Credit card fees and charges
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
18th January 2021
3 minute read
Getting a credit card can be handy way of borrowing money, protecting your purchases, managing existing debt or all of the above. However, under certain circumstances you might have to pay penalty fees or charges, which means that having the card might end up costing you more in the process.
If you are a sensible borrower and don’t overspend, chances are you can get away with paying no fees on a credit card, but it’s still worth checking out your summary box document to shed some light on the particular terms and conditions of your credit card.
Failing that, we’ve put together a short guide on credit card fees and charges, to help you avoid them completely. Especially for instances when you have a 0% interest promotion, it’s worth avoiding any additional charges so you don’t have to pay anything at all for borrowing money.
Why am I being charged extra on my credit card?
Checking your credit card statement to find extra fees or charges can be a very unwelcome discovery, especially if you’re already struggling to make monthly payments. There are certain circumstances with every credit card that will mean you will receive an extra charge, with some examples more common than others.
Usually it has to do with you missing a payment or making a late payment, which will always incur a fee. However, there are plenty of other situations where you might be charged. If you feel like you’ve been charged incorrectly, then it’s worth getting in touch with your card provider.
Circumstances where you may be charged
The following circumstances will usually lead to your credit card provider applying an additional charge, which you will see reflected in your credit card balance by the end of the month:
- Missed a payment – your provider will charge you a flat fee for missing a payment completely. This might also impact your credit score and refusal to pay could land you with a CCJ (County Court Judgement) that can impact your ability to borrow money in the future
- Late payment – making a late payment will usually result in a flat fee, but as long as you continue to make payments there shouldn’t be any other action taken
- Spent over your limit – made a purchase that takes you over your limit? You will receive a flat fee from your card provider and you might even lose any promotional rates that you might have
- Returned payment – if you have spent over your limit, some providers will also return your direct debit or payment to your account, which will result in another flat fee applied to your balance
- Withdrawing cash – most credit cards will allow you to withdraw cash from an ATM but will usually charge you a percentage of the amount you’re withdrawing. It’s often best in this situation to avoid withdrawing cash and stick to spending on the card
- Transfer a balance – unless you have a 0% interest balance transfer credit card, there will usually be a percentage fee for any balance transfers you make
- Monthly or annual fee – some premium credit cards will require you to pay a monthly or annual fee for the privilege of using the card. Sensible borrowers will use all of the perks attached to these cards to make sure they are still saving money by the end of the month. If you don’t think you’ll use the perks, get a credit card with no annual fee
- Spending abroad – most credit cards (apart from travel credit cards) will require you to pay a Non-Sterling transaction fee, which is a percentage fee of what you’re spending. This is in addition to the load fee, which is applied when the exchange rate conversion is made
- Getting a statement – if you request to have a paper statement your credit card provider will usually charge you a small flat fee
- Getting a copy of a transaction – similar to the fee to receive a statement, if you request a paper copy of a specific transaction your credit card provider will also charge you a small flat fee
How to avoid credit card fees
Since there are many different types of credit card, you’ll find that not all the fees and charges mentioned above will apply to you. However, there are certain practices you can stick to which will help you avoid accumulating any credit card fees or charges:
- Check your balance before you spend – most credit card providers will also have an app you can download on your phone, allowing you to check your balance quickly and easily before you spend
- Set up a direct debit – rather than relying on making a payment each month, automate the process by setting up a direct debit. If you want to pay off more on a certain month you can always make an additional one-off payment too
- Don’t withdraw cash – while it might be tempting, withdrawing cash will always incur a fee, so stick to spending on the card instead
- Choose the right credit card for you – make sure you pick up the right credit card for you. Need to transfer an existing balance? Get a 0% balance transfer card. Need to make multiple purchases? Get a 0% purchase card. Going on holiday? Get a travel card. For more advice, read our guide on getting your first credit card
If you want to get a new credit card, make sure you check your credit report first, so you know how high your credit score is. You can also check your eligibility using our free moneymatcher tool, which will indicate the cards you are most likely to be accepted for.