I admit there is nothing glamourous about credit card fees. It is certainly not something that is featured at the top of commercials or in bright print in advertisements for credit cards but credit card fees are a big expense that needs investigating when applying for a credit card.

In order to find out what the credit card fees are that will be charged by your lender, you’ll either have to hunt down the fine print terms and conditions that govern the agreement between you and your credit card company or you’ll have to call customer service.

Simply looking on the credit card issuers’ site is not going to be good enough since the current offer may be a different plan even though the card carries the same look and name.

Credit card companies offer a wide range of pricing plans per card and based on your credit score, credit report, history with the company, debt to income ration, income, etc. the pricing plan and terms you are on may vary from the current advertised card by that lender.

The important charges you are looking for are the Late Fee, Overlimit Charge, Annual Fee, No Activity Fee, Phone Pay Charge, Balance Transfer Fee, Foreign Transaction Fee and Cash Advance Charge. This is not a complete list, depending upon the creativity of your credit card issuing bank there may be more.

Late Fee - Fee paid when your payment due arrives more than 1 minute past the cutoff time on the due date.

Overlimit Charge - Fee charged by your credit card company when they allow your balance to exceed your credit limit.

Annual Fee - A fee paid to the company for the privilege of carrying the card.

No Activity Fee - Fee charged by some lenders if you do not use the card or carry a balance on the card.

Phone Pay Charge - Some banks charge a fee if you call and make a payment to your card by phone.

Balance Transfer Fee - Typically these fees are  percentage of the balance transferred, like 3% and are capped at a certain amount.

Foreign Transaction Fee - If you use your credit card outside of the country you may have to pay 3% or more of the transaction cost as a fee for making a foreign transaction.

Cash Advance Charge - Taking cash advances from your credit card can be expensively painful as well. Not only may you be charged a percentage fee based on the cash advance but also much higher interest rates will be charged on the cash advance balance.

Merchants and businesses that accept credit cards and debt cards have also been fighting Visa and MasterCard associations for the past decade regarding hidden fees consumers pay.

Credit card companies are doing a good job of earning more and more money from customers by charging them more and more fees. It is these silent fees that provide a financial relief for the card company but a financial pain for consumers. (http://www.unfaircreditcardfees.com/)

It is interesting to watch the EU attacking credit card companies for cross-border credit card fees and merchant interchange fees. While these may not be terms that you are familiar with, recent testimony before the United States Congress by Ed Mierzwinski of the U.S. Public Interest Research Group spoke directly about them.

Mr. Mierzwinski said “Today I have a simple message:  the deceptive and anticompetitive practices of the two credit card associations – Visa and MasterCard -- have injured both consumers and merchants for many years.  Interchange fees are hidden charges paid by all Americans, regardless of whether they use credit, debit, checks or cash.  These fees impose the greatest hardship on the most vulnerable consumers – the millions of American consumers without credit cards or banking relationships.  These consumers basically subsidize credit card usage by paying inflated prices – prices inflated by the billions of dollars of anticompetitive interchange fees.

All consumers, even those who pay with cash and checks, pay more at the store and more at the pump because these interchange fees are passed on in the overall cost of goods sold. The card associations’ rules prevent merchants from informing consumers on the  costs of payment and limit the ability of merchants to direct consumers to the safest, lowest cost, and most efficient forms of payment. 

The interchange fee system is hidden from consumers and the public.  The card associations do not disclose publicly their fees or the basis for these fees.  Some public reports maintain that, on average, interchange fees cost merchants 1.6 percent or more of each transaction on a credit or signature debit card.  In 2006, credit card interchange fees alone cost merchants and consumers an estimated $36 billion.
 
Like all other costs incurred by merchants, interchange fees are included – at least in part – when pricing goods and services.  Card associations may suggest that interchange fees fund attractive rewards programs.  Setting aside the question of the value of these programs, many consumers with credit cards do not use them and those without credit cards receive no benefits. Over 27 percent of Americans do not have credit cards.  For these consumers, interchange fees are especially pernicious and regressive.  These low-income Americans subsidize interchange fees for “services” that they are not eligible to use.  No charge could be as regressive as one in which low income consumers receive no benefits.
 
The regressive nature of this charge is exacerbated because interchange fees are assessed as a proportion of overall sales.  For example, when gas prices averaged $1.87 per gallon in 2004, interchange fees totaled about $12.5 million per day.  In 2005, gas prices averaged about $2.75 per gallon nationally: credit card companies then made $18.4 million a day.  These companies made an additional $2.2 billion dollars per year simply because of rising gas prices. This problem will increase if gas prices continue to increase.  It is difficult enough for low and moderate income consumers to afford skyrocketing gasoline prices without having to pay additional fees that are passed on to them.”

And those are the fees involved in a credit card transaction that you don’t even get to see.

Both merchants and consumers are subject to fees but as you can see from the testimony, ultimately the cost of merchant fees gets passed down onto the backs of consumers.

Merchants and subsequently consumers will watch these back room credit card fees increase especially as the acceptance of the contactless credit card and debit card become more embraced by consumers and merchants alike.

Banks know that when consumers use a contactless credit card or debit card that the per transaction sale goes up and the higher the sale the more fees are paid per sale as a percentage of the sale. Additionally with the ease of purchase in their hands, consumers will probably make more contactless purchases using the card.

So the lesson to be learned here is to not get tunnel vision and focus just on the interest rate your credit card lender charges you but to also be aware of the extra silent and hidden fees that you are being charged as well.