As they seek new customers, some card issuers have done the remarkable: They cut fees.
The trend is small, but unmistakable, according to the CreditCards.com 2016 Credit Card Fee Survey. We counted the total number of fees charged by a representative sample of 100 widely held general-purpose cards. The 100 surveyed cards charge a total of 593 fees, down from 613 in our 2015 fee survey.
The biggest change is in foreign transaction fees: 61 cards charge such fees today, down from 77 in 2015.
Our survey also found:
- Getting a free copy of your old account statements is easier. Nineteen cards have dropped fees for them.
- Late fees are lower, too, but that’s a temporary blip. While 28 cards cut the fee by $1, they were compelled to do so by an inflation adjustment by federal regulators. The responsible agency admitted it made a calculation mistake, and in June, told card issuing banks they were free to let the fee rise again.
- Some fees went up. Sixteen cards, for example, increased the fee for returned payments.
- The number of fees per card varies greatly. Only one card in this year’s survey – the Pentagon Federal Credit Union Promise Visa – doesn’t charge cardholders any fees. Two cards – First Premier Bank secured MasterCard and the First Premier Bank credit card – may charge up to 12 fees.
- Late payment and cash advance fees are almost universal: They’re charged by 99 and 98 of the 100 cards, respectively. Balance transfer fees are also very common and mandated by 77 of the 89 cards that allow balance transfers. However, only 25 of the 100 cards charge an annual fee and just six charge an over-limit fee.
|COMPARE CREDIT CARD FEES|
Late payment fee
Balance transfer fee
Foreign transaction fee
Cash advance fee
Returned payment fee
*Based on 90 cards that allowed balance transfers in 2015
**Based on 89 cards that allowed balance transfers in 2016
|Average cost of common fees|
| Late payment||Up to $37||Up to $38|
| Balance transfer||3% of the transfer, or $5-$10,|
whichever is greater
|3% of the transfer, or $5-$10,|
whichever is greater
|Foreign transaction||3% of each transaction in U.S. dollars||3% of each transaction in U.S. dollars|
|Cash advance||$10 or 5% of each advance,|
whichever is greater
|$10 or 5% of each advance,|
whichever is greater
|Overlimit||Up to $39||Up to $39|
|Returned payment||Up to $37||Up to $35|
|Source: 2016 CreditCards.com survey of 100 widely held general-purpose credit cards|
Overall, as card issuers compete for a larger share of cardholders and respond to regulation changes, the fee landscape is now more favorable for those who carefully shop for a new card.
“There is a lot of competition out there, there is a lot of choice,” said Nessa Feddis, the American Bankers Association’s senior vice president and deputy chief counsel for consumer protection and payments.
Issuers continue to tweak fees
Since the federal Credit CARD Act of 2009 and the Great Recession, card issuers have had to adjust to a new landscape and changing cardholder behavior by relying on more fees to generate income.
Industry data compiled by bank card advisory firm R.K. Hammer shows card issuer fee income jumped in 2014, reaching $90.3 billion from $79.9 billion just a year before. Fee income rose once again in 2015, up to $94.3 billion.
In 2016, the numbers are up once again, but the rate of growth has slowed. That’s because there’s only so much issuers can do under the current fee regulations and without driving away cardholders.
|CARDS WITH THE MOST, FEWEST FEES|
|Cards with the most fees: |
Cards with the fewest fees:
“As the flow of revenue has increased over recent years, [issuers] reach a point when each additional increment is more difficult to achieve, as many have already raised and/or added fees,” said Robert Hammer, founder and CEO of R.K. Hammer.
As a result, issuers appear to be tweaking fees to find a better balance between generating income and satisfying cardholders. CreditCards.com found nearly all card issuers (85 out of 100) made some sort of fee adjustment since 2015. Some issuers have even made overarching card changes. For example, Capital One and Barclaycard U.S. no longer charge fees for copies of old account statements, and Barclaycard U.S. card returned check fees are now $25, down from $35 in 2015.
According to Barclaycard, it’s about making card terms less complicated, which is good news for consumers.
“There are so many little fees out there, it can be very hard for customers to keep track of everything,” said Jared Young, senior director of strategic analytics for Barclaycard U.S. “We have been going through a process over the past couple years and evaluating the fees we charge and see if there is any way we can simplify what we are doing. Asking ourselves, \u2018Is there really a purpose for these fees?’”
ABA’s Feddis said that going forward, cardholders will have greater influence over how issuers charge – or don’t charge – fees.
“It’s consumers who will drive the trends,” she said. For example, “If an issuer offers a service with a fee, but it’s something consumers value, then you may see that fee stick around.”
Foreign transaction fees disappearing
It is easier than ever to find cards with no foreign transaction fee, the 2016 CreditCards.com Credit Card Fee Survey found.
Of the 100 surveyed cards, 61 charge a foreign transaction fee, which is typically 3 percent of each transaction in U.S. dollars made abroad. However, since 2015, 14 cards dropped this fee.
“I think that’s just competition at work,” Feddis said. “Issuers must be getting a response from consumers who feel that’s important. It’s not going to be important to everyone, but it matters to a big segment of consumers, like those who travel abroad.”
Hammer agrees. “It’s almost an unnecessarily harsh fee to put on the customer base you are trying to attract: Those who pay thousands a year in travel, but really never go delinquent or pay late,” he said.
Looking ahead, foreign transaction fees may continue to disappear. “As issuers look for ways to differentiate themselves, this is another way they can do that,” Hammer said.
Other common card fees
Here’s what the rest of the credit card fee landscape currently looks like right now:
|12 cards that don’t charge|
balance transfer fees
|1. Capital One QuiksilverOne Rewards card|
|2. Capital One Platinum card|
|3. Capital One Secured MasterCard|
|4. Capital One SonyCard Visa|
|5. Capital One Spark Cash Select for Business|
|6. Capital One Spark Classic|
|7. Capital One Spark Miles Select|
|8. Capital One Journey Students Rewards card|
|9. Capital One Venture Rewards card|
|10. Navy Federal Credit Union cashRewards Visa|
|11. Navy Federal Credit Union Platinum card|
|12. Pentagon Federal Credit Union Promise Visa|
Source: 2016 CreditCards.com card fee survey
Annual fees: Twenty-five of the cards surveyed charge annual fees. Annual fees can be as low as $25, as charged by both the Wells Fargo Secured card and the PenFed Platinum Cash Rewards Visa Standard card, to as high as $450, which is charged by the Citi Prestige card. Only one card – the Capital One Platinum card – dropped its annual fee in the past year.
Balance transfers fees: Of the 89 cards that offer balance transfers, 77 cards charge a fee for balance transfers, a slight decrease from 2015, when the same survey found 80 cards charging this fee. Balance transfer fees are typically 3 percent of the amount transferred or a $5-$10 minimum, whichever is greater.
We found 12 cards that allow cardholders to make fee-free transfers. Another four cards – Wells Fargo Cash Wise card, Wells Fargo Rewards card, Wells Fargo Cash Back College Card and Slate from Chase – currently offer no or low introductory balance transfer fees for new cardholders who make transfers shortly after opening their account.
Cash advance fees: This fee is still one of the prevalent – and lucrative. Of the 100 surveyed cards, 98 charge a fee for advances, typically $10 or 5 percent of the amount advanced, whichever is greater. Cash advance fees generated $25.1 billion of income for issuers in 2015, according to R.K. Hammer’s latest industry report.
Pentagon Federal Credit Union’s Platinum Cash Rewards Visa Card Standard and the PenFed Promise Visa Card were the only two cards surveyed that don’t charge cash advance fees.
Penalty fees: With the exception of the almost-mandatory late fee, credit card penalty fees aren’t as common as transaction fees.
- Late fees: The late fee continues to be the most-universal fee, typically charging up to $37, as reported by 59 cards in this year’s survey. Only three cards from the survey (Discover it Balance Transfer, Discover it Student Cash Back and Discover it Student chrome) let a cardholder’s first late payment slide, fee-free. More cards may soon charge up to $38 again, as they adjust to the CFPB’s recent correction to its 2016 inflation adjustment. The current late fee caps are $27 for a first offense and $38 for additional late payments.
- Returned payment fees:Returned payment fees are slightly less popular today. This year’s fee survey found 77 cards charge this fee, down from 81 in 2015. The typical cost of returned payments? “Up to $37” according to 37 cards surveyed this year.
- Over-limit fees: CreditCards.com found only six out of 100 cards surveyed charge over-limit fees at or up to $39. All are business credit cards, which typically carry higher fees as they do not fall under the same CARD Act regulations as personal credit cards.
Oddball fees: There are some cards that may pile additional fees on top of the transaction and penalty fees listed in the federally mandated disclosure of the card’s terms and conditions. These can include charges for purchasing wire transfers and stopped payments, which were disclosed by 10 and 19 cards in this year’s fee survey, respectively. Fees for paper copies of older monthly statements, which are typically around $5-$10, are charged by 21 cards. However, 19 cards dropped this fee since 2015. Stop payment fees are slightly more common, now charged by 19 cards compared to only 6 in 2015.
Most fees are avoidable
If you use credit wisely, you can avoid paying most fees. To start, carefully read all terms and conditions before applying for a new card. Comparing the terms of different cards can help you find one with the fewest – or lowest – transaction and penalty fees.
“You’re just going to pay a fee for some things,” said Martin Lynch, director of education for Cambridge Credit Counseling. “But comparison shopping for cards in the first place is good idea. Before you enter into a card agreement, you have to know what the fees are.”
Already have a card that charges a slew of fees? No problem, just be mindful.
Avoid late fees by paying on time. “Set up a payment in advance, go online any time and you can even pay via your phone these days,” Feddis said. “It’s become easier and easier to avoid these fees.”
Try being prepared for the unexpected to avoid fees, too. “As far as cash advances go, usually the people who require a cash advance at some point are in an emergency situation,” Lynch said. Creating an emergency savings fund now can save you from racking up a card balance with a fee-carrying cash advance later. And to get around paying for paper statement copies, save electronic statements as they become available for reference later.
Not sure what fees your card may charge you? Do some research.
“The fees are disclosed in the contract and I think where the whole conversation starts: Have you read the contract all the way through?” Lynch said. “Everything you need to know is in there.”
The Credit Card Fee Survey of 100 U.S. credit cards was conducted in July 2016 by CreditCards.com. The 100-card survey pool is the same group of cards used to calculate CreditCards.com’s Weekly Rate Report, and is a representative sampling of cards from all major U.S. card issuers. Fee information was gathered from the cards’ terms and conditions documents, any publicly available cardholder agreements and phone calls to issuers.
See related: One day late, one dollar short means late fee