Credit cards are beneficial in more ways than one. They allow you to pay for things instantly, even if the money is not currently in your account, and they offer added benefits such as cash back, airline miles, and a higher credit score. As desirable as these benefits are, credit cards can also have downfalls. By using a credit card wrong, you can damage your credit score and dig yourself into a seemingly inescapable pit of debt, often exacerbated by credit card fees themselves.
Many credit card issuers have offered relief options, including fee waivers, to people financially impacted by COVID-19, but you have to contact your issuer in order to take advantage of those offers. Relief measures will likely be in effect for the foreseeable future. If you’re going to take advantage of these programs, you have to be aware of the charges that could pop up on your account, as well as what you can do to get them waived.
When it comes to banks and credit card issuers, more often than not they want to keep you as a customer and not drive you to one of their competitors. You can use this as leverage to negotiate a refund on any of your credit card fees. Call your issuer and explain why these fees occurred. For instance, if you are currently experiencing financial difficulties due to the economic effects of the pandemic, tell the representative why a refund would help during this unprecedented time. While on the phone, remember to be kind, patient, and honest. And remember that you won’t get a refund every time.
To make the process easier, you can sign up for Cushion’s ⚛️ Fee Genius, which scans your accounts regularly, catches pesky fees, figures out what is negotiable, and more. We provide you with all of the “what” behind fee negotiation so you only have to figure out the “how” of negotiating your fees.
And if you want Cushion to negotiate your fees for you, well we’re sort of geniuses at that too. To date, we’ve refunded our customers more than $10 million in bank and credit card fees. If you’d like to opt into our 💭 Fee Negotiation add-on, just flip the switch during sign-up or in the Profile tab of your dashboard.
Not all credit cards charge an annual fee, but if you have a card that offers top-tier perks, points, and rewards, chances are you’re paying a fee each year. Annual fees vary greatly, from less than $50 per year to $500 or more.
You can often find the annual fee amount listed with other essential information that’ll help you decide whether or not you want to apply for the card, such as any new member offers and the card’s APR. Because you are aware of the annual fee before applying for the card, it can be more difficult to get it waived than other bank and credit card fees — but it isn’t impossible.
Read more about how to get an annual fee refunded.
Each credit card comes with an APR, or annual percentage rate. When you don’t pay off your balance in full before the payment due date, your account will begin accruing interest based on the remaining balance and your card’s APR. How much interest you accrue before your next statement date is called the interest charge, also called a finance charge, and this charge will typically compound daily until you make the full payment.
Read more about common questions associated with interest and APR.
Each month, your issuer sends you a statement with a minimum amount due and the payment due date. If you do not make at least the minimum payment by the due date, you will receive a late fee. Issuers calculate late fees differently; some don’t charge fees at all, some charge a percentage of your balance, and others use a tiered system or charge a flat fee. Cushion analyzed more than 50,000 late fees and found that the average fee amount is $34.30.
Late fees can not only stick you with a costly fee, they can also lead to a damaged credit score, penalty APR, or loss of access to rewards and benefits.
Read more about the negative consequences of late payments and what to do if a late payment damages your credit score.
When transferring credit card debt from one card to another, you will incur a balance transfer fee from the issuer to which you are transferring the debt. The fee amount is typically a percentage of the total amount that you are transferring, usually 3–5%. Before transferring, it’s important to take into consideration how much debt you are transferring, how quickly you plan to pay off the balance, and the new card’s terms. It may or may not pay off to transfer a balance.
People often take advantage of balance transfers when the new card features a lower or 0% APR for an extended period of time, or if the issuer offers a competitive rewards or cash back program. To retain you as a customer, the new issuer may be willing to waive the balance transfer fee.
A cash advance is like a short-term loan. If you need cash now, you can use your credit card like a debit card at an ATM; instead of the money being withdrawn from your checking account, it will be withdrawn from your credit limit and your issuer will charge you a cash advance fee for borrowing the money. Like any credit card purchase, you’ll have to repay the advance plus the fee, which is either a flat fee or a percentage of the advance, typically 3–5%. You will likely also have to pay interest on top of the advance and fee amount. Unfortunately, there is no grace period with cash advances and interest begins accruing immediately.
You can incur a cash advance fee on other cash equivalent transactions as well, such as using your credit card for overdraft protection, buying a money order, or sending money to someone.
When using a credit card for a transaction that passes through a foreign currency, you will incur a foreign transaction fee. You can get stuck with a foreign transaction fee by using a debit card, credit card, or an ATM, and the fee is typically around 3% of the transaction — 1% charged by the payment processor (e.g. Visa, Mastercard) and 2% charged by the issuer (e.g. Chase, Wells Fargo).
Some cards, such as the Capital One Venture or Chase Sapphire Preferred®, don’t charge foreign transaction fees. If you travel often, you should consider applying for one of these.
A returned item fee for a credit card is similar to that of a debit card in that your issuer will charge a fee if you try to make a purchase, schedule an automatic transaction, or write a check when there aren’t sufficient funds in your account to cover the transaction or your account has been closed. Issuers can charge up to $40 for returned item fees.
If you’re paying a credit card bill out of your checking account and the payment doesn’t clear, you may also be subject to an NSF fee, late fee, or increased interest rate.
An over-limit fee is the overdraft of credit cards — you’ll get one when you exceed your credit limit, and it can cost as much as $35. The good news is that, with the Credit Card Act of 2009, issuers can no longer charge you an over-limit fee unless you’ve opted in. In fact, a number of issuers have done away with these fees entirely; instead, they might just decline the transaction, reduce your credit limit, raise your interest rate, or even close your account after repeated occurrences.
Opting into over-limit protection can be helpful in emergency situations or if you’d like the added security of having funds at your fingertips, but opting in could also do a lot of damage, like lowering your credit score, especially if you’re a habitual spender. It might be wiser to request a higher credit limit or apply for another credit card to increase your total credit.
Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.
*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.