2019 Credit Card Fee Study: What’s Normal and What’s Not?

Comparing credit card fees can help you save money.

By U.S. News Staff |Jan. 29, 2019, at 11:00 a.m.

https://creditcards.usnews.com/articles/fee-survey

Credit card fees are nearly unavoidable – every card has some. A better understanding of these fees, however, can help you select the right credit card for your needs and save money.

The 2019 U.S. News Consumer Credit Card Fee Study analyzed the fees of hundreds of credit cards active in the U.S. News card database, identifying average annual percentage rates, annual fees, and late and transaction fees.

Study highlights:

• Nearly 70 percent of credit cards don’t charge an annual fee.
• Of the cards that charge an annual fee, the average fee is almost $110.
• The average APR is between about 17 and 24 percent.
• The average maximum late fee is about $36.
• Ninety-six percent of cards charge a balance transfer fee of usually 3 to 5 percent, and the minimum fee ranges from $5 to $10.
• Almost 40 percent of cards waive foreign transaction fees.

Annual Fees

Roughly two-thirds of cards, or 68 percent, don’t charge an annual fee, but of the ones that do, the average annual fee is almost $110. Certain types of cards, including travel and secured cards, typically have an annual fee, but other types, including low APR, balance transfer, student and cash back cards, often have no annual fee. Sometimes, cards that charge an annual fee waive it for the first year, particularly among travel cards.

“When you’re matching your spending patterns to a rewards credit card, in some cases, you might actually earn more rewards with the card that has an annual fee,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News. “If the fee isn’t waived for the first year, then ask your issuer if that would be possible.”

Balance transfer	$26.49	$125.34	79 percent	14 percent
Cash back	$11.49	$80.46	86 percent	6 percent
Low APR	$21.28	$88.14	76 percent	17 percent
Rewards	$41.38	$125.81	67 percent	15 percent
Secured	$22.43	$34.89	36 percent	7 percent
Student	$0	$0	100 percent	N/A
Travel	$93.17	$139.16	34 percent	34 percent
All cards	$35.23	$109.63	68 percent	13 percent

APR

On average, credit cards have an APR of between 16.75 and 23.62 percent. However, some card types have APRs that may fall outside of that range. Low APR cards have an average minimum APR of 12.06 percent, which is much lower than the average minimum APR for all cards. And rewards cards have an average maximum APR of 24.25 percent, slightly higher than the average maximum APR for all cards.

Balance transfer	15.46 percent	23.76 percent
Cash back	16.06 percent	23.94 percent
Low APR	12.06 percent	19.34 percent
Rewards	16.89 percent	24.25 percent
Secured	19.34 percent	19.87 percent
Student	16.89 percent	25.18 percent
Travel	16.95 percent	24.16 percent
All cards	16.75 percent	23.62 percent

Late Fees and Penalties

Consumer credit card late fees are limited by law. A credit card company can charge up to a $28 late fee on the first delinquency. The fee can be up to $39 if you’re late a second time within the next six billing cycles. Some cards charge up to this limit, but others don’t charge the full $39 late fee, even if you’re late multiple times. You can find cards that waive your first late fee, or all late fees, but automatically waived late fees are rare: Only about a dozen cards in the U.S. News study offer this feature.

If your payment is returned because of insufficient funds, you can expect to pay an average maximum returned payment fee of about $34. This charge is on top of any applicable late fees if the insufficient funds delay your payment for that statement period.

A penalty APR may be triggered if you’re at least 60 days late on your credit card payment and your issuer has sent you a written notice of the rate increase at least 45 days before the effective date. The average penalty APR for all cards in the U.S. News study is 27.54 percent.

Student cards have the highest average maximum late fee and penalty APR and the second-highest maximum returned payment fee. Coming up with the money for these fees can be tough for students who may have little to no income. But these fees may offset some of the risk for issuers, which typically offer this type of card to students with limited credit history.

Balance transfer	$36.34	$33.72	28.4 percent
Cash back	$36.36	$34.24	26.42 percent
Low APR	$37.05	$32.81	26.71 percent
Rewards	$36.85	$34.34	27.63 percent
Secured	$34.39	$31.70	22 percent
Student	$37.83	$34.43	29.99 percent
Travel	$37.36	$34.65	28.57 percent
All cards	$36.34	$34.01	27.54 percent

Balance Transfer Fees

Some credit cards allow you to transfer a balance and may offer a zero percent introductory APR on the balance transfer. However, you will typically be charged a balance transfer fee. Nearly three-quarters of cards, or 72 percent, that offer balance transfers charge a 3 percent balance transfer fee. Generally, there is a minimum balance transfer fee of $5 to $10.

4 percent	1 percent	72 percent	7 percent	16 percent

Cash Advance Fees

Credit cards charge a cash advance fee when you use your card to withdraw cash from an ATM or use convenience checks from the card issuer. Cash advance fees range from 2 to 8 percent, and usually the minimum fee is $5 to $10. Typically, you can expect to pay a 2 to 5 percent cash advance fee, but some cards have no cash advance fees.

4 percent	54 percent	39 percent	3 percent

Foreign Transaction Fees

When you make a purchase in a foreign currency or country, your credit card may charge a fee for the transaction, usually up to 3 percent of the amount. Almost 50 percent of all cards charge a 3 percent fee. Some cards, about 12 percent, charge a foreign transaction fee of less than 3 percent. Most cards with foreign transaction fees charge a minimum fee of $5 to $10. Nearly 40 percent of all cards and almost 50 percent of travel cards waive foreign transaction fees.

39 percent	12 percent	49 percent

Which Card Types Have the Highest Fees?

There isn’t a single card type that has the highest fees across the board. That said, travel cards have a higher average annual fee and returned payment fee than other types of cards. Student cards have a higher late fee and penalty APR, and secured cards have a higher average minimum APR compared with other cards.

Average annual fee	$35.23	$26.49	$11.49	$21.28	$41.38	$22.43	$0	$93.17
Average minimum APR	16.75 percent	15.46 percent	16.06 percent	12.06 percent	16.89 percent	19.34 percent	16.89 percent	16.95 percent
Average  late fee	$36.34	$36.34	$36.36	$37.05	$36.85	$34.39	$37.83	$37.36
Average  returned payment fee	$34.01	$33.72	$34.24	$32.81	$34.34	$31.70	$34.43	$34.65
Average  penalty APR	27.54 percent	28.40 percent	26.42 percent	26.71 percent	27.63 percent	22.00 percent	29.99 percent	28.57 percent

Limiting Credit Card Fees

Ideally, you want to get the most value possible from your credit cards. Although you should factor in rewards and cardholder benefits, the simplest way to increase your card’s value is to reduce or eliminate as many unnecessary credit card fees as possible. You can do this by taking these steps:

• Compare card fees.
• Look for card types with lower fees.
• Ask for lower fees.
• Weigh the value of transaction fees.
• Avoid late fees.

Compare card fees. When you choose a new credit card, compare its fees to other cards you’re considering. If you plan to carry a balance, compare the minimum and maximum APR available for the cards. If a card has an annual fee, consider whether the value of the rewards and benefits will offset the cost.

“If you take a minute to not be angry and look at what you get for the fee, in many cases, it’s well worth it,” says John Ulzheimer, a credit expert who has worked at FICO and Equifax. “An annual fee shouldn’t automatically disqualify a card option.”

Ulzheimer says that although the $450 annual fee on his Delta Reserve Credit Card from American Express is steep, it pales in comparison with what he gets in return. With this card, he can take advantage of Delta Sky Club access as well as a free companion ticket each year and a free checked bag on every Delta flight.

Look for card types with lower fees. For example, cash back and student cards often have low or no annual fees. Low APR cards are designed to offer the lowest rates possible, but that may mean they don’t offer robust rewards or cardholder benefits compared with other cards.

Ask for lower fees. With a new card, you can expect the standard annual fee, late fee and other fees advertised by the card issuer. You will be assigned a variable APR based on your creditworthiness. But if you already have a card, you may be able to negotiate better fees and rates than you have now. The issuer may move your account to a different card product with lower fees, reduce your APR or waive late fees, but you will have to ask.

“It can often be worth making a call to your credit card issuer to see if you can get a fee waived either permanently or for a short time,” says Matt Schulz, chief industry analyst at CompareCards.com. “The credit card marketplace is so competitive, your chance of success is probably higher than you realize.”

Weigh the value of transaction fees. Using a card with a foreign transaction fee for purchases that will incur the fee is generally not a good idea because so many cards without the fee are available. If you’re planning an international trip, get a card that waives this fee.

“There are so many cards out there that give you travel rewards and the things that frequent travelers are looking for without including the foreign transaction fee,” Schulz says. “Traveling overseas is expensive enough without paying a 2 to 3 percent fee you don’t have to.”

Cash advance fees are also not a good idea and should be avoided, if possible. This type of transaction not only has a fee but also a higher APR than regular purchases. Cash advances also don’t have a grace period like regular purchases do, which means you’ll start incurring interest as soon as you make the transaction.

However, balance transfer fees can typically offer savings if you’re moving your debt to a card that offers a zero percent balance transfer introductory APR.

“If you’re transferring interest-accruing debt to a card that has no interest for some period of time, then a balance transfer fee may be well worth it from a financial perspective,” Ulzheimer says. “If you’re going to save $1,500 in interest but have to pay a $200 balance transfer fee, you won the math.”

Avoid late fees. Almost all credit cards charge late fees, and although you may do your best to avoid paying late, complications and mistakes happen, even to responsible cardholders. Plan ahead so you can reduce your risk of paying a late fee. That means setting up automatic payments and reminders so you make at least the minimum payment each month. Also, be sure you have enough funds in your bank account to avoid returned payments.

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Prepared by U.S. News & World Report L.P., Copyright 2019.