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Credit card fees and interest rates help determine your true cost of borrowing. In the past decade, regulatory and market changes have impacted those costs.

The Credit CARD Act of 2009 set limits on rate increases, and on fees that could be charged to credit card holders. The card industry changed in response to the law: Instead of offering low rates upfront with big back-end rate hikes, it became more transparent and set truer upfront rates. That has resulted in slightly higher initial rates for consumers, but fewer surprise punitive fees and rate hikes.

The Consumer Financial Protection Bureau says if fees had continued at pre-CARD-Act levels, consumers would have paid an additional $16 billion in fees from the beginning of 2011 through the end of 2014.


Some fees more prevalent than others

A fee survey found that the average credit card has six fees associated with it. Late fees are the most common, followed by cash advance fees, returned payment fees and balance transfer fees.2 The average late fee in 2015 was $27.11



However, consumers paid less in penalty fees in 2015 ($11.5 billion) than they paid in 2014 ($11.7 billion).1 Over-limit fees in particular have plummeted. In 2012 an average 0.33 percent of active accounts were charged an over-limit fee each quarter. But throughout 2014 and in the first quarter of 2015, that number had dropped to 0.0008 percent of active accounts.11


Annual fees are also fairly uncommon, unless you’ve got rewards credit cards. Only 26 percent of the cards surveyed by carry annual fees,2 and fewer than 3 percent of all credit cards in the CFPB’s database were actually assessed annual fees as of the first quarter of 2015. But the vast majority (70 percent) of annual fees charged by issuers in 2013 and 2014 were on rewards cards. The average annual fee as of Q1, 2015 was $48.11

Don’t look for them to disappear anytime soon. Annual fee payments added $10.8 billion to issuers' income in 2014, up from $9.4 billion in 2012 and 2013.1

Who pays fees

Revolvers – cardholders who tend to run a balance -- incur about 75 percent of all consumer fees on credit cards. In the first quarter of 2015, fees incurred by revolvers came out to an annualized rate of 2.4 percent of their end-of-cycle balances. That’s slightly above the lowest rate the CFPB has measured since it began monitoring in 2008, which was 2.1 percent in the fourth quarter of 2010.11

Women are slightly more likely to be charged penalty fees than men. In 2015, 60.3 percent of women said they had paid a late or over-limit fee in the past year compared with 57.4 percent of men.3


But the burden of fee costs has shifted away from consumers with the lowest credit scores in the past 10 years. Consumers with subprime credit scores incurred more than 64 percent of all fees assessed to revolvers in the first quarter of 2008. By the first quarter of 2015, that had fallen to around 46 percent.11 



Nevertheless, consumers with the lowest credit scores do pay the most fees, when calculated as a percentage of their cycle-ending balances.


Consumers with cards from subprime specialist issuers – a small subsection of the market that focuses on consumers with the weakest credit scores -- incurred fees during 2013 and 2014 that exceeded 20 percent of year-end outstanding balances. Subprime specialist issuers rely more heavily on fees than other issuers. While mass market issuers got 80 percent of their revenue from interest and 20 percent from fees in 2013 and 2014, subprime specialists got 58 percent of their income from fees, and only 42 percent from interest payments.11

Students and late fees

A significant percentage of college students, who are often building credit and learning how to use credit cards wisely, pay late fees. Twenty-seven percent of college students in 2015 said they had been charged a late fee in the past. The closer students get to graduation, the more likely they are to have been charged a late fee.4


Students who say they’ve been charged a late fee
Base = Students with credit card in own name
  Total Freshmen Sophomore Junior Senior
Average credit card debit  27%  19%  16%  31%  37%
Source: Student Monitor: Financial Services, Spring 2015


Among students who have ever been charged a late fee, 54 percent said it had happened more than once, down from 66 percent in 2014. Again, the more senior the student, the more likely they were to have been charged multiple late fees.4


Students who have been charged multiple late fees
Base = Students charged a late fee
  Total Freshmen Sophomore Junior Senior
Late payment fee more than once
54% 40% 57% 67% 52%
Late payment fee one time only
46% 60% 43% 33%> 48%
Source: Student Monitor: Financial Services, Spring 2015


The impact of interest 

For consumers who carry a balance, interest can be crippling. The average annual percentage rate (APR) on a credit card with a balance was 13.51 percent in February 2016.6 That means a $5,000 balance with that rate could cost you an extra $675 a year.

Consumer interest payments dipped between 2014 and 2015. In 2015,  card issuers made $70.4 billion in interest, down from $71.4 billion in 2014.1 

But credit card APRs have been creeping up since the Federal Reserve raised the benchmark federal funds rate in December 2015. According to’s weekly rate survey, the average APR on the 100 most popular credit cards (not just accounts assessed interest) rose from 14.9 percent before the Fed’s rate hike, to over 15 percent. Business credit cards have lower rates. As of mid-2016, the average APR on a business card was 13.12 percent.13

Those who are new to credit are likely paying much more in interest. In 2014, a college student getting his or her first credit card had an average interest rate of 21.4 percent and would be charged on average 24.1 percent in interest for taking out a cash advance.7

Whether the majority of college students are paying more in interest than other groups is unclear because 72 percent of college students in 2015 did not know the APR on the credit card they used most. Fifteen percent of college students in 2015 said they had interest rates between 10 percent and 20 percent on the cards they used most often.4 


What is the APR for the credit card you use most often?
Base = Students with credit card in own name
  Total Freshmen Sophomore Junior Senior
1% to 5%
7% 10% 0% 4% 9%
6% to 9%
3% 4% 4% 1% 3%
10% to 15%
8% 6% 4% 2% 14%
16% to 20%
7% 4% 0% 11% 6%
More than 20%
1% 0% 9% 2% 2%
Don't know
72% 74% 82% 68% 67%
10.9% 8.8% 13.5% 11.0% 11.0%
Source: Student Monitor: Financial Services, Spring 2015


Those college students who are aware of their APRs apparently understand how devastating high interest rates can be. Twenty-eight percent of college students in December 2015 admitted to paying off higher-interest debt first.8

College students weren’t the only ones who experienced an APR change. In 2015, 23 percent of millennial credit card holders said their APR had risen.5

Interest, fees shape attitudes 

Since interest rates and fees can wreak havoc on a consumer’s budget, it’s no surprise that many consumers consider them as factors in whether they use a particular card.

A 2016 credit card loyalty survey found that low interest rates were the most important credit card feature for 21 percent of consumers surveyed.9 That sentiment was echoed in a 2015 study that found that 30 percent of consumers said a low interest rate was the most attractive feature of their preferred credit card.10

A survey by Bug Insights, however, found that annual fees are the top reason consumers would consider switching credit cards. More than 64 percent of respondents said it was the largest potential driver for them to switch cards. That was followed by rewards programs (13 percent) and APR (8.16 percent).12

While fees and interest continue to make credit more expensive, empowered consumers can opt for cards that are the least painful to their pocketbooks.

  1. R.K. Hammer
  2. 2015 credit card fee survey: Average card carries 6 fees
  3. National Debt Relief Survey of Age and Gender Differences with Credit Usage
  4. Student Monitor: Financial Services Spring 2015
  5. Experian Millennial Credit & Finance Survey Report Part II
  6. Federal Reserve's G.19 report on consumer credit, released June 7, 2016
  7. Study
  8. Sallie Mae and Ipsos: Majoring in Money: How American College Students Manage Their Finances
  9. survey: Millions stay loyal to a single card forever
  10. TSYS 2015 Consumer Payment Choice Study
  11. CFPB: The Consumer Credit Card Market, Dec., 2015
  12. Bug Insights press release, June 8, 2016
  13. rate survey, June 8, 2016

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See related: Credit card statistics, Credit card debt statistics, Credit card rewards and cardholder satisfaction statistics


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Updated: 07-17-2018