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Before getting a new credit card or using one you already have, it’s important to understand potential fees you may incur.

Not all cards have the same fees. Some fees might be worth the additional cost for you get in return. That’s why it’s so important to weigh the pros and cons of each add-on and the different fee structures you may encounter.

Many credit card fees can be avoided if you know what to look out for. That’s why it’s important to educate yourself and be honest about how you use (or will use) your credit card. Here are some common credit card fees that you should watch out for.

When Choosing a Credit Card

APR (Interest Rate)

Interest is charged each month you carry a balance on your credit card. It is calculated as a percentage of the balance remaining. The rate will vary greatly depending on your credit score, which credit card you are using and if you are eligible for promotional financing.

Typically, if you have a lower credit score you’ll have a higher interest rate. Some cards have introductory financing offers such as a lower APR for the first 6 months – 24 months. Your eligibility depends on the promotion running when you apply, as well as your credit worthiness.

Foreign Transaction Fees

These are charged depending on card usage, meaning that you’re only charged the fee if you buy a good/service in a foreign country or from a company that’s located in a foreign country.

You may have heard this fee under the term “currency conversion fee”. Cards use them to make up for the cost of converting foreign transactions into US dollars. Even if the transaction is made in US dollars, this fee may still be applied but it depends on the terms of your credit card. It’s typically a small percentage of the transaction and varies by card issuer.

If you’re a frequent international traveler, it may be advantageous to look for a credit card without a foreign transaction fee. Nerdwallet has some great suggestions for credit cards without foreign transaction fees.

Annual Fee

This is something you should evaluate before applying for a credit card. Annual fees are charged once a year, typically on travel reward cards or secured credit cards.

Secured credit cards are a good way to build or rebuild credit, but it’s likely that you won’t earn rewards. If you have poor or no credit, a secured card may be worth the annual fee while you build credit and prepare for a traditional credit card.

For travel reward cards, the annual fee may be worth paying if you charge a large amount each month because you’ll be earning a higher reward rate than some other credit cards, and more likely to recoup the cost of the fee faster.

If you take advantage of a special sign-on bonus you may get enough rewards to recover the annual fee cost for the first year upfront. After that, you can always contact the credit card issuer and ask for the annual fee to be reduced or waived entirely. It can’t hurt to ask!

It all comes down to the math. You may get more from the travel rewards card less the annual fee, or the standard cash-back credit card might be more beneficial based on how frequently you use your card.

Balance Transfer Fees

These apply to you only when you move your balance from one card to another. Fees vary depending on the card issuer and your credit worthiness.

Many introductory offers will give 0% interest for a period of time, before resuming a higher interest rate. The fee for the actual balance transfer may be worthwhile if you are planning to pay off your existing balance before the promotional interest rate expires.

Special Services Fees

Cash Advance Fees

A cash advance fee is charged when you borrow cash from an ATM against your credit card. This fee is avoidable but may be something of use if you have limited savings to draw from in the event of an emergency.

Fees are charged as a percentage of what you borrow, plus potentially higher interest rates on the advance amount and associated ATM fees. Before taking on a cash advance, determine all the applicable fees so you know the real cost. There may be alternatives that will cost you less in the long run.

Payment Protection Fees

This monthly fee is for an additional service that provides minimum payments if you are unemployed or face a qualifying hardship. Also known as payment protection insurance, it’s similar to an insurance policy on your credit card.

Depending on your monthly balance this may be expensive because the cost is determined based on a percentage rate or by a certain number of cents per $100 of your balance.

Paper Statement Fees

Some banks charge a fee each month to receive an account statement by mail. With online statements easily accessible and free, this is probably not a worthwhile fee to be paying. It can take days for your statement to reach you, and you can get up-to-date information online without an additional fee.

Replacement Card Fee

If your card is lost and you request a new one, your card issuer may charge a fee for a replacement. Many issuers will give you at least one for free, but this isn’t a guarantee. If you request expedited processing or mailing you may be charged more than the regular replacement fee. Keep this in mind if you ever lose your card or are prone to losing cards.

Over-The-Limit Fee

If you exceed your credit limit, you may be charged an over-the-limit fee. However, the Credit CARD Act of 2009 protects you unless you’ve opted into the program. Enrolling in the program will prevent your card from being rejected at the register. This fee is an optional expense and can be avoided if you don’t charge your entire credit limit each month.

Fees Associated With Payments

Late Payment Fee

If you fail to make the minimum payment by your due date a late payment fee may be charged. Depending on the card, the amount will vary. You can easily avoid this by enrolling in automatic payments or setting a reminder for you to pay your bill every month.

If you happen to make a one-time slip and forget to make a payment, call your credit card issuer. The fee may be redacted if you have a good track record of making payments on time; it can’t hurt to ask!

Returned Payment Fee

If you make a payment on your credit card and it is returned because of insufficient funds in your account, you’ll be charged a returned payment fee. Similar to a bounced check fee, it’s typically a flat fee for each instance that the payment bounces. If you don’t notice a bounced payment, you may incur additional fees. Be careful this could add up quickly!

Reward Recovery Fees

If you don’t make payments on time you may be charged a fee to reinstate your rewards. It’s also possible that you may be unable to get your points back until your payments are up-to-date. Depending on the card issuer it can be a small fee, sometimes in addition to a late payment fee. Also, when you eventually redeem the points you may be charged a Reward Redemption Fee (see more below).

Rewards Fees

Reward Redemption Fees

These are commonly associated with travel redemption; some credit cards will charge a booking fee for you to redeem miles. Depending on how you’re booking travel they pay not apply (i.e. booking online instead of over the phone). Read the fine print on your terms and conditions before redeeming rewards to see how you can avoid possible fees.

“In”Activity Fees

Charged for non-use of your card, this happens if you don’t use your card for an extended period of time. There are limitations enacted by the Credit CARD Act, but it’s possible to still be charged and rebated back once you charge the yearly minimum. Read the fine print on these because it depends on your credit card. Fees can range $50-100 yearly as noted by

Miscellaneous Credit Card Fees

Application or Processing Fee

This is a fee charged when you apply for the credit card, namely to cover the cost of evaluating your application. It is unlikely you’ll see this fee, however it’s still possible. If you have a lower credit score it’s more likely you’ll encounter this fee.

Merchant Surcharge

This may be applied across all credit cards used at a particular merchant. The surcharge is the fee the merchant sets for using plastic instead of cash. The cost depends on the merchant, not your card issuer or bank. The best way to avoid this fee is to use cash at merchants that employ this practice.

Next Steps

Now that you understand all the fees you may encounter, determine what fees you can avoid based on what services are wants versus needs. Rank what features are most important factoring in your expected credit card usage. An online comparison tool will simplify the decision making process. Nerdwallet has an easy-to-use tool that breaks down your credit card options by: card type, annual fee, network preference credit score and balance transfer fees.

Fees and promotions change frequently on credit cards, so before applying for a new card be sure to read the fine print. If you have additional questions, contact the card issuer or your financial institution.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.