Credit card companies are in the business of making money. It really is that simple. They earn their money through two principle methods. One is through the finance charges that they levy when you make purchases on the card, and the other method is through the use of credit card fees. It should be understood that these are not one in the same. They are different, and knowing more about the fees that a company charges (or does not charge) its customers can help you save money.
Credit card fees can (and do) vary from one company to the next. There is no set schedule for credit card fees. This makes it very important for consumers to read carefully the literature that is supplied by the company in order to know exactly what you will be billed for during the course of your association with the company.
Some of the more common types of fees include:
Annual Fees: Many credit card companies are moving away from this particular fee, but there are still some that use it. The annual fee is generally just a yearly fee, billed monthly, for having the card. Whenever possible, you should avoid credit card companies that charge an annual fee. You get nothing but the card in return for this payment.
Set Up Fee: This, too, is becoming less popular with most companies, meaning they do not charge it any longer. Again, however, there may be some companies that do charge a fee for setting up your account. Read carefully exactly what the fee is and the explanation that the company offers for charging this fee. You may find that working with another company that does not charge this initial fee is a good idea.
Cash Advance Fee: This is one fee that you will find with many credit card companies. This fee is applied to your account if you take a cash advance from the card. It can be a flat fee or it can be a percentage of the cash amount. Keep in mind that this is in addition to any finance charge the company will levy as well.
Late Payment Fee: This fee is assessed when you make a late payment. The trigger date for this fee is the “due date” as it is stated on the bill.
Transfer Balance Fee: Not all companies will charge this fee, but some will. This fee is levied when you transfer a balance from one credit card to another one.
Exceeding the Limit Fee: This fee may be assessed should you exceed your credit limit. Modern technology has made it harder to exceed your limit in that online approval or disapproval from the company is immediate.
Increase Limit Fee: Some companies will charge a small fee when you want to increase your credit limit. Not all do, but some will want to charge this fee.
Bad Check Fee: As with most companies, if you send a bad check the credit card company will usually want to charge for this.
These are just some of the possible fees that a credit card company may charge to your account. It is important to read their literature carefully in order to know what they will charge for and what they do not charge for.