Understanding credit card fees

Types of fees

Annual fees

Some credit cards charge you a fee each year for the right to use them. This fee is billed directly to your credit card statement. There may be an additional fee if you request another card for the same account.

Cards with an annual fee often offer more rewards and benefits, or a lower interest rate. Before you apply for one, consider carefully how you will use the card and whether the features and rewards are worth the cost to you. If not, you are better off saving your money and choosing a card with no annual fee.

Cash advance fees

You have to pay a fee, called a “cash advance fee,” whenever you:

  • use your credit card to withdraw cash from an automatic banking machine (ABM)
  • use your card to withdraw cash at a bank branch
  • use “convenience cheques,” depending on the issuer
  • charge cash-like transactions to your credit card.

A cash advance fee can be:

  • a fixed amount per transaction
  • a percentage of the transaction
  • a fixed amount plus a percentage.

Some credit card issuers set a minimum and a maximum cash advance fee.

In addition to the cash advance fee, the credit card issuer will charge interest starting on the date you withdraw the money and continue to charge interest daily until you pay off the entire cash advance amount. Cash advances can be an expensive way to replenish the money in your wallet; if possible, use your debit card instead.

If you use cash advances, you should try to pay off as much of your balance as you can, as early as possible, because the interest charged on cash advances costs you more each day you wait. You can make payments to your credit card account at any time—you don’t have to wait for your statement.

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