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No one likes paying extra fees. The delivery fee on your Uber Eats order, resort fees on your trip to Hawaii…it feels like extra fees are everywhere. That means many people try to avoid them.
This same idea applies to people who look for credit cards with no annual fee. For one reason or another, you don't want to pay a fee to keep that card in your wallet each year. However, you may see posts and discussions of these credit cards as “no fee” credit cards. I'm here to tell you that you should beware whenever you see that. Here's why.
Why No-Annual-Fee Cards Aren't No-Fee Cards
To understand what I'm talking about, I'll use three popular credit cards with no annual fee: Chase Freedom Unlimited®, Citi® Double Cash Card, and The Blue Business® Plus Credit Card from American Express (Rates & Fees).
There's no fee for keeping these cards in your wallet year after year. However, discussions of these credit cards as “no fee” cards can be misleading. These cards do have tons of fees — just not annual fees.
Consider that the Freedom Unlimited has the following fees:
- Balance transfer fee: Either $5 or 5% of the amount of each transfer, whichever is greater.
- Cash advance fee: Either $10 or 5% of the amount of each transaction, whichever is greater.
- Foreign transaction fee: 3% of each transaction in U.S. dollars
- Interest fees: 20.49% - 29.24% Variable APR if you don't pay your balance in full each month.
- Late payment fee: Up to $40.
- Returned payment fee: Up to $40.
Similarly, the Citi Double Cash has these fees:
- Balance transfer fee: Intro fee 3% of each transfer ($5 min) completed within the first 4 months of account opening. After that, 5% of each transfer ($5 min).
- Cash advance fee:5% of each cash advance; $10 minimum
- Foreign transaction fee: 3%
- Interest fees: 19.24% - 29.24% (Variable) APR if you don't pay your balance in full each month.
- Late payment fee: Up to $41
- Returned payment fee: Up to $41.
And the Blue Business Plus publishes these fees:
- Foreign transaction fee: 2.7% of each transaction after conversion to US dollars. (Rates & Fees)
- Interest fees: 18.49% - 26.49% Variable APR if you don't pay your balance in full each month. (Rates & Fees)
- Late payment fee: Up to $39 (Rates & Fees)
- Returned payment fee: Up to $39. (Rates & Fees)
As you can see, these cards do have fees. There's no annual fee, but there are many other fees you could encounter.
Even the recently-announced TD Clear Visa Platinum Credit Card has fees, despite its marketing points. While it has no annual fee, foreign transaction fees, or late payment fees, it has a monthly fee and a monthly payment amount.
Our Take
Why does this matter? It's important that credit card consumers understand the details of their credit cards. Surprise fees don't help anyone. You may be shocked if one of these fees shows up on your credit card statement after hearing it referenced as a “no fee” credit card. More than likely, it has a host of fees you could encounter. Most likely, your card simply has no annual fee.
Understanding the difference can help you avoid surprises when your credit card statement arrives.
For rates and fees of the cards mentioned in this post, please visit the following links: The Blue Business® Plus Credit Card from American Express (Rates & Fees)
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Good information for those signing up for a new credit card. The “no fee” credit cards work for me. I don’t use the balance transfer feature or other features that have an extra fee. I pay my card off every month and it truly is a “no fee” card for me. That being said, you do have to read the fine print and make sure you understand all fees associated with the card.