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Good terms: Credit card fees.

We’ve already talked about how interest works on your credit card, and when and how it’ll be charged. But interest might not be the only cost that comes with a credit card.

Just like realizing you’re missing a key ingredient for your famous recipe right before your guests are about to arrive, finding unexpected credit card fees on your statement can be an unpleasant surprise. This is especially true if you’ve carefully planned out a monthly budget that you need to stick to. In this first article of our two-part series about fees, we’ll look at some of the common fees that credit card issuers may charge, and what to keep in mind so that you can pay as few fees as possible. To better understand what fees are chargeable to your credit card and how that might impact you, be sure to check the account terms applicable to your card.


Annual or monthly fees.

If you’ve recently shopped around for a new credit card and compared your options, you’ve probably noticed that many credit cards in the market come with either an annual fee or a monthly fee.

If the credit card you’re considering has an annual or monthly fee, that fee amount is an important cost to consider before applying for the card. Unlike other fees (such as the ones we’re about to talk about next), an annual or monthly fee is usually charged regardless of how you use your card and as soon as your account is first activated, and will then be charged either once each year in the same month that your account was originally opened, or once each month.


Over limit fees.

Whenever you sign in to online banking or look at your monthly credit card statement, there are a couple things (among others) that you’ll want to keep an eye on: the credit limit on your card and your currently available credit. Be sure to check your account terms to see if over limit fees can be applied to your account. Over limit fees are usually charged once per billing period if your account ever exceeded your credit limit during that billing period, even if it was only for a couple days.

You’ll want to stay under your credit limit to avoid paying an over limit fee. Not only can staying below the credit limit help benefit your credit score, but you’ll also avoid paying any over limit fees – if they’re applicable to your account. If you’re a Capital One cardholder, you can get alerts to let you know when you’re nearing your credit limit and help you avoid those fees.


Dishonoured payment fees.

The name might be a bit vague, but bear with us. Dishonoured payment fees are important to keep in mind if you make payments by cheque or through pre-authorized debits, such as Auto Pay.

A dishonoured payment fee can come into play if you make a payment by credit card cheque or pre-authorized debit and it’s returned or rejected because you don’t have sufficient funds to cover it. Before making a payment by cheque or a pre-authorized payment is scheduled, double check that your account has enough money to fully cover that payment.

You might also be charged a dishonoured payment fee if you use a credit card cheque to take out a cash advance from your credit card account but the payment is returned because your card is over its limit.

But what about other fees?

Those are just three of the common fees that could apply to your credit card, and you’ll want to check the terms and conditions that apply to your card to know what other fees might apply. In part two of this series, we’ll take a look at two more fees that can be a bit more complicated: balance transfer fees and cash advance fees. Stay tuned!