Cardholders are most likely to pay fees if they pay late, take out a cash advance or carry a balance, according to the 2018 CreditCards.com Credit Card Fee Survey.
As fees remain stable and interest rates rise, cardholders are most likely to see extra charges on their statements if they pay late, take out a cash advance or carry a balance.
The 2018 Credit Card Fee Survey scoured the cardholder agreements and terms and conditions of a representative sample of 100 popular general-purpose cards to assess the fee environment.
The cards we surveyed listed a total of 545 fees, down from 591 counted in last year’s survey. Meanwhile, card APRs have risen dramatically in the past year as the Fed continues to normalize interest rates. The average rate for new card accounts was 17.01 percent as of Oct. 3, 2018, according to the CreditCards.com Weekly Credit Card Rate Report.
- The average number of fees per card is 5.5, down from 5.9 in 2017.
- Foreign transaction fees are still being cut: Three years ago, 77 cards in our survey charged a small fee (typically 3 percent) for purchases outside the U.S. Only 52 of the cards surveyed charge foreign transaction fees in 2018, down from 56 last year.
- If you pay late or take out cash, expect a fee. Ninety-eight cards in our survey charge fees (usually up to $38) for paying past your statement date. And 97 of the 100 cards we reviewed charge fees for cash advances. Only one card has no cash advance fee, and two cards don’t allow them at all.
- Balance transfer fees ticked upward. Last year, 76 of the 89 cards we tracked that allowed balance transfers charged a fee to do so. In 2018, 79 of the 90 cards that allow them charge a balance transfer fee.
- Annual fees were essentially unchanged. Twenty-six of the cards in this year’s survey charge an annual fee, compared to 24 in 2017.
- No annual fee doesn’t mean no fees at all. We found that 11 of the top 15 fee-charging cards in our survey don’t impose an annual membership charge.
Card fees stable – for now
On the whole, cardholders are subjected to fewer fees now than they have been in years past. For instance, our survey in 2015 found a total of 613 fees among the 100 cards studied, and that number has gradually gone down to 545 fees.
However, experts say the reprieve from fees could be short-lived.
An August report by Mercator Advisory Group shows that the return on assets for major card-issuing banks – a measure of credit card profitability – has fallen by more than half since 2014. Those leading banks’ noninterest income – which includes card fees along with interchange fees and other revenue – has declined while interest income generated by higher APRs has gone up.
See related: Credit card surcharges grow more common
Brian Riley, director of Mercator’s credit advisory service, said large banks could be forced to re-evaluate their card fee strategies if the return on assets numbers continue to fall, as Mercator projects. There’s also uncertainty over revenue from interchange, or “swipe,” fees – which merchants pay card networks and issuers to accept credit cards.
“You can be certain that every nook and cranny is being examined right now,” Riley said.
Fewer fees for foreign purchases
While many card fees have remained in place over the past few years, foreign transaction charges – which tend to be 3 percent of the transaction in U.S. dollars, but sometimes as high as 5 percent – have fallen dramatically. That has coincided with intense competition among the major card companies for rewards-hungry travel enthusiasts.
Many of the travel-oriented rewards cards in our survey had no foreign transaction fees, while cash back cards tend to have them. For instance, the Chase Sapphire Preferred Card and the Starwood Preferred Guest® Credit Card from American Express don’t charge fees for outside-the-U.S. spending, but Chase Freedom and the Blue Cash Everyday® Card from American Express do charge them.
Although foreign transaction fees are not common features of travel rewards cards, globetrotting card users still should be wary of dynamic currency conversion when spending money abroad. Dynamic currency conversion enables you to make a debit or credit card purchase in U.S. dollars while outside the country (or online from a foreign vendor). However, converting to American currency instead of paying in the local currency results in an unfavorable exchange rate, and it comes with fees.
“Even if you’ve got a foreign-transaction-fee-free card, there are still situations where you could end up paying additional money that you might not want to pay, as in dynamic currency conversion,” said Linda Sherry, director of national priorities at Consumer Action.
Cards with the most, fewest fees
|MOST FEES||FEWEST FEES|
|Card||Number of fees||Card||Number of fees|
|First Premier Bank credit card||12||PenFed Promise Visa||0|
|Barclays Arrival Premier World Elite Mastercard||9||Capital One Platinum Credit Card||2|
|Carnival World Mastercard from Barclays||9||Capital One Secured Mastercard||2|
|Platinum Delta SkyMiles® Credit Card from American Express||9||Journey Student Rewards from Capital One||2|
|Starwood Preferred Guest® Credit Card from American Express||9||Capital One Spark Cash Select for Business||2|
|Gold Delta SkyMiles® Credit Card from American Express||9||Capital One Spark Classic for Business||2|
|SunTrust Specialty Business card||9||ExxonMobil Smart Card||2|
|Source: CreditCards.com research, August and September 2018, from a representative sample of 100 widely held cards.|
Standard fees hold steady
Other common card fees, such as annual and balance transfer fees, generally stayed put this year, according to our survey.
Twenty-six of the cards in our survey charge an annual fee, compared to 25 last year. About half of the cards with annual fees waive them for new account owners in their first year of membership.
The smallest annual fee is $25 for the Wells Fargo Secured Card, and the highest is $450, charged by the Chase Sapphire Reserve and the Citi Prestige. The latter two cards also tack on fees for authorized users – $75 and $50, respectively. Meanwhile, The Platinum® Card from American Express, while not included in our survey, charges a very high $550 annual fee.
While most cards surveyed have no annual fee, many still assess lots of other charges to look out for. For instance, of the 15 cards with the highest number of different fees, 11 don’t have annual membership charges.
One example is the Carnival World Mastercard from Barclays, which is in a six-way tie for the second-highest number of fees per card at nine, despite having no annual fee. In addition to the usual penalty fees for late and returned payments, the card charges $15 for expedited shipping of replacement cards, gift cards and merchandise, as well as completing an air travel booking over the phone.
Balance transfer fees
Most cards that allow balance transfers charge a fee to do so (typically $5-10 or 3-5 percent of the transfer amount). However, free transfers are still available if you know where to look. Eleven of the cards in our survey do not charge fees for balance transfers.
Additionally, some balance transfer cards will waive the fee if you transfer the balance shortly after opening the account. The BankAmericard for Students and Slate from Chase don’t charge fees for balance transfers done in the first 60 days of card membership.
Some Capital One cards’ balance transfer fee structures have special quirks, imposing charges depending on what APR is assessed on your account. For instance, the Capital One Quicksilver Cash Rewards Credit Card charges a 3 percent fee for any transfers done in the first 15 months of account ownership, or at a promotional APR that can be offered at any other time. But you can transfer a balance for free under the card’s purchase APR after the first 15 months.
See related:What to do when your balance transfer is denied
Cash advance fees
Credit card cash advances are costly – you typically get charged interest right away and there’s almost always a fee. Ninety-seven cards in our survey have cash advance fees, and only one does not (the other two don’t allow cash advances).
The sole card that allows you to take out cash without a fee is the PenFed Promise Visa – the only card in our survey that has no fees whatsoever.
It’s a fact of life for nearly all credit card users – if you miss a payment, your issuer will slap you with a fee. Ninety-eight of the 100 cards in our survey charge late payment fees. These fees cannot exceed $39 under federal law.
The two cards that don’t charge late fees are the PenFed Promise Visa and Citi Simplicity. Additionally, three Discover cards we surveyed – Discover it® Cash Back, Discover it® Student Cash Back and Discover it® Student Chrome – waive their late payment fees the first time you slip up (but if you do it again, that’ll be up to $39).
You’re also likely to get charged if a payment of yours gets returned. Seventy-eight of our surveyed cards charge fees ranging from $27-$38 if your payment is sent back.
Meanwhile, fees for charging more than your credit limit are rare, but they still exist. Only six of the cards in our survey charge over-limit fees, but none are greater than $39.
4 ways to avoid paying credit card fees
- Choose only no-annual-fee cards. As our survey shows, there are plenty of credit cards to choose from that don’t charge an annual fee, and many offer cash back and rewards. Just keep in mind that the cards with the best travel rewards and perks – including generous sign-up bonuses, airline credits and points multiples on dining and travel – tend to have annual fees.
- Don’t slip up. If you’re a few days late on a payment, or a card payment you make bounces back, you’ll almost certainly be subject to a fee.
- Look for free balance transfers. If you’re transferring a $5,000 balance to a card that levies a 5 percent fee to do so, that’s another $250 you’ll be paying on top of your debt. Instead, find a card that charges no fee – such as the Capital One Platinum Credit Card or the Navy Federal Credit Union Platinum Card – or waives it if you initiate your transfer within a set time frame.
- Ask your issuer to waive the fees. When it comes to getting rid of card fees, it can’t hurt to ask. A recent CreditCards.com poll found 85 percent of U.S. cardholders who asked their issuers to waive late fees were successful in doing so, and 70 percent who inquired about removing or lowering an annual fee got a “yes.”
Don’t fear fees if the card you want has value to you
While no one wants to get nickeled and dimed for using a credit card, a menu of fees shouldn’t deter you from signing up for a card you want. In many cases, a card’s value to you as a consumer could outweigh the costs of owning it. And many fees are just simply avoidable (see sidebar).
For instance, an elite rewards card with a high annual fee could pay for itself in the form of travel credits or a sign-up bonus that helps you book a dream vacation. At the other end of the credit spectrum, a secured card with lots of fees could help you build credit and graduate to cards with fewer fees.
“That’s the way the lenders have managed the fee spectrum,” said Paul Siegfried, senior vice president at TransUnion. “The question is, do they provide the value to the consumer, and as long as they do, it seems like the consumers understand them and are willing to accept them.”
The Credit Card Fee Survey of 100 U.S. credit cards was conducted in August and September 2018 by CreditCards.com. The 100-card survey pool 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.