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Lesser-Known Credit Card Fees You Might Be Overlooking
December 12, 2024
Not all credit card fees are obvious. Beyond the well-known charges like interest or late fees, there are a number of lesser-known fees that can catch cardholders off guard. These may not appear often – which is why many people overlook them – but they can cost you money if you’re not aware. Being informed about these hidden fees will help you avoid unpleasant surprises on your bill. Below are several oft-overlooked credit card fees and how to steer clear of them.
1. Authorized User Fees on Premium Cards
When you add an authorized user (like a spouse or family member) to your credit card account, some issuers charge a fee for the additional card. This is common on premium rewards cards. For example, the Chase Sapphire Reserve charges $75 per authorized user, and the Platinum Card from American Express now charges $195 per added user per year. Many cardholders aren’t aware of these fees because plenty of basic cards don’t charge for authorized users. But on high-end cards, an authorized user fee can be a sneaky extra cost, essentially an extension of the annual fee.
How to avoid it: If you have a premium card, consider carefully whom you add as an authorized user. Only add someone if they truly need their own card and will use the benefits that justify the fee. In some cases, it might be cheaper for that person to get their own card. Alternatively, look for cards that offer free authorized users – for instance, some top-tier cards let you add a few users at no cost (the Capital One Venture X allows up to four free authorized users). Always check your card’s terms so you’re aware of any charge for additional cardholders. If you’re not willing to pay an authorized user fee, stick to cards that don’t impose them.
2. Inactivity or Maintenance Fees
Believe it or not, some credit cards will charge a fee if you don’t use the card enough. These can be listed as inactivity fees, dormancy fees, or monthly maintenance fees. They’re most commonly found on certain subprime or secured credit cards aimed at people with bad credit. For instance, some cards have an annual fee plus a monthly service fee after the first year – effectively penalizing you for simply holding the account. One notorious example is the First PREMIER Bank credit card, which can charge a monthly fee on top of an annual fee if your credit limit is low. These fees are often buried in the card agreement and can easily be overlooked by users who don’t read the fine print.
How to avoid it: Read the card’s terms and conditions before you apply, especially if you’re getting a card designed for building or rebuilding credit. Opt for cards that don’t charge maintenance fees – many reputable issuers (even of secured cards) have no monthly fees or inactivity charges. If you already have a card with a potential inactivity fee, make a small charge on it every couple of months (and pay it off) to keep it active. However, if a card has a monthly “maintenance” fee regardless of usage, you might want to reconsider keeping it. In the long run, switching to a no-fee card can save you money. In short, choose cards with no inactivity or monthly service fees so you won’t be dinged just for having open credit.
3. Paper Statement Fees
Some banks and card issuers charge a fee to send you a paper statement in the mail. This is a relatively small fee (often around $1 to $5 per month), but it’s a completely unnecessary expense in the digital age. For example, a major U.S. bank might charge $2 for each mailed statement if you haven’t opted into electronic statements. Over a year, that could be $24 wasted. Many people might not notice this fee because it’s small and buried in a clutter of statement details, ironically charged on the statement itself.
How to avoid it: Go paperless. The simplest solution is to switch to electronic statements, which almost always eliminates any paper statement fee. You can typically do this through your online banking or mobile app settings. Electronic statements are not only free, but also more secure (less risk of sensitive info getting lost in the mail). If you prefer paper for record-keeping, consider downloading and printing the PDFs at home to avoid the fee. And if you’re being charged for paper statements and didn’t realize it, contact your issuer – they’ll often help you enroll in e-statements and may refund any recent paper fees as a courtesy.
4. Expedited Payment Fees
If you’re in a rush to make a payment on your credit card (for example, your due date is today and you call the issuer to make a last-minute payment by phone with a representative), you might incur an expedited payment fee. Essentially, some issuers charge a fee for payments handled by a live agent, especially if you need it posted quickly to avoid a late payment. This fee can be around $10 or $15 in some cases. It’s not very well advertised – you usually find out about it when you’re desperate to avert a late fee and the phone agent says there’s a fee for an expedited phone payment. By U.S. law, card companies can’t generally charge a fee just for the method of payment, except when you request expedited service via a customer representative.
How to avoid it: Plan ahead with your payments. To never need an expedited payment, set up automatic payments for at least the minimum due, so you’re never late. If you do find yourself scrambling on the due date, try to make the payment through the automated phone system or online/mobile app – those methods are typically free and post the same day or next day. The fee usually applies only if a live person assists you and rushes the payment processing. So, avoid calling in last-minute; use self-service payment options. And of course, if an emergency led to a late payment and you got hit with a fee, you can always ask the issuer to waive the expedited fee or the late fee – but it’s better not to cut it that close in the first place.
5. Dynamic Currency Conversion (DCC) Fees
Dynamic currency conversion is a sneaky merchant-side fee that credit card users often overlook. It’s not a fee your card issuer charges, but it’s a costly gotcha when traveling abroad. Here’s how it works: when you make a purchase in a foreign country, sometimes the merchant or the card terminal will offer to charge you in U.S. dollars instead of the local currency. It might sound convenient to see the amount in USD, but they often use a poor exchange rate and tack on a hefty conversion fee within that rate. In practice, you end up paying around 5-7% more (the exact “markup” varies). This dynamic currency conversion fee is essentially hidden in a bad exchange rate. Many travelers don’t realize that opting for USD at the point of sale is usually much more expensive than paying in local currency and letting Visa/Mastercard do the conversion.
How to avoid it: Always choose to pay in the local currency when abroad. If a payment terminal or receipt gives you an option, decline conversion to USD. Let your own credit card network handle the currency conversion; their exchange rates are typically wholesale and much better. Also, using a card with no foreign transaction fees (as mentioned earlier) in combination with saying “No” to DCC means you’ll get the best possible cost on international purchases. Make it a habit to double-check the currency on the receipt before you sign or enter your PIN. If it shows USD when you’re in Europe, ask them to redo it in euros (or simply insist on local currency). By staying alert, you can avoid this hidden fee that merchants or ATMs may push onto you.
6. Convenience Fees for Certain Payments
Using your credit card to pay for things like taxes, tuition, mortgage or rent, or utility bills can sometimes incur a “convenience fee” charged by the service provider. These are essentially processing fees for accepting credit cards on transactions where cards aren’t the norm. For instance, if you use a third-party service to pay your rent with a credit card, they might charge around 2.5%–3% of the transaction as a fee. Similarly, paying your IRS tax bill by credit card incurs a fee of about ~2% by the payment processor. These fees often catch people off guard because you’re trying to earn rewards or handle a big expense on your card, and suddenly the value of points is negated by the extra charge. If you’re not paying attention, you might authorize the payment and only later notice the fee added on.
How to avoid it: Whenever you’re considering paying a bill with a credit card outside of typical retail purchases, check for convenience fees. The company or processor should disclose it before you finalize the payment. Often, using a bank account (ACH) is fee-free for those bills, so it may be better to use that instead of a card. If you really want to use a credit card (perhaps to hit a sign-up bonus or because you need the short-term float), do the math: ensure the value of rewards or the importance of using the card outweighs the fee. As a rule of thumb, a 3% fee will outweigh typical 1-2% cashback rewards, so it’s usually not worth it. Some specific scenarios: Many colleges, utilities, and government services openly state the surcharge for card payments – take those seriously. To avoid these fees, you can also look for alternative methods: for example, some people buy a no-fee money order or use a bill pay service that sidesteps the direct fee (these methods can be complex, though). In general, save your credit card for purchases that don’t tack on extra fees.
Use Technology to Stay Informed: Keeping track of all these niche fees can be challenging, but personal finance tools can help. The Kudos extension, for example, not only helps maximize your rewards but also keeps you aware of your cards’ features. It can remind you which card to use for a given purchase (avoiding, say, using the wrong card abroad that incurs a fee) and centralizes info about your cards. By using a tool like Kudos, you’re more likely to know each card’s terms and avoid stumbling into fees. Plus, maximizing rewards through Kudos’s recommendations can help offset any unavoidable fees and ensure you’re not leaving money on the table.
FAQs about Lesser-Known Credit Card Fees
Do credit cards charge inactivity fees?
Most major credit cards do not charge inactivity fees these days, especially mainstream cards from big banks. However, a few subprime or specialty cards might charge a “maintenance fee” or monthly service fee even if you’re not using the card. Always read your card’s terms. If you see any mention of monthly fees or inactivity charges, consider switching to a card with no such fees. The majority of popular cards have no inactivity fee – they make their money from interest and standard fees instead.
What is a paper statement fee and how can I avoid it?
A paper statement fee is a small charge (often $1–$5) some issuers levy if you choose to receive printed billing statements in the mail. To avoid it, simply opt for electronic statements through your card’s website or app. Going paperless not only eliminates the fee, it also means you’ll get your statement faster (via email) and reduce paper clutter. If you prefer having a hard copy, you can always print out the e-statement yourself without paying a fee.
Why was I charged for paying my credit card bill by phone?
If you were charged a fee for making a payment, it’s likely because you requested an expedited payment through a customer service rep. By law, card issuers can’t charge you for standard payment methods, but they can charge a fee if a live representative helps you make an emergency, same-day payment. For example, “Pay-by-phone fee” or “Expedited payment fee” might appear if you called in a last-minute payment to avoid lateness. To avoid this in the future, use the automated phone system or online payment, which are free. And of course, try to pay before the due date so you don’t need special rush processing.
What is dynamic currency conversion (DCC) in credit card transactions?
Dynamic currency conversion is an optional service offered by some overseas merchants or ATMs where your purchase amount is converted to your home currency (USD) at the point of sale. It might seem convenient, but it usually comes with a poor exchange rate and fees embedded in it. In short, you end up paying more than if you let your credit card network convert the currency. To avoid DCC fees, always decline offers to be charged in USD when abroad – choose the local currency instead. Your credit card company will convert the charge at a fair rate and you’ll avoid the hidden markup.
Are authorized user fees mandatory, and can I avoid them?
Authorized user fees are only charged by some cards (mostly premium ones), and they’re only incurred if you choose to add an authorized user. They are “mandatory” in the sense that if the card’s policy is to charge $X for an additional user, you’ll pay it if you add one. To avoid paying, you can simply choose not to add authorized users on that card, or use cards that offer free authorized user additions. If you want to share a card’s benefits with someone else and your card charges a fee, weigh the pros and cons. In some cases, it might be worth paying (e.g., the user gets airport lounge access valued higher than the fee). But if not, consider alternatives like sharing a no-fee card or each getting your own cards.
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