 5% fee on a $100 withdrawal, the interest rate might be higher than the rate you’d pay on standard purchases.

Cash advance fees begin when you withdraw cash from an ATM using your credit card. These fees are notoriously expensive, so you may not want to make a habit of paying them and only use for in emergencies. If you do take out a cash advance, try to pay the balance off as quickly as possible.

Late payment fee

If you miss a credit card payment or pay less than the minimum due, it’s a serious matter. Not only will it trigger a late fee, but depending on how late your payment is, your credit card issuer could report the late payment to the credit bureaus. If that happens, chances are it’ll appear on your credit report and stay there for years, hurting your credit score in the process. The effect on your credit report is especially important to know if you’re a college student just beginning your credit journey.

Late fees vary by card and whether it’s your first time missing a payment. Note that if you make a payment more than 60 days late you could also receive a penalty interest rate.

If you slip and miss a payment, call your credit card company as soon as possible. If it’s your first time missing a payment, they may be able to waive the fee.

Consider automating payments to avoid a late fee. Make sure to schedule your payment at least two or three days in advance. If your due date falls on a Sunday or holiday, your bank could delay releasing funds until the following business day.

Did you know?

Discover Cardmembers can use DirectPay to set up automatic payments for their credit card bill each month.

Learn More

Over-the-limit credit card fee

An over-the-limit fee may occur if you make a purchase that exceeds your credit limit. You need to authorize your credit card to allow you to go over your limit for your card issuer to be able to charge you this fee.

Returned payment fee

Returned payment fees apply when you try to pay your credit card bill but your account either has insufficient funds, you canceled the check, or you close your account. Your returned payment fee will vary by card, and some credit card issuers may also charge an additional late fee if you don’t send an alternate payment (that goes through) prior to your due date.

When it comes down to it, various fees can be a necessary part of having and using a credit card. Just make sure you’re well-informed about which fees you may be paying, how much, and what triggers them.

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