11 Credit Card fees: How much do they really cost?

1 February 2017
How much do credit cards really cost? Here are 11 credit card fees you need to know about…

We collectively make around $25 billion of credit card transactions per month, and we are paying interest on almost $33 billion of credit card debt. Credit cards are big business.

While the new credit card surcharge restrictions came into force for large merchants this month (which will probably save you a few dollars on those occasions when you book a flight or a concert ticket) there are plenty of other credit card fees you might possibly be charged that you really should know about. Most of them are avoidable – but only if you know about them in the first place!

1. Credit card annual fee

Many credit card providers charge us a reasonably high interest rate on any outstanding balance we have on our credit card – on Canstar’s database the purchase interest rate on credit cards varies from 8.99% right up to 23.50% – and many credit cards also charge an annual fee. The credit card annual fee can range from $0 up to $700, with rewards cards tending to attract a higher annual fee.

Credit card annual fees
Min Max Average
Rewards Cards $0 $700 $169
Non-rewards cards $0 $125 $42

Source: Canstar database. Information correct at 6/12/16
Across 197 credit cards on Canstar’s database in December 2016 there are:

  • 36 credit cards that don’t charge an annual fee
  • 43 credit cards with an annual fee of less than $50
  • 58 credit cards with an annual fee between $50 and $100
  • 26 credit cards with an annual fee between $101 and $200
  • 30 credit cards with an annual fee more than $201

Source: Canstar. Based on products listed on Canstar database

2. Credit card annual fee for a subsequent card

In addition to charging you an annual fee, some card providers will also charge you another annual fee on any subsequent/supplementary card attached to your account. This is not as common, but you still should ask the question, just in case.

3. The credit card interest rate

Currently, according to the Reserve Bank, Australians are paying interest on around $32 billion of debt. At average credit card interest rates, that equates to millions of dollars per day in interest charges.

That’s a nice, profitable product!

Currently on Canstar’s credit card database, the minimum, maximum and average credit card interest rates are as follows:

Non-rewards credit cards
Min Max Average
Purchase 8.99% 24.50% 14.00%
Cash Advance 8.99% 24.50% 17.64%
Balance Transfer 0.00% 11.49% 1.67%
Rewards credit cards
Min Max Average
Purchase 9.99% 22.74% 19.48%
Cash Advance 15.99% 29.49% 20.96%
Balance Transfer 0.00% 7.89% 0.75%

Source: Canstar database. Information correct at 6/12/16

4. Credit card foreign currency conversion fee

If you’re using your credit card overseas – or even buying something online in Australia that originates overseas – you can expect to pay a currency conversion fee of around 3 percent. That’s a fee on top of whatever exchange rate is on offer at the time.

An interesting example of customers being unaware of this fee is Westpac’s recent decision to  refund approximately $20 million to around 820,000 customers for not clearly disclosing the types of credit card transactions that attract foreign transaction fees. Following a customer complaint, Westpac notified ASIC that customers may have been incorrectly charged foreign transaction fees for Australian dollar transactions processed by overseas merchants. Because Westpac’s terms and conditions did not clearly state that foreign transaction fees would be charged for such Australian dollar transactions, Westpac commenced a process to identify impacted customers and provide refunds with interest.

If you are travelling with your credit card, you should also know about dynamic currency conversion. Also check out Canstar’s travel credit card ratings report.

5. Credit card ATM cash advance fee

Getting cash out at the ATM, if you use your credit card, can cost you up to 5% of the amount. Plus, interest on that cash advance starts accruing from Day 1. Plus of course (and this is a bank charge rather than card-specific) you could also be charged another flat dollar fee if you use an ATM outside your own bank’s network. According to the Reserve Bank we make around $21 million of credit card cash advances each month…

6. Credit card late payment fee

Each month you will be required to make a minimum repayment on the balance owing on your credit card (ideally, pay it off each month if you can!). If you don’t make this payment by the due date, you might be charged a late payment fee.

Across the credit cards on Canstar’s database there are, at time of writing:

  • 24 credit cards that don’t charge a late payment fee
  • 84 credit cards that charge to $10 as a late payment fee
  • 46 credit cards that charge a late payment fee of between $11 and $20
  • 36 credit cards that charge a late payment fee of between $21 and $30
  • 9 credit cards that charge a late payment fee of $35

Source: Canstar. Based on products listed on Canstar database

7. Foreign currency cash advance

Just as you may have to pay a cash advance fee for withdrawing cash at an ATM in Australia, you may also pay a fee for withdrawing cash from your credit card while you’re overseas. Plus the use of ATM fee!

8. Credit card over the limit fee

Your bank does have to get your permission to allow your credit card to go over its limit, but if you do allow this, be prepared that you might pay for it. Canstar’s data found at least 95 credit cards that will charge you an amount of up to $40 if your credit card goes over its limit.

9. Credit card dishonour of direct credit fee

If you pay your credit card by direct debit, and that payment is dishonoured, you may be hit with a dishonour fee on your credit card. Canstar’s research found at least 115 credit cards that will charge upwards of $2.50 for a dishonour.

10. Credit card over the counter payment fee

Yes, you can be charged for paying your credit card bill. It’s not a common fee – there are only a small handful of institutions that charge it – but you could be looking at a $2 cost to pay your credit card bill in person, over the counter.  Also, and while the fee is relatively modest, a small number of card providers will charge you up to 95 cents if you want to pay your credit card statement via BPay.

11. Replacement credit card fee

Don’t lose your credit card (or wear it out)! Getting a replacement could cost you up to $25. Although to be fair, around two-thirds of the credit cards on Canstar’s database don’t charge a replacement card fee.

In summary, be aware of the potential to be charged…

Summary of credit card fees

  • An annual fee
  • An annual fee for a subsequent card
  • Credit card interest
  • Foreign currency conversion fee
  • ATM cash advance fee
  • Late payment fee
  • Foreign currency cash advance fee
  • Over the limit fee
  • Dishonour fee
  • Over the counter payment fee
  • Replacement credit card fee

If there’s any moral to this list of fees, it’s probably that – unlike some of the surcharges that will now be limited – they are mostly avoidable by changing your card usage habits. The  main thing is to simply be aware of them. Read those boring Ts & Cs that relate to your credit card so that you know what costs you might be up for.

If you’re currently comparing credit cards, the comparison table below displays some of the low interest credit cards currently available on Canstar’s database for Australians looking to spend around $2,000 per month. Please note that this table features links direct to the provider’s website, and is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s credit card comparison selector to view a wider range of credit cards.

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