Interest charges

This is what a provider charges you when you use your credit card to borrow.

For example, if you have a balance of 100 on a card with 20% APR, it would earn interest of 20 per year.

To avoid paying interest, repay your balance in full every month. If this is not possible, you can pay less by finding a card with a lower APR.

Fees for breaking card terms

Late payment charges

Your credit card bill will specify a minimum payment amount and a date you need to make the payment by. If you do not pay by that date, you will be charged a late payment fee of 12.

To avoid late payment charges, set up a direct debit to pay at least the minimum amount every month.

Missing a payment can also affect your credit rating and lead to your provider increasing your interest rate or withdrawing your introductory 0% APR offer.

Charges for exceeding your credit limit

If you go over your credit limit will be charged a fee which could be around 12.

You can avoid this by checking your limit and current spending by signing in to your online banking or phoning your provider.

If you know that you are likely to spend too much before the end of the month, ask your provider to increase your credit limit.

Dormancy fees

Some American Express credit cards and store cards charge an inactivity fee if you go too long without using them, for example more than 12 months.

If you have a card that charges an inactivity fee, consider cancelling it.

Card charges

Cash withdrawals

You could face the following charges if you use your credit card to withdraw cash:

  • Withdrawal fee: This is usually about 3% of what you take out, although there is usually a minimum fee amount of a few pounds.

  • Higher APR: The interest rate charged on cash advances is usually higher than your APR on purchases - often around 27.9% but sometimes much more.

  • Immediate interest: You will be charged interest on the amount you withdraw straight away.

Here is how to work out if you should withdraw cash using your credit card, and how much it could cost.

Balance transfers

When you make a balance transfer or money transfer, you will usually have to pay a fee to make the transfer.

This fee is a percentage of the balance you want to transfer. For example, if you transferred 2,000 to a card with a fee of 2.5%, this would cost 50.

You can save by finding a card with a low, or no fee. Here is how to work out which deal will be cheapest.

Spending abroad

If you use your credit card abroad, it could charge you:

  • A loading fee of around 2.99% each time you spend

  • The exchange rate, which is likely to be less competitive than most travel money rates

  • Interest on the amount withdrawn straight away*

  • An ATM withdrawal fee e.g. 3%

* You usually get around 56 days before you are charged interest when you use a credit card for purchases at home

However, cards designed for use abroad can come without fees for spending or withdrawing cash.

Monthly and annual fees

Some credit cards charge a fixed fee that you have to pay annually or monthly. These fees generally cost from 12 to 150 a year.

If you have a monthly fee, you will pay it off as part of your credit card bill.

For example, if you had a card with a monthly fee of 3 and repaid 50 a month, 3 of this would pay off the fee and 47 would go towards the interest and balance.

Can you get a refund?

If you think you have been charged any fees incorrectly, contact your credit card provider immediately and ask for a refund.