What Are The Costs of Carrying a Credit Card?

Credit cards can come with costs, but you can avoid most of them with responsible use. They include:

Interest payments: Credit cards can have different interest rates, or APRs, for purchases, cash advances and balance transfers. When you pay in full every month, your purchases don’t accrue interest.

Annual fees: Some cards charge annual fees, from around $20 to hundreds of dollars. An annual fee can be worth paying if the card gives you rewards and perks that make up for the cost, but in most cases, you shouldn’t pay a fee just for the privilege of having the card in your wallet.

Late payment fees: The cost varies by issuer, but federal regulations limit how much late fees can be. As of 2018, first-time late fees were capped at $27; and fees for a second late payment within six months were limited to $38. Late fees also can’t cost more than the minimum payment due.

Balance transfer fees: Generally, balance transfer credit cards charge 3% to 5% of the amount of debt transferred. Some cards waive the fee when you transfer debt within a certain time frame.

Foreign transaction fees: Most cards add a surcharge of 1% to 3% on transactions made with non-U.S. merchants. Travel credit cards generally don’t charge these fees, and some issuers don’t charge them on any of their cards.