11 credit card fees: how much do they really cost?

Co-author: Justine Davies

Have you ever been surprised by a credit card fee? Being aware of any fees your credit card provider may charge could help you avoid any future “surprises”.

According to the Reserve Bank of New Zealand, we collectively make around $3.8 billion of credit card transactions per month, and we are paying interest on around $7 billion of credit card debt. Credit cards are big business.

While you may be mindful of having to pay a credit card surcharge here and there, there are plenty of other credit card fees you could be charged that you really should know about. Most of them are avoidable – but only if you know about them in the first place.

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1. Credit card annual fee

Many credit cards charge an annual fee, which can range from $36 up to $390 in New Zealand, with rewards credit cards tending to attract a higher annual fee.

Annual Fee
Rewards Minimum Average Maximum
Without Nil $36 $80
With Nil $168 $390
All cards Nil $115 $390
Source: Canstar.  Information correct at 30/10/2018.

Across 38 credit cards on Canstar’s database in October 2018, there are:

  • 5 credit cards that don’t charge an annual fee
  • 14 credit cards with an annual fee of less than $50
  • 14 credit cards with an annual fee between $50 and $100
  • 7 credit cards with an annual fee between $101 and $200
  • 3 credit cards with an annual fee more than $201.

Source: Canstar. Based on products listed on Canstar’s database. 

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2. Credit card annual fee for a subsequent card

In addition to charging you an annual fee, some card providers will also charge you further annual fees on any supplementary card attached to your account. This type of fee is not as common, but if you are considering getting a second card, you should check with your provider to find out whether or not you will be charged.

3. The credit card interest rate

Many credit card providers charge a reasonably high interest rate on any outstanding balance left on a credit card. On Canstar’s database the purchase interest rate on credit cards varies from 12.69% right up to 25.99%.

Credit cards typically have high interest rates because they are an unsecured debt. Unlike other loans or lines of credit, interest rates on credit cards appear to remain high no matter how the Reserve Bank of New Zealand (RBNZ) increases or decreases the official cash rate. By comparison, home loans and term deposit accounts tend to reflect any movement in the cash rate within a short time of the official announcement.

Currently on Canstar’s credit card database, the minimum, maximum and average credit card interest rates and balance transfer rates are as follows:

Non-rewards credit cards
Minimum Average Maximum
Purchase Rate 12.95% 16% 25.99%
Balance Transfer 12.95% 15% 20.95%
Rewards credit cards
Minimum Average Maximum
Purchase 16.95% 17.65% 20.95%
Balance Transfer 16.95% 20% 20.95%

Source: Canstar database. Information correct at 30/10/2018.

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4. Credit card foreign currency conversion fee

Research any cultural differences in your travel destinationIf you’re using your credit card overseas – or even buying something online in New Zealand from an overseas retailer – you can expect to pay a currency conversion fee on top of whatever exchange rate is on offer at the time.

If you are using your credit card overseas, you should also know about dynamic currency conversion, a service that gives you the choice of paying in New Zealand dollars, rather than the local currency when you pay an overseas merchant. For example, when you’re shopping online at the checkout with your online shopping on an international website, the prices are displayed in New Zealand dollars rather than the currency of that country, thanks to the Dynamic Currency Conversion that applies when you pay for something with a credit card.

If you’re travelling with a credit card, you may want to consider using a travel money card to get the most value from your card during your trip. You can compare travel money cards on Canstar’s database.

Compare Travel Money Cards

5. Credit card ATM cash advance fee

Cash advances usually incur a cash advance fee, which may be a flat fee or a percentage fee based on the amount of cash you withdraw. Interest is charged on cash advances from the time you make the withdrawal, and the interest rate applying to cash advances is usually much higher than the interest rate for making purchases.

6. Credit card late payment fee

Each month you will be required to make a minimum repayment on the balance owing on your credit card. If you don’t make this payment by the due date, you may be charged a late payment fee.

Across the credit cards on Canstar’s database there are, at time of writing:

  • 6 credit cards that don’t charge a late payment fee
  • 25 credit cards that charge to $10 as a late payment fee
  • 5 credit cards that charge a late payment fee of between $11 and $20
  • 1 credit cards that charge a late payment fee of between $21 and $30.

Source: Canstar. Based on products listed on Canstar database.

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7. Foreign currency cash advance

The same fees may apply if you withdraw cash from an ATM while overseas. Just as you may have to pay a cash advance fee for withdrawing cash at an ATM in Australia, you may also pay a fee for withdrawing cash from your credit card while you’re overseas.

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8. Credit card over the limit fee

Your bank does have to get your permission to allow you to spend over your credit card limit, but if you do allow this, be prepared to pay for it. Across the credit cards on Canstar’s database, 22  will charge you a fee of up to $20 if you spend over your credit card limit.

9. Credit card dishonour of direct credit fee

If you pay your credit card by direct debit, and that payment is declined, you may be hit with a dishonour fee on your credit card. Canstar’s research found 7 credit cards that will charge a dishonour fee of upwards of $10.

10. Credit card over the counter payment fee

Yes, you can be charged for paying your credit card bill in person. Over the counter payment fees are not too common – there are only a small handful of institutions that charge it.

11. Replacement credit card fee

Don’t lose your credit card or wear it out! Getting a replacement could cost you. While most credit cards on Canstar’s database don’t charge a replacement card fee, it’s worth being aware of whether or not your card provider does.

Be aware of the potential charges

If there’s a moral to this list of fees, it’s that fees are mostly avoidable by changing your card usage habits. The main thing is to simply be aware of them. Always read your credit card policy’s T&Cs so that you know what costs you might be in for.

If you’re considering signing up for a new credit card, you can compare credit cards on Canstar’s database to find a card that will suit your usage needs.

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