5 Credit Card Fees You Didn’t Know You Were Paying

We all know credit card companies do their best to charge as many fees as possible. After all, it’s how they make money. From late payments to interest on outstanding balances, credit card fees can really add up.

When was the last time you combed through a statement to see exactly what types of fees you are paying? You might be surprised by the charges. The following are 5 credit card fees you may not have known you were paying:

Hidden Credit Card Fee #1: Interchange Fees

One bank will charge another bank a fee as a way to cover handling costs and credit risk associated with a credit card transaction. These are known as interchange fees and they are charged each transaction.

Generally, the merchant bank, or “acquiring bank,” will forward their merchant fee to the bank that issued the credit card. Then the issuer charges the cardholder, who pays it. Interchange fees tend to run about 1 to 2 percent of the transaction amount, including sales tax.

Hidden Credit Card Fee #2: Low-Activity Fees

Luckily, the CARD Act made changes to how credit card companies could charge customers who rarely used their cards. Currently, you cannot be charged an inactivity fee unless your account remains inactive for at least 12 months.

However, these companies have found a way to dodge this rule by creating low-use or low-activity fees. In this circumstance, a credit card company can charge you a fee if you don’t charge a certain amount to your card every year. For example, ABC 7 reports Citigroup plans to charge anywhere from $30 to $90 if you accumulate less than $2,400 over a year.

Hidden Credit Card Fee #3: Reward Redemption Fees

Rewards credit cards can be a great way to earn extra perks and make up for some of the money you’ve spent, but you should know they come at a price. Many credit card companies will charge you a fee to use your rewards.

Take Wells Fargo–they charge $24 for every airline ticket redeemed. This practice can take a bite out of the overall value of your rewards and make them seem a bit less…rewarding.

Hidden Credit Card Fee #4: Reward Recovery Fees

Oh, you thought that was the extent of rewards fees? Credit card companies came up with another way to reduce your earnings.

You are likely aware that paying your credit card bill late results in a late fee. Plus, there’s the interest you’re charged for carrying a balance. You may not know, however, that they will also take your rewards points away, too. Want them back? That’s simple, just pay the fee.

Hidden Credit Card Fee #5: Account Closure Fee

It’s been shown that closing credit card accounts can actually have a negative effect on your finances, but here’s another reason to avoid the practice. Don’t expect to get rid of a card without one last jab at your wallet. Some credit card companies charge you a fee to close the account.

Card fees are unavoidable, so the best thing you can do is research the various cards you’re interested in obtaining thoroughly to be sure you get the best possible deal. If you currently have a card you believe is costing you too much in fees, a simple call to your creditor could result in getting them lowered.