Credit Card Fees and Charges

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The Basics of Credit Card Fees and Charges

Unfortunately when most people get that shiny new credit card they falsely believe that the money is free. Well it is not! Along with high interest rates associated with purchases and cash advances, there are a host of different and creative charges and fees added to your credit card statement based on your usage. Getting to know these additional charges can make a significant difference in the amount of money you pay back for the convenience of owning a credit card.

Fees charged to customers

The major credit card fees and additional charges are for:
Late payments or overdue payments
Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called overlimit fees
Returned cheque fees or payment processing fees (eg phone payment fee)
Cash advances and convenience cheques (often 3% of the amount).
Transactions in a foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this.
Membership fees (annual or monthly), sometimes a percentage of the credit limit.
Exchange rate loading fees (these may sometimes not be reported on the customer's statement, even when they are applied)

Over limit charges

Consumers who keep their account in good order by always staying within their credit limit, and always making at least the minimum monthly payment will see interest as the biggest expense from their card provider. Those who are not so careful and regularly surpass their credit limit or are late in making payments are exposed to multiple charges that were typically as high as 25 - 35 until a ruling from the Office of Fair Trading that they would presume charges over 12 to be unfair which led the majority of card providers to reduce their fees to exactly that level.

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