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2019 Credit Card Fee Survey: Premium rewards, card missteps get costlier

Several card issuers have quietly increased fees on new credit card offers, according to CreditCards.com’s annual survey of card fees

Summary

Several card issuers have increased fees on new offers, according to CreditCards.com’s annual survey of card fees. It’s getting more expensive to miss a payment, take out a cash advance and transfer a balance. New cardholders are also being charged more for premium rewards on select cards.

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It’s getting more expensive to miss a credit card bill, or take out a cash advance.

Several card issuers have quietly increased fees on new credit card offers, according to CreditCards.com’s annual survey of card fees. New cardholders are also being charged more for premium rewards on select cards and paying more to transfer a balance.

For this year’s Credit Card Fee Survey, we pored over the terms and conditions of 100 popular credit cards. We found that issuers are listing fewer fees overall compared to previous years.

Foreign transaction fees, in particular, have become especially rare on travel cards. Annual fees also continue to be reserved for just subprime credit cards and for premium cards that offer valuable benefits.

However, several lenders included in the survey have boosted a number of other fees included in new offers.

See related:  Is there such a thing as a free credit card? Maybe – here are your options

Credit mistakes and debt get more expensive

The findings in this year’s credit card fee survey underscore just how costly credit cards have become over the years. Although APRs on new credit card offers have slumped recently thanks to rate cuts by the Federal Reserve, they continue to remain near record highs.

The average card APR, for example, currently stands at 17.25 percent – more than two points higher than it stood three years ago.

Meanwhile, many issuers have chosen to hike late fees on new card offers every time the Consumer Financial Protection Bureau increases the maximum allowable fee. Five-percent balance transfer fees have also become more common this year, CreditCards.com’s 2019 fee survey found. So have 5-percent cash advance fees.

As a result, some consumers who haven’t shopped for a new card in a while may be startled to find such high fees lurking in their agreements.

“It’s really important to read all the fine print,” says Beverly Harzog, a credit card expert at U.S. News and World Report.

Unlike new rewards, issuers don’t typically advertise rate hikes or fee increases on new cards. Instead, they leave it up to you to dig through the agreements they include with new offers.

Survey highlights 

  • Issuers are levying fewer fees overall. Among the 100 cards included in the survey, we counted 438 potential fees listed on new cardholders’ credit card agreements, including annual fees, balance transfer fees, cash advance fees and penalty fees.
  • Most cards advertise just a small handful of fees. The average number of potential credit card fees has fallen to 4.38 fees per card – down from 5.5 fees in 2018.
  • Foreign transaction fees have become all but extinct on travel credit cards. More than half of the cards included in the survey (54) waive foreign transaction fees. That’s up from 48 cards in 2018. But they have become especially rare on travel cards: Just one of the travel cards included in the survey charges a fee for cross-border purchases.
  • Late fees are the most common type of credit card fee. All but one card included in the survey charges some kind of late fee. However, four cards included in the survey will forgive a cardholders’ first late payment.
  • Penalty fees are rising. Seventy-four cards included in the survey charge up to $39 per missed payment, which is the maximum amount lenders are allowed to charge on personal cards. Three business cards charge more than $39 per late fee.
  • Cash advance fees are also going up. Sixty-four cards now charge up to 5 percent per transaction for cash advances. Fourteen cards charge up to 4 percent.
  • Transferring a balance is growing more costly. Many cards included in the survey offer temporary fee promotions, ranging from 0 to 3 percent per balance transfer. But more than a quarter now charge a much higher standard balance transfer fee of 5 percent.
  • Annual fees are rising on select cards. The total number of cards charging an annual fee has remained stable. Twenty-six cards included in the survey charge an annual fee. However, several cards included in the survey are advertising bigger fees – often in tandem with stronger rewards and benefits.

See previous credit card fee surveys: 2018, 2017, 2016, 2015

Most annual fee cards are premium credit or charge cards

Just over a quarter of the cards included in this year’s survey charge annual fees. Some cards are designed for consumers with thin or damaged credit.

For example, three of the cards included in the survey – the Credit One Bank Platinum Visa for Rebuilding Credit, the First Premier Bank Secured Credit Card and the Wells Fargo Secured Credit Card – are geared for consumers with lower scores. Another subprime card included in the survey, the BankAmericard Secured card, recently dropped its $49 annual fee.

However, most annual fee credit cards from major issuers – including in CreditCards.com’s survey sample – are premium cards designed for consumers with excellent credit. In exchange for a sizable fee, consumers are often awarded bigger bonuses and benefits.

Often, these types of cards also allow consumers to try out a card for a year before committing to a fee. Nine of the cards included in the fee survey, for example, waive annual fees in the first year. Most annual fee credit cards are travel cards. However, a growing number of annual fee cards offer premium rewards on other types of purchases, such as dining and groceries.

The cost of annual fee cards continues to range widely, CreditCards.com found. Some of the most famous annual fee credit cards, such as the Chase Sapphire Reserve card, the Platinum Card® from American Express and the Citi Prestige® Card, charge cardholders hundreds of dollars a year. The Chase Sapphire Reserve card, for example, charges $550, and the American Express Platinum charge card has the same annual fee. The Citi Prestige card (which recently went through a major revamp) charges $495 a year – up from $450 in 2018.

However, most premium credit cards with annual fees charge closer to $100. Among the cards included in CreditCards.com’s survey, for example:

  • 12 cards charge between $95 and $99.
  • 4 cards charge between $75 and $89.
  • 1 card charges up to $125, while another card charges $195.
  • 5 cards charge between $29 and $49.
  • Just two cards charge between $400 and $450.

Lenders are boosting annual fees, along with rewards

Some credit card issuers are also increasing fees on select cards in exchange for bigger rewards. American Express, for example, recently increased the annual fee on its iconic American Express® Green Card from $95 to $150. It also introduced improved credit card rewards and benefits, in addition to the higher fee.

American Express is also getting ready to increase fees on a number of other credit cards, including two cards included in this year’s fee survey. For example, it is increasing the annual fee on the Delta SkyMiles® Gold American Express Card from $95 to $99 (waived first year) as of Jan. 30, 2020. It is also increasing the fee on the Delta SkyMiles® Platinum American Express Card from $195 to $250 starting Jan. 30, 2020.

According to Andrew Davidson, chief insights officer at Comperemedia, issuers are finding that many consumers are open to paying higher fees in exchange for more valuable benefits.

Even younger consumers are open to paying a fee if they think they can get a good deal, Comperemedia research found.

“Chase was the catalyst with Sapphire Reserve,” explains Davidson.

But American Express has been tapping into this trend recently by increasing the fees on its popular range of charge cards and adding valuable perks that help cancel out the cost of the annual fee, he says.

For example, the American Express® Gold Card and the Platinum card award travel credits that are worth $100 to $200 or more apiece.

“The idea is to make the annual fee increase a wash in consumers’ minds,” says Davidson. “It’s a bold strategy, but it appears to be working.”

Foreign transaction fees are disappearing

Most travel cards are also luring cardholders by waiving foreign transaction fees. Only one travel card included in the survey – the no-annual-fee American Airlines AAdvantage MileUp℠ Card – charges a fee for international charges.

Travel cards aren’t the only cards to waive foreign transaction fees. Other everyday cards, including cash back cards, have also gotten rid of international charges.

Among the cards in CreditCards.com’s survey, 54 allow consumers to freely use their cards abroad. Some issuers, such as USAA, Discover and Capital One, don’t charge a foreign transaction fee on any of their credit cards.

See related:  ‘Upgrading’ to a no-fee credit card

There are more balance transfer fee promotions – but also higher fees

Despite increasing competition for consumers willing to pay a premium for luxe benefits, lenders appear to be sending fewer offers with annual fees, according to financial firm CreditSuisse.

Instead, issuers are increasingly going after consumers who carry a balance, says analyst Moshe Orenbuch. An analysis by CreditSuisse, for example, found that lenders sent significantly more offers advertising a 0 percent balance transfer offer in September, compared to the previous year.

Lenders also appear to be targeting borrowers with promotional balance transfer fees, CreditCards.com found. Some cards included in the survey, for example, waive balance transfer fees for a short period or don’t charge them altogether.

A growing number are also offering cheaper balance transfer fees for a short period. For example, 11 cards included in the survey offer a promotional 3 percent balance transfer fee. Once the promotional period passes, balance transfer fees often rise to 5 percent.

According to CreditCards.com’s fee survey, 5 percent is now one of the most common balance transfer fees. For example:

  • 47 cards charge a standard balance transfer fee of 3 percent, which has long been the most common balance transfer fee.
  • 26 charge a 5 percent fee.
  • 6 cards charge a 4 percent balance transfer fee.

Harzog recommends consumers avoid paying more than 3 percent to transfer a balance. But many cards with the longest promotional periods, such as the Citi Simplicity® Card, charge 5 percent.

Cash advance fees are also growing more expensive

According to CreditCards.com’s fee survey, several card issuers have also increased cash advance fees this year. For example, at least eight cards have increased fees to a maximum of 5 percent since the summer. Among the cards included in the survey:

  • 64 cards now charge up to 5 percent per transaction to borrow cash from your credit line.
  • 17 cards cap cash advance fees at 3 percent.
  • 14 cards charge a maximum cash advance fee of 4 percent.
  • Only three cards allow free or low-cost cash advances.

Penalty fees keep going up

Even though the Credit CARD Act of 2009 imposes strict restrictions on penalty fees, lenders are still managing to slowly increase the amount they charge, CreditCards.com found.

For example, the Consumer Financial Protection Bureau recently increased the maximum allowable late fee for personal credit cards to $39, and many card issuers have responded by pushing up their maximum fees. For example, among the survey’s 100 cards:

  • 74 cards now charge up to $39.
  • 18 charge up to $35 to $38.
  • 4 charge between $20 and $25.
  • 1 doesn’t charge a late fee at all.
  • 3 business cards, which aren’t subject to the same restrictions as personal cards, charge late payers up to $49.

Just four cards included in the survey forgive cardholders’ first late payment.

See related:  More cards are getting rid of credit card fees

Bottom line

Credit card issuers continue to add valuable perks and benefits to new offers. However, many lenders are also quietly increasing fees in order to help pay for those rewards.

In most cases, “if you pay your bills on time, you don’t have to worry about all these fees,” says Harzog. However, you can also avoid paying other kinds of fees, such as balance transfer fees, by shopping around for less expensive cards.

Methodology

The Credit Card Fee Survey of 100 U.S. credit cards was conducted in November 2019 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.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: August 12th, 2020
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13.91%
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15.48%
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16.09%
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15.82%
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16.12%

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