Changes to credit card fees have decreased, foreign transaction fees are going away, and the rest can be avoided.
When it comes to credit card fees, consumers caught a bit of a break in 2017, according to CreditCards.com’s annual survey. Changes to fees have slowed to a crawl, one travel-related fee is going away and the fees that remain can mostly be avoided by good payment behavior.
The 2017 Credit Card Fee Survey reviewed the terms and agreements of a representative sample of 100 widely held general-purpose cards to get a snapshot of the current fee environment. (See methodology.)
- Credit cards have an average of six fees (5.91, rounded up).
- Foreign transaction fees continue to fade away. The fee, which typically adds 3 percent to any foreign charge, was charged by 77 cards in 2015. Now, it’s down to 56.
- Late payment and cash advance fees remain nearly unavoidable: They’re charged by 99 and 98 of the 100 cards, respectively.
- Balance transfer fees are also very common, mandated by 76 of the 89 cards that allow such transfers.
- Only 24 of the 100 cards charge an annual fee.
- Just four cards charge the once-common over-limit fee.
- The number of fees cards charge varies greatly, from a minimum of one to a maximum of 12 different charges.
At the low end, the Pentagon Federal Credit Union Promise Visa charges one fee, and that’s only if cardholders request a paper statement in addition to the online copies available free. Conversely, the First Premier Bank credit card charges up to 12 fees, including uncommon fees for items such as for credit limit increases and additional cards.
Fewer fee changes
CreditCards.com has observed a steady slowdown of changes made to fees. Between June 2015 and July 2016, 86 out of 100 surveyed cards made some sort of fee adjustment, but from July 2016 to July 2017, only 33 cards show fee changes.
Card issuers have now had plenty of time to recover from the Great Recession and adapt to the requirements of the Credit CARD Act of 2009, which dramatically changed credit card regulations. Issuers have found a comfortable structure when it comes to fees – one that works for them legally and for their credit-hungry customers, according to Paul Siegfried, senior vice president of financial services and card business leader for TransUnion.
“I think as we look back at 2015 and 2016, we’ve really hit that ‘stable’ zone,” he said.
|CARDS WITH THE MOST, FEWEST FEES
|Number of fees
|Number of fees
|First Premier Bank Mastercard Card
|Pentagon Federal Credit Union Promise Visa
|BankAmericard Secured card
|Sam’s Club Mastercard
|PNC Points Visa
|Capital One Secured Mastercard
|Journey Student Rewards from Capital One
|KeyBank Key2More Rewards Credit Card
|Spark Miles Select by Capital One
|Blue Sky from American Express
|Spark Classic from Capital One
|Hilton HHonors Card from American Express
|Capital One Spark Cash Select for Business
|10 other cards
|SonyCard Visa from Capital One
|15 other cards
|Capital One Platinum Card
|Source: CreditCards.com research, July 2017, from a representative sample of 100 widely held cards.
Passing up an extra buck
Consumers even caught a break from a federal regulator’s goof.
Credit card issuers had the opportunity over the past year to increase late fees for repeat offenders, to $38. The Consumer Financial Protection Bureau had ordered banks to make an inflation adjustment and cut the maximum late fee to $37 in 2015. The next year, the agency said it made a “miscalculation” and allowed the fee to immediately rise back to $38.
Some issuers did raise this fee, and their adjustments comprise the majority of the changes we found in our survey. But other banks didn’t bother: 18 kept late fees capped at $37.
Changing fees is a hassle for banks, Siegfried said. When fees change, card issuers “must then give you a full disclosure to show you the change in terms. And then they give cardholders the option to reject the new terms [and close the card]. It takes work – and it can be expensive. Issuers may have just determined that it’s not worth the upheaval.”
Issuers want to stay competitive and encourage cardholder spending, too, said Kimberly Gartner, founder and CEO of the Kimberly Gartner Group, a consultancy specializing in financial services.
“If we are thinking about the customers who are paying close attention to card terms and fees, if they were to get yet another notice about changing terms, they might start thinking, \u2018They are changing it again, what’s up with this?’” she said. “So, from an issuer’s perspective, there could be some risk there if you are trying to attract and retain customers.”
Foreign transaction fees continue fading away
It’s easier than ever to find cards with no foreign transaction fees, the survey found.
Of the 100 surveyed cards, slightly more than half (56 cards) charge a foreign transaction fee, which is typically 3 percent of each transaction in U.S. dollars made abroad. Since 2015, 21 fewer cards charge the fee.
“What [the survey] captured last year was tremendous competition in this space in general,” Gartner explained. “And I think we are seeing a lot of that competition continue. There also seems to be a large effort to retain those high-value, elite, frequent traveler-type cardholders and keep them using their top-of-wallet cards.”
This trend will likely continue, too, as consumers become more credit-savvy.
“I think issuers are watching how consumers make their card decisions – how they are spending money, using and picking cards, and so on,” Gartner added. “And issuers are reacting accordingly, in ways that catch and retain cardholders.”
The standard array of card fees
Here’s what the rest of the credit card fee landscape currently looks like, based on this year’s CreditCards.com fee survey:
Annual fees: Only 24 of the cards surveyed charge annual fees, nine of which lower or waive the fee for a new cardholder’s first year. Annual fees can be as low as $25, as charged by the Wells Fargo Secured card, to as high as $450, which is charged by the Citi Prestige card.
Balance transfer fees: Of the 89 cards that allow balance transfers, 76 cards charge a fee for doing so. Balance transfer fees are typically 3 percent of the amount transferred or $5-$10, whichever is greater.
Six of the fee-charging cards – Slate from Chase, BankAmericard for Students, BankAmericard Mastercard, Wells Fargo Cash Wise card, Wells Fargo Rewards card, and Wells Fargo Cash Back College Card – currently offer reduced or waived balance transfer fees for new cardholders who make transfers soon after opening their account.
|CARDS THAT DON’T CHARGE BALANCE TRANSFER FEES
Source: 2017 CreditCards.com Card Fee Survey
Cash advance fees: Those who use their credit card to take cash out of an ATM will pay extra for that convenience. Cash advance fees are one of most common and expensive fees issuers can tack on to your balance. In this year’s 100-card survey, 98 charge a fee for cash advances, typically $10 or 5 percent of the amount advanced, whichever is greater. In 2016, cash advance fees generated $26.6 billion of income for issuers, which comprised 27 percent of their total fee income, according to R.K. Hammer’s latest industry report.
The Pen Fed Promise Visa Card is the only card surveyed in 2017 that never charges a cash advance fee. The two Navy Federal Credit Union cards in the survey – the cashRewards Visa and the Platinum card – don’t charge a cash advance fee for transactions performed at Navy Fed branch ATMs.
Penalty fees: Nearly every card will penalize consumers for making a late payment, while other penalty fees are not quite as common. Overall, penalty fees accounted for just 12 percent ($12 billion) of issuer fee income last year, per R.K. Hammer.
- Late fees: The late fee continues to be the most universal credit card fee, which is typically “up to $37,” as charged by 59 cards in this year’s survey. Only three cards (Discover it® Cash Back, Discover it® Student Cash Back and Discover it® Student chrome) let a cardholder’s first late payment slide, fee-free.
- Returned payment fees:Returned payment fees are charged by 80 cards, nearly unchanged since 2015 when 81 cards charged this penalty fee. The typical cost of returned payments? “Up to $37,” per 33 of the cards surveyed in 2017.
- Over-limit fees: CreditCards.com found only four of the 100 surveyed cards charge over-limit fees. All four are business credit cards, which typically carry higher fees anyway, because they don’t fall under CARD Act regulations like personal credit cards do.
Some cards pile additional fees on top of the standard transaction and penalty fees listed in the terms and conditions. CreditCards.com found not all issuers readily disclose these small, miscellaneous fees upfront. Based on the issuers that disclosed such information, those extraneous fees may include some – or all – of the following:
- Wire transfer fee: 8 cards
- Overdraft protection fee: 8 cards
- Stop payment fee: 16 cards
- Statement copy fee: 14 cards
- Expedited replacement card shipping fee: 10 cards
- Returned check fee: 20 cards
- Account reinstatement fee: 9 cards
Individual consumer cardholder agreements typically hold all the details about these “oddball” fees, as the CARD Act doesn’t mandate their inclusion in card terms and conditions. But, if you use credit cards wisely, you can avoid ever paying such fees, even if a card charges for this, that, and the other thing.
“It’s all about being as careful as you can when it comes to using your card,” Gartner said. “Be as educated as possible.”
Know your credit card habits
Since the card fee landscape varies greatly, shop around for a card that fits your spending habits to avoid paying unnecessary fees. For example, if you want to make a balance transfer, you may want to apply for a card that waives the balance transfer fee for new cardholders.
“I think it depends on how you are going to use your card,” Gartner said. “If you are paying off your balance in full every month, then the interest rate might be less important than the annual fees. If you are still paying down a balance, you might be juggling multiple cards and paying more attention to their total cost, which may include fees.”
If you already have a card you’re not happy with, fees included, don’t fret. Keep using it wisely to strengthen your credit history so you have more valuable card options to choose from when you decide to move on.
“Make your payments and make them on time,” Siegfried advised. “You will be rewarded for your performance, and issuers give you more choices. You also won’t be subjected to late fees if you make your payments on time.”
Remember, you don’t have to settle for a costly card.
“Consumers are more in control than they have ever been,” Siegfried added. “They are in control of who they want to do business with and how they want to do business. And that’s exciting.”
Survey methodology: The Credit Card Fee Survey of 100 U.S. credit cards was conducted in July 17-31, 2017, 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.
Editor’s note: Card APRs mentioned in this story may have been updated since publication. See the card issuer’s site for the most current offering.
See related: Consumer protection bureau warns about pay-by-phone fees, Best no annual fee cards