I recently received this question from a Money Talks News reader:
My current credit card is riddled with fees, and I’m interested in applying for a new card. Can you explain credit card fees I should look out for, and which cards charge the fewest fees? Thank you! – Carl L.
Unfortunately, Carl’s right. Some credit cards are absolutely fee-heavy. The cards with the most fees are often the ones available to consumers with limited or no credit, giving credit newbies a sour experience their first time out.
The better and more established your credit is, the better the quality of cards you’re likely to get approved for. So if you can ride out a fee-heavy credit card for a year or more and build credit, the odds of getting approved for a new, higher-quality card are much stronger.
When researching new credit cards to apply for, here are some fees to be aware of and – ultimately – look out for:
The No. 1 fee to consider when applying for a credit card is the annual fee. It’s the single largest fee you’ll pay on a credit card, so it’s the fee you should be most aware of.
Many annual fee credit cards offer great rewards programs, which is why they’re able to charge the fee in the first place. A handful of these cards will waive the annual fee your first year of membership as a welcome or introductory incentive to get you to sign up.
Annual fees aren’t all bad, but they are the first fee you should consider when determining whether or not a credit card is right for you.
Foreign transaction fee
If you’re even considering taking your new credit card into foreign territory, it’s crucial to be aware of foreign transaction fees.
The average foreign transaction fee is 3 percent of each purchase made abroad. Three percent doesn’t sound like a lot, but over the course of a trip those fees can really add up, making for a not-so-welcome credit card bill when you return home.
If you’re getting ready to travel abroad (or even thinking about it), be sure to check for foreign transaction fees when applying for a card.
Finally, there are balance-transfer fees. If you plan on transferring a balance to a 0 percent credit card, the standard fee attached to such a transaction is 3 percent of the total balance being transferred.
There’s only one interest-free balance-transfer card on the market right now that doesn’t require a balance-transfer fee — Slate from Chase. The only catch to this offer is that you must transfer your balance within 60 days of the start of your card membership, which is hardly a catch, if you ask us.
Credit cards with the fewest fees
Getting back to Carl’s original question, here’s our list of credit cards that charge the fewest fees:
- Citi Simplicity. This card has no annual fee and no late-payment fees, and the 0 percent interest introductory period is one of the longest available at 18 months. This card does charge a balance-transfer fee and foreign transaction fee, both of which are 3 percent.
- Discover it. This cash-back card has no annual fee or foreign transaction fee. It also waives the first late-payment fee (it’s up to $35 thereafter), and the 0 percent interest period is competitive at 14 months, applied to new purchases and balance transfers.
- Slate from Chase. As we mentioned, this is the only 0 percent credit card with no balance-transfer fee. There’s also no annual fee, but it does charge foreign transaction fees. The intro period is 15 months, though there’s no rewards program to take advantage of.
To sum it up
Rather than considering which cards have the fewest fees, a better strategy would be to identify the fees that most apply to you and your spending habits. Then you’ll have an easier time determining which card will be the cheapest to carry in your wallet. That said, the above options are three of the best when it comes to fee-friendly credit cards.