Holding a credit card can feel powerful AF. In that hot little hand of yours, you have access to (potentially) thousands of dollars… that’s not even yours… all from a little card.

As Ariana Grande would say, "I see it, I like it, I want it, I got it". But we all know the joy is short-lived, because as soon as you’ve spent on that card, you’re on the hook for the repayments PLUS all the little fees you didn’t even know existed...

So we’re here to unravel all those pesky fees, what they are and how they work.

1. Annual Fees

Annual fees are a yearly cost some credit card companies charge for the privilege of having their card. 

The amount varies - anywhere from $0 to $500 depending on the card. This fee is just a cost-of-having-the-card fee. No reason. Just because.

Pro tip: 

Some credit cards will waive the annual fee for the first year of owning the card. 

If you have a credit card that offers a $0 annual fee in the first year, you can avoid the cost altogether by cancelling the card before the year is out and still get the benefits that come with it.

2. The interest rate

Every credit card, just like every loan, will charge you an interest rate. In other words, it’s a charge for borrowing money from a financial institution.

In most cases, the interest rate only kicks in if you don’t have your balance in full each month. It’s charged on the balance that you owe and added to that balance. 

The interest rates on credit cards can vary between 8% for low-rate cards to even up to 30%. To put that into perspective, a $5,000 credit card balance with a 30% interest rate could cost you $125 monthly.

Pro tip:

You should only spend money on your credit card that you can afford to pay off at the end of each month, then you don’t need to worry about interest charges at all. 

Set yourself up with a calendar reminder so you can pay your credit card balance to avoid or minimise your interest payments. Then, you get the benefits of the credit card without any of the chunky costs. 

3. Balance Transfer Fees

Some credit card companies charge a fee for moving your current credit card debt onto another card.

The fee gets added to your total balance and is charged instantly.

It’s a fee that’s usually between 1% to 3% of your total debt, but it can really add up if you’ve got thousands in credit card debt.

Pro tip:

Some credit cards will waive the balance transfer fee for the first few months of owning the card. 

4. Other credit card fees

And credit card fees don’t end there my friend. They have a range of other fees like cash transfer fees, late payment fees, foreign transaction fees, and more. 

Credit card companies are smart - so if they seemingly put forward tonnes of value, you can bet they’ve also got tonnes of sneaky ways to make money off of you.

If you’re going to be applying for a credit card, be sure to go through all the fees with a seriously SERIOUSLY fine tooth comb to make sure none of them will come back to bite you.

The information published on Flux is general in nature only and does not consider your personal objectives, financial situation or particular needs and is not recommending any particular product to you