CardClub Education

Fees and Charges

Understanding Common Charges Associated With Credit Cards

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Credit card companies employ a bevy of tactics to profit off the convenience offered by their product. Fees, penalties, and surcharges all come with the territory. Don't be caught unaware.


The benefits of any credit card are often tied to an array of mandatory fees. These fees can quickly eclipse the value of a card’s convenience, if improperly managed. They’re also rarely-discussed in promotional materials for credit cards, and sometimes outright hidden from customers. Because fees and charges are among the more confusing, dismaying, dangerous aspects of credit cards; we’d like to shed light on every type you might encounter as a cardholder - from membership fees, to foreign transaction charges.

Membership Fees: Annual v. Monthly

Annual Fee

The annual fee is perhaps the most straightforward cost associated with a credit card. Ranging widely from $25 to $550 or more, the particular amount of this charge directly relates to the card's features and associated benefits. For some high-end cards offering lavish perks like airline miles and hotel stays, the annual fee can be viewed as an investment in return for valuable rewards.

Monthly Fee

While less common, some cards also come with a monthly membership fee, typically falling between $5 to $15. This is especially confusing, and it’s different from a card with an annual fee that amortizes the charge on a monthly basis. This should factor into your decision-making process when evaluating a card's true cost versus its benefits, as there’s really no reason for a company to charge both types - other than to obscure the true cost of it’s product.

Cash Advance Fees:

Cash advances are a Faustian bargain. Most credit cards have a feature allowing users to draw upon their line of credit at an ATM, turning credit into liquid cash. This can be a lifesaver in a true emergency. However, you'll be hit with a fee of around 3% of the amount withdrawn, with a typical minimum charge of $10, making it the single-most expensive way to obtain cash.

Over-Limit Fees:

Overshooting your credit limit, whether intentionally or by accident, can result in over-limit fees. Regulatory shifts have made these fees increasingly rare, but they still exist and range from $25 to $40. Credit products carrying an over-limit fee tend to be expensive and low-quality. If a credit limit is imposed on a user, the imposing entity should bear responsibility for enforcing the limit - not the user.

Foreign Transaction Fees:

If you use your card to pay online in a foreign currency, or plan take it with you on international journeys, be prepared to pay an exchange rate fee. These fees can be a silent budget-breaker on vacations, often amounting to 1% to 3% of the transaction value.

Late Payment Fees:

Missing a minimum payment is one of the worst things you can do for your credit. Not only will it harm your score; you'll also get slapped with a late payment fee, ranging from $25 to $40. This fee applies to every single credit card on the market today.

Returned Payment Fee:

If a payment is returned due to insufficient funds or for other reasons, expect a returned payment fee in the neighborhood of $25 to $40. This fee is another uninvited guest that can appear if you're not diligent with your account management.

Regulatory Safeguards:

The Credit CARD Act of 2009

In the United States, the Credit CARD Act of 2009 provides a layer of consumer protection by mandating that credit card companies give a 45-day notice prior to modifying certain fees, including but not limited to annual fees, cash advance fees, and late fees.

This allows consumers reasonable time to reassess their options, whether that means budgeting for the higher fee, opting out of certain features, or switching to a competitor with better terms. This mandatory notice period empowers consumers to make proactive and informed decisions about their credit card accounts.

Moreover, the Credit CARD Act of 2009 stipulates that the 45-day notice must be clear and easy to understand, forbidding the use of legal jargon to obscure the changes. This ensures that the cardholder is fully aware of what the changes are, and what that means for their financial situation.

The act has other consumer-friendly provisions as well, such as protecting students and young adults from predatory credit card promotions, and requiring that above-minimum payments be applied to the highest interest balances, first. These provisions collectively serve to create a more transparent and equitable credit card landscape, affording consumers the protections they need to manage their credit responsibly.

The Schumer Box

Shopping for a credit card means understanding the associated fees fully. In the United States, this task is easier, thanks to the Schumer Box: a standardized table that's a mandatory inclusion in credit card agreements and promotional materials. Named after its creator, Senator Charles Schumer, the Schumer Box is designed to level the playing field for consumers, creating universal transparency around credit card fees, rates, and other financial obligations.

The Schumer Box presents this information in a clear, easy-to-read format that enables quick comparison between different credit cards. Reading it is an essential step in the process of choosing a credit card. By examining this information carefully, you can avoid unpleasant financial surprises and make an informed choice about which card to add to your wallet.


Understanding the fees associated with credit card use is key to managing your finances responsibly. Always read the Schumer Box when considering a new card to get a clear picture of what you'll be paying. Choose a card that aligns with your financial habits and goals, and make a habit of reviewing your statements and paying on time to avoid unexpected costs.

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