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Common Credit Card Fees Explained

Unexpected fees can be unnerving, confusing and leave you feeling caught off guard. The good news is – by learning the facts about credit card fees, you can likely avoid many in the future, or at least have a good understanding of why they exist. So, let's take a closer look at some of the most common credit card fees out there so you won't have any unexpected surprises on your next bill.

December 17, 2020 in Learn

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The annual credit card fee

What is it?

This is a very common type of fee. But what is an annual credit card fee exactly, and why is it on your bill? Some cards charge an annual fee in return for more points or cash back rewards on eligible purchases. The amount and the value of rewards varies from Card to Card.

Other common credit card fees

Interest charges

If you miss a payment or make just a partial payment, you’ll get charged interest on the outstanding balance. Luckily, you can avoid these fees by simply paying in full and on time each month. Setting up automatic payments or creating SMS or email alerts that remind you of payment due dates can help ensure that you pay your credit card bills on time.

Dishonoured payment

You'll be responsible for this fee if you try to make a credit card payment from your bank account, for example, but you don't have enough money in that account to cover the payment. Setting up account alerts with your bank that let you know if your funds drop below a certain level can help you avoid this situation.

Funds advance fee

Credit card issuers often allow cardholders to withdraw cash, either from an ATM, bank or other financial agency. But when you do, you may be charged a funds advance fee, which is either a percent of the amount borrowed or a fixed dollar amount depending on the issuer. The best way to avoid this credit card fee is to simply avoid cash advances. Instead, ask the merchant if they'll accept the credit card itself rather than cash.

Foreign currency conversion fee

This fee is often incurred during vacations or business travel. It happens when your credit card charge is processed in a currency different from your card’s currency. To avoid this fee, you can consider exchanging currency with cash before traveling and avoiding foreign ATMs.

Nobody likes to be caught off guard by credit card fees. Another way to cut down on unnecessary fees is by making sure you have the right credit card to begin with. Browse all of the Cards that American Express offers to find the one that fits your lifestyle best.

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