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How much does a credit card cost?
It depends on the card, but you can always minimize costs.
What can I expect to pay with a credit card?
Credit cards come with a wide variety of potential costs that depend on your spending and card issuer, including foreign transaction fees and penalties for missing your statement due date.
|Fee||Typical range||How to avoid it|
|Annual fee||$50 to $550 or more||Look for a card with no annual fee|
|Interest or finance charge||Determined by your card’s APR||Pay off your statement each month|
|Foreign transaction fee||3% of transaction outside the States or not in USD||Use a debit or travel card with no foreign fees|
|Balance transfer fee||$5 or 3% to 5% of transferred balance, whichever is higher||Leverage a 0% balance transfer period|
|Cash advance fee||$10 or 5% of your advance total, whichever is higher plus immediate interest accrual at higher APR||Use a bank debit card to withdraw money at an ATM|
|Late payment fee||$27 to $38 for each late payment||Set up autopay to avoid late payments or call issuer immediately|
|Overlimit fee||$25 to $35 each charge over your limit||Sign up for protection that declines transactions or allows for limited transactions|
|Returned payment fee||$27 to $38 for each late payment||Set up low-balance alerts with your bank|
How much will I pay for an annual fee?
Most issuers offer at least one card that doesn’t charge an annual fee. However, the more perks, features and benefits a card offers, the more likely you’ll pay an annual fee. Fees range widely: A simple cashback credit card might run you $50 to $100 a year, while the annual fee for a top-tier travel card can soar as high as $550.
A higher annual fee can net you a wealth of useful benefits that make up for the cost of the card. For example, The Platinum Card® from American Express offers hundreds of dollars in statement credits on common travel expenses each year, as well as access to luxurious airline lounges and other travel perks. The Capital One® Venture® Rewards Credit Card charges a $95 annual fee after an intro period with a solid signup bonus, solid reward earnings and a one-time $100 statement credit toward Global Entry or TSA PreCheck.
How to keep costs down
- Pay your statement on time every month
Avoid interest fees of 25% or more by paying off your statement balance in full. If you’re not able to get to $0, pay as much as you can toward your balance to keep interest low.
- Beat your due date.
Late payments can result in fees of $35 or more, depending on your issuer. Watch too for fees of $30 or more for insufficient funds or bounced checks.
- Avoid cash advances.
Withdrawing cash from an ATM with your credit card is convenient, but the fees you face are anything but. Issuers typically charge a flat transaction fee and a fee equal to a percentage of the amount withdrawn, making this one of the most expensive ways to fill your wallet.
- Know your card’s credit limit.
When you make a purchase, make sure you have the credit available on your card. Each time you go over your limit, you face a fee of $30 or more.
- Understand your card’s rates and fees.
Interest rates vary by card and issuer, but you could be surprised by a revert rate if you miss several payments on your card. This could be a much more punishing rate than your initial APR and can start racking up the interest even faster.
- Transfer your balance.
If you’re a disciplined credit card user, transferring your existing credit card balance to a balance transfer card can save you a lot of money in interest.
How to cancel out some card costs
Depending on your card and how you use it, you can reduce or completely negate the costs associated with the card. Let’s take a look at the Citi Prestige® Credit Card as an example.
To use the Citi Prestige, you’ll need to pay an annual fee of $495. This is on the higher end of credit card annual fees thanks to the number of features and perks the card offers. To make this card worth it to own, you’ll need to create enough value with the card’s features to equal or surpass this annual fee.
Obtaining a credit card’s signup bonus is an easy way to reduce the card’s cost, at least for the first year. Obtaining the Prestige’s bonus will net you 50,000 ThankYou points, valued at 50,000. Provided you can spend the $4,000 in 3 months. Earning the bonus effectively erases the card’s annual fee for the first year.
So how do you avoid paying the annual fee for the next year? Let’s take a look at the Prestige’s annual travel credits. Citi will credit you up to $250 each year when you use your Citi Prestige® Credit Card to pay for eligible travel. If you typically travel each year, you could consider the true cost of the Citi Prestige as about $250 annually.
Other travel features included with the Citi Prestige include a free fourth-night stay when you book a hotel through the Citi ThankYou portal. A free night stay can amount to $250 on average – taking advantage of this feature just twice in a year can completely cancel your card’s annual fee.
Citi Prestige annual fee: $495
|Citi Prestige feature||Monetary value|
|Signup bonus||$500 (one time only)|
|Travel credits||Up to $250 a year|
|Free fourth nights||$250 per night on average|
|Global Entry/TSA PreCheck credit||$100 every 5 years|
|Reward points||1x point = 1 cent|
Some credit cards offer more valuable rewards and perks than others. When you’re applying for a card, take a close look at the annual fee and any rewards, perks or features offered. If you don’t plan on using those features, you might be better served by a card with a smaller – or no – annual fee.
Compare credit cards with no annual fee
Minimize the fees you’ll pay out the door — and maybe land a 0% intro APR on transfers or purchases — by comparing annual-fee-free credit cards on the market.
Credit card fees are like credit cards themselves: wide-ranging and determined by your spending habits and responsibility. By comparing cards on the market, you may find one that comes without an annual fee — and with perks like rewards or a 0% intro APR. But keep an eye on transaction, transfer and other potential fees to avoid eating into your budget.Back to top
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