How Much Does a Credit Card Cost?

Understanding how credit card fees work is the key to making smart swipes.

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Updated June 6, 2024
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Chances are that at some point, you will be looking to open a credit card account. According to the Consumer Financial Protection Bureau, 5.7 million new credit card accounts were opened in July of 2018 alone.

Having and using a card responsibly can help build your credit history and boost your credit score, which can enable you to take advantage of financial opportunities in the future. And though many credit cards are free to use, there are still costs and fees that could pop up if you’re not careful.

Here is a look at some of the costs you should be aware of before applying for or using a new credit card.

How much does a credit card cost?

There are several types of credit cards available, and the costs associated vary from type to type.

Many are free to use, but others charge an annual fee. Beyond this upfront cost, credit card companies charge interest and additional fees for services, missed payments, late payments, making international purchases, and a number of other activities.

Knowing what fees and penalties are associated with using a credit card is crucial. Information about these policies should be detailed in the card’s terms and conditions statement. If you’re not sure what costs are associated with a card, call their customer service line and ask questions.

10 credit card costs to look out for

Here are some key items to look for when reviewing the terms and conditions of a credit card.

1. Annual fee

This is a fee charged once per year and can range from around $90 to more than $500. Usually these fees are applied to credit cards that offer some kind of reward or benefits program. The only way to avoid an annual fee is to choose a card that doesn’t charge one.

2. Interest fees

Card interest is calculated as APR, or annual percentage rate. The rate you are offered is set by the issuer of the card, and your credit score is a determining factor.

The card’s terms and conditions will detail APRs and policies about paying balances in full and penalties for late payments. It will also explain the different APRs for specific types of charges, such as balance transfers and cash advances.

To avoid paying interest fees on regular purchases, simply pay off your balance in full every month.

3. Late payment fees

When you miss the due date for your monthly minimum payment or pay less than the minimum payment, you are likely to be charged a late fee. Depending on how late you are, your interest rate and credit score might also be affected.

4. Over-the-limit fees

If you go over the credit limit set by your card issuer, you may be charged a fee. However, the Credit CARD Act of 2009 requires card issuers to gain permission for your balance to be able to exceed the limit. If you don’t opt in to allow your account to go over the limit, you won’t be charged this fee.

5. Returned payment fees

If your credit card payment bounces, you could be charged a returned payment fee on top of what is owed for your monthly payment. A late fee may also be applied, depending on the card’s policies and how soon you make a payment that successfully goes through.

6. Foreign transaction fees

When you make international purchases on your credit card, the issuer has to convert the money from whatever currency you are purchasing into U.S. dollars. Some cards may charge a fee for this service, though many will not, especially travel-related cards.

If you do a lot of international travel (or frequently make online purchases from international retailers), choosing credit cards with no foreign transaction fees could save you money.

7. Balance transfer fees

Transferring balances from one or many credit cards to another to take advantage of a low APR can be a good financial move, but there may be fees applied. Some cards can charge you between 1% and 5% of the amount you are transferring, which would cut into the amount you’re saving by making the switch.

8. Cash advance fees

Some credit cards allow you to use your line of credit to get cash through checks or ATM withdrawals. However, there is usually a fee charged on top of the amount of money you withdraw. Sometimes the APR applied to these transactions is higher than what you would normally pay.

9. Penalty APR

In addition to a late fee, your APR may also increase as the result of late payments. Though the CARD Act of 2009 placed restrictions on how and when this is applied, card issuers can review your APR and raise it if you are 60 days or later on making a payment.

10. Deferred and introductory interest

Some cards offer a low introductory APR or no APR if a balance is paid off within a certain amount of time. For example, you may have a 0% APR on all your purchases for the first year of owning a new credit card.

But if a balance isn’t fully paid when the stated time period is over, you could be charged interest on the remaining amount owed.

Though having a credit card can help you build a strong financial future, it’s important to know all of the costs associated with using that card. This can help you make smart decisions about where your money goes and reduce your overall costs.

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Robin Kavanagh

Robin is a freelance writer who lives on the South Carolina beach. She has spent the last 20 years writing about all kinds of topics for publications such as The New York Times, Yes! Magazine, Next Tribe, Parenting, and various trade magazines. On, you’ll find her mostly writing about smart ways to use credit cards, navigating personal loans, how to save when traveling, and ways to improve your financial health.