Credit card ownership has its perks. You can build a solid credit history, tap a line of credit when you need it, and, in some cases, unlock benefits from rewards programs—things like cash back, discounts and upgrades.

But owning a credit card isn’t all champagne and roses. Like it or not, credit cards have fees and it’s important to understand what they are and how to avoid them before they impact your bottom line. Different cards have different fees, so you’ll need to compare across a range of potential charges to get a sense of what you might wind up paying out for.

To get you started, here are the seven most common credit card fees every cardmember should be aware of and some tips to help you dodge them.

  1. Annual Fees
  2. Foreign Transaction Fees
  3. Balance Transfer Fees
  4. Cash Advance Fees
  5. Late Payment Fees
  6. Over-the-Limit Fees
  7. Return Check Fees
  8. Payment Tips

1. Annual Fees

Some cards come with annual fees that are charged to your card every year. Think of them as the price of admission to use and carry the card.

If you’re paying for a credit card, chances are you’re getting something in return. To that end, annual fees are most commonly associated with rewards and premium cards, as well as secured cards. (Note: credit cards can still have rewards without carrying an annual fee.)

Annual fees vary by card, both in cost and how they’re applied. Some cards are billed annually and other cards charge a portion of the fee each month.

If you’re signing up for a card with annual fees, make sure you understand when and how the fees are applied so they don’t catch you off guard. Further, some cards offer promotions that waive the first year’s fee, so review the terms carefully to make sure you don’t get hit with a surprise bill in year two of cardmembership.

2. Foreign Transaction Fees

If you travel often outside the United States, check if your card or the card you’re applying for charges foreign transaction fees. These are fees applied to non-U.S. purchases, often when you pay in currencies other than U.S. dollars.

Foreign transaction fees are typically applied as a percentage of the purchase price rather than a flat per-transaction fee. According to Credit Karma, a typical foreign transaction fee is about 3 percent. That translates to a few cents on a pack of gum, or a few dollars on a nice dinner. Bear in mind that over the course of, say, one week abroad in Europe, a 3 percent charge on every purchase could set you back hundreds of dollars when it’s all said and done.

It’ also important to be conscious of foreign transaction fees even when you are not traveling. They may apply at home if you buy from an overseas vendor, such as an airline or online merchant.

Don’t want to pay foreign transaction fees? Find a credit card that doesn’t charge any-there are plenty, like all of Discover’s credit cards.

3. Balance Transfer Fees

If you’re planning to make a balance transfer—meaning you’re moving debt from one card to another—make sure to read the terms and conditions carefully. Many card issuers charge a balance transfer fee ranging between 3-5 percent of the total amount transferred.

Balance transfer fees are typically applied as a one-time charge for each balance you transfer. Before you transfer any balances, it’s important to factor in the fee because it could have an impact on how much (and whether) you save money if you’re moving to a lower-interest card.

You may maybe able to avoid these fees by finding a credit card with no balance transfer fee or a card with a promotion, waving fees and/or interest on the transferred balance for a limited time. If that’s the route you choose, you may want to plan to try to pay off the transfer before the promotion expires to maximize your savings.

4. Cash Advance Fees

Cash advance fees kick in when you withdraw cash from an ATM using your credit card. These fees are notoriously expensive, so you don’t want to make a habit of paying them.

While a cash advance fee is typically a percentage of the amount withdrawn, for example 5 percent on a $100 withdrawal, the interest rate is usually higher than the rate you’d pay on standard purchases.

Interest starts accruing right away on cash advances so it’s best to only use a cash advance in emergencies. If you do take out a cash advance, try to pay the balance off as quickly as possible.

5. Late Payment Fees

Missing a credit card payment or paying less than the minimum due is a big deal. Not only will it trigger a late fee, but depending on how late your payment is, your credit card issuer could report the late payment to the credit bureaus. If that happens, chances are it’ll be tacked on to your credit report and stay there for years, dinging your credit score in the process.

Paying your credit card late or for less than the minimum due could result in unexpected fees. According to The Balance, late fees run as high as $40 but vary by card and whether it’s your first time missing a payment. Note that payments more than 60 days late could be hit with a penalty interest rate, which is the highest rate your card issuer will charge on a balance.

If you slip and miss a payment, call your credit card company as soon as possible. If it’s your first time missing a payment they may be able to waive the fee.

Consider automating payments so this doesn’t happen to you. Make sure to schedule your payment at least two or three days in advance. If your due date falls on a Sunday or holiday, your bank could be delayed releasing funds.

6. Over-the-limit Fees

An over-the-limit fee may be charged if you make a purchase that exceeds your credit limit. You have authorize your credit card to allow you to go over your limit for your issuer to be able to charge you this fee.

7. Return Check Fees

Return check fees kick in when you try to pay your credit card bill and the check bounces, either because of insufficient funds, a cancelled check or a closed account. Return check fees vary by card and may also come with an additional late fee if you do not send an alternate payment (that goes through) prior to your due date.

8. Payment Tips

Request a due date that’s easy to remember and make sure it fits well with your pay date and the due dates of your other monthly bills.

To avoid making a late payment, automate your payments and designate an amount that covers your minimum payment.

If you can’t afford to pay off your balance in full every month, try to pay more than the minimum to save on interest charges and reduce your high-interest balance.

Always keep in mind the ‘golden rule’ of credit cards: The best way to avoid credit card fees is to pay your bill on time and in full every month.

When it comes down to it, various fees are a necessary part of having and using a credit card. Just make sure you’re well-informed about which fees you may be paying, how much, and when they may be triggered.

Published February 10, 2015.

Updated October 19, 2020.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.