Credit Card Fees Explained

Credit cards are a paradox. They’re the simplest thing to understand: you buy something by presenting your card, take your purchase home, and pay later. At the same time, it’s almost impossible for some consumers to comprehend how they accrued so much credit card debt, and why it seems to keep increasing with every week or month. Many customers can’t even decipher the concept of a maxed out card or a blocked transaction.

It’s not necessarily the cardholders’ fault. Many card networks push the benefits of the credit card while glossing over the potential disadvantages. For example, some credit card users may not even know they have a repayment deadline, and if they pay past that date, they could end up paying many times what they owe. That’s how card networks make their money – through interest and late fees. Here are a few other charges cardholders pay that they may not know about or understand.

Some “free” credit card features actually come with a cost for consumers

Sometimes, a credit card comes in the mail, so the consumer just fill out their details. Other times, it will be offered as a loyalty card at a favorite store. Ordinarily, there’s an application fee that will be deducted from the cardholder’s bank account once the cardholder links it. If the card is lost or stolen, there’s often a replacement fee. There may also be an extra charge for card transactions done overseas. Many cards also carry a yearly fee, an advance fee, an overdraft fee, and/or an express payment fee.

Another thing some cardholders are unfamiliar with is the limit of their cards. They just keep swiping until someone refuses their card, then they may ask their bank and be informed they’ve maxed out their card. At that point, they can make a formal request to have their limit raised. If they qualify for extended credit, they’ll receive it–often at a fee. And they’ll have to look out for those interest rates now that they may have more to pay back at the end of their billing cycle.

Punctuality penalties

If the customer made a payment and there wasn’t enough money in their card, they’ll typically be charged a ‘bounce fee’ instead. When getting a card, there are three figures to look out for: card limits, payment dates, and minimum payments. A cardholder doesn’t have to repay your card debt all at once. As long as they make the minimum payment before the due date, the cardholder can spread it out over time, though of course the longer they take, the more they pay in interest.

Normally, as long as the cardholder pays back the minimum on time, there will be no late fees. Even so, interest is charged as a percentage of the cardholder’s reducing balance. Paying promptly saves the cardholder money, improves their credit score, and raises their credit limit.

For more information on credit card fees, or to sign up for a merchant account, please call (888) 924-2743 or go to


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