by Katerina Nikolas

Created on: August 11, 2010

Credit card fees are on the increase as banks look to recoup some of the losses which credit card reforms cost them. However the majority of unsecured credit cards are still free of annual fees and fees in general are only allocated when the cards are misused. To be certain that the card you apply for is fee free it pays to comparison shop online and beware of certain misleading advertisements.

Some lenders have begun to introduce annual fees to existing cards which previously carried no fees. Also imaginative charges such as dormant fees and inactivity fees are being applied by some lenders to cards which haven’t seen a lot of action recently. In such instances it is better to close the cards if you don’t tend to use them, rather than pay unnecessary fees.

Secured credit cards tend to carry fees which unfortunately are unavoidable if the cards are necessary to establish a good credit rating. However fees are decreasing as more lenders move into the secured card market. Take care not to fall for a card which advertises no annual fee and then stings you with a processing fee or application fee.

First Premier bank used to have a remarkably imaginative fee structure which ate up most of the available credit limit on a new card but fees are now limited to 25% of the credit limit by law. However if an application fee if paid in advance of the card being issued this does not count as part of the 25%, nor do fees which are applied due to breaching the terms and conditions of the card.

One of the best secured cards for carrying a low annual fee is the Capital One secured card which charges $24 per annum. This is far lower than the total fees on some other cards which carry no annual fees but charge processing fees. Always check first for the applicable fees which do change.

There is nothing hidden about late payment fees, returned fees or over the limit fees, and each card will carry such penalty fees. However rates do vary greatly between cards and if this is a problem area for you they can be avoided by setting up automated payments so you never pay late. Cash withdrawal fees are very high and credit cards should not be used for cash withdrawals unless you like to pay fees to the bank.

Balance transfer fees should be calculated to determine if they represent an overall saving if you are considering a balance transfer. The capped limit has now been removed by most lenders and fees have seen a gradual rise to around 3%-4%. However they are often worth paying for the benefit of an overall reduced interest rate providing the cards are not used for additional spending.

The majority of the best cards with cash backs remain fee of frees and are usually reserved for those with the best credit scores, so it always pays to keep your credit score high to take advantage of the best offers.

Learn more about this author, Katerina Nikolas.
Click here to send this author comments or questions.