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What fees do credit cards charge?

What fees do credit cards charge?

Credit card companies don’t make money just by charging interest on purchases and cash advances.

They also have a range of fees they use to earn revenue.

What makes these fees so effective is that they add up to a tidy sum of money, yet they tend to fly under the radar.

In other words, a lot of consumers don’t realise how much money they give to their credit card company each year.

Listed below are eight fees you might be paying. As you’ll see, all of them are avoidable.

Annual fees

Annual fees are the most common type of fees people pay – even though they’re entirely avoidable. At the time of writing, a quick check of RateCity’s online comparison tool found 28 credit cards on the market that didn’t charge an annual fee. Although the numbers will bounce around from year to year, it’s almost certain that there will always be at least some cards that don’t impose annual fees.

Late payment fee

These are the fees you get charged if you fail to make your monthly minimum payment on time.

Dishonour fees

Dishonour fees are imposed whenever a payment to your credit card account is declined.

Overlimit fees

Overlimit fees are imposed if you exceed your credit limit – although they can be charged only on accounts opened before 1 July 2012.

Cash advance fee

These are the fees you get charged if you want to use your credit card as an ATM card.

Additional cardholder fees

Some credit cards will charge a fee if you add another signatory to your account. However, there are cards on the market that won’t impose a fee.

International transaction fee

You’ll be charged an international transaction fee if you use your credit card during an overseas trip. You can also be slugged with an international transaction fee while you’re in Australia, if you make an online purchase from an overseas-based business.

Paper statement fee

Some credit card companies will charge you a fee if you want to receive your statements by snail mail rather than email.

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Learn more about credit cards

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Current Annual Fees

These are the current annual fees on your existing credit card.

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.