Credit card fees are going away.
Not all of them, of course. There will always be fees associated with most credit cards. However, a new study from CreditCards.com shows that the number of fees associated with the country’s most popular cards has decreased in the past year.
The 100 cards CreditCards.com looked at came with a total of 593 fees, down from 613 in 2015. That’s a result of tremendous competition in the credit card marketplace as issuers fall all over themselves to hold on to current customers and woo new ones, and it’s obviously good news for consumers.
But that doesn’t mean consumers can let their guards down. The average credit card still has about six fees, the survey shows. Some of these are obvious — annual fees and late payment fees, for example — while others are less well-known. It is the consumer’s job to make sure they get to know about those credit card fees. Too often, consumers fail to read their credit card agreement, so they don’t see the tiny, tiny print where all of these fees are detailed.
Yes, those agreements are maddeningly hard to read.
Yes, the type is absurdly small.
Yes, you have other things you’d rather do.
But here is something you should know: It can cost you real money if you don’t read it.
Here are some fees to watch for the next time you apply for a card.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
1. Cash advance fees. CreditCards.com looked at 100 popular credit cards and all but two came with cash advance fees. However, the good news is that these fees are also easy to avoid.
People are usually hit with cash advance fees in two scenarios. The first scenario is when they withdraw cash from an ATM using their credit card. The second example is when they use those paper “convenience checks” that their credit card issuer sometimes sends in the mail. If you can avoid doing those two things, you’ll likely steer clear of paying a cash advance fee. That’s important because the fees can be substantial, typically $10 or 5 percent of the amount of the advance, whichever is greater.
2. Overlimit fees. These fees — charged when your purchase would push you over your card’s credit limit — are virtually extinct on consumer credit cards. That’s because the Credit CARD Act of 2009 said that the banks could only charge cardholders this fee if the cardholder opted in to having them. If not, a purchase that would push you over your limit would simply be rejected.
The CARD Act doesn’t apply to business credit cards, though.
Not all business cards charge overlimit fees, but CreditCards.com saw six business credit cards that do, typically up to $39. Again, this fee can easily be avoided — just don’t max out your card. If you do go over that limit, don’t be surprised if you’re slapped with a fee.
[See: 8 Ways to Maximize Your Credit Card Rewards.]
3. Credit limit increase fee. Imagine being given a higher credit limit on your credit card but then having to pay a fee equal to 25 percent of that increase.
That’s exactly what folks with the First Premier Bank Credit Card and the First Premier Bank Secured Credit Card could face. Here’s what the fine print in their online disclosures says:
“Each time your Credit Account is eligible for and approved for an unsecured credit limit increase, a Credit Limit Increase Fee in the amount of 25 [percent] of the amount of the credit limit increase will be assessed to your Credit Account. For example: If approved for a $100.00 credit limit increase, a $25.00 Credit Limit Increase Fee will be assessed to your Credit Account, which will result in an additional available credit of $75.00 on your Credit Account. This fee is automatically assessed upon approval of your credit limit increase, which could be as soon as your Credit Account has been open for 13 months.”
Later on, they detail the consumer’s options when they’re offered the credit limit increase:
“We will refund the Credit Limit Increase Fee if you reject the credit limit increase within 30 days after the date of the billing statement on which the fee is billed. This will result in a reversal of the credit limit increase.”
This is a classic example of why it’s so important to read the fine print of your credit card agreement before getting a card. It’s the only way to know about all of the fees associated with a card, and thus the best way to make the most informed decision possible about whether the card is right for you.
[See: 12 Habits to Help You Take Control of Your Credit.]
The bottom line. The intense competition in the credit card business is paying dividends for the consumers in many ways. Sign-up bonuses are at peak levels. Issuers are waiving late fees and reducing APRs for many cardholders who request them. And, of course, the number of fees consumers face is decreasing. However, none of this means that consumers should let their guard down.
Do your homework. Read the fine print — or at least skim it to get a feel for what fees are associated with the card. Any time you apply for a new credit card without doing your due diligence, you do yourself a disservice. Most importantly, you potentially cost yourself real money.
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Watch Out for These 3 Fees the Next Time You Apply for a Credit Card originally appeared on usnews.com
