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Credit Card charges explained and Top Tips to Save Money

In this guide to credit card charges, our Money Mum and Dad will explain all of the fees that might apply to your credit card and the best ways to avoid them to save you £100’s in unnecessary charges.

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 28 June 2024

3 min read

Credit Card charges explained and Top Tips to Save Money

Credit cards are the most common and the easiest form of credit that you can get to help you to manage your monthly finances for your family. Unfortunately, they can also be a very expensive option if they’re not managed properly.

It’s too easy sometimes to whack things for ourselves and our family on to the credit card and worry about it later. Poor management of your credit card accounts will mean that the fees will add up very quickly, and there are some hidden fees that you probably don’t even know about.

In this guide to credit card charges, our Money Mum and Dad will explain all of the fees that might apply to your credit card. We’ll also look at the best ways to avoid them to save you £100’s in unnecessary charges and fees.

Most credit cards will have several standard charges for having and using the card (e.g. interest (APR), Annual fee, overseas transactions, and cash withdrawals), as well as some additional charges for misuse (e.g. late payment fees, exceeding credit limits, and underpayment).

It can be far too easy to rack up a load of charges on your credit cards very quickly, simply by not managing your accounts properly. Managing your family finances is difficult enough as it is without the added stress of unwanted credit card fees.

Many people in the UK struggle with expensive credit card fees, and Martin Lewis offered his advice on this issue during an interview on ITV‘s This Morning.

How Can I Deal With Credit Card Charges? | This Morning

The table below shows the main types of credit card charges that you can pay and how they work.

Credit Card ChargeDescriptionStandard amountTop Tips
Interest ChargesUnless you’re on a 0% Balance transfer credit card deal then you’ll almost certainly have an interest charge on any balances not repaid at the end of the month.Typical card – 20% APR   Balance Transfer card – 35% APRYou can avoid these interest charges by clearing your balance each month or transferring to 0%.
Balance Transfer FeeIf you choose to take out a 0% balance transfer card then you’ll pay a percentage on the amount that you transfer to the new account.Typical balance transfer fee is 3.5% of the full balance of all cards transferred.There are No Fee balance transfer cards or you could try to clear your balance another way.
Annual Fee or Rewards FeeSome rewards cards and cashback cards will charge an annual fee for the facility. Some charge this every year or just in the first year.These fees can vary from £100 up to £500 depending on the facility and rewards.Always look at the best offers to see what is available and check if it’s worth paying the fee.
Currency ChargeIf you’re overseas and you use your card for normal transactions (e.g. food, shopping, etc.), then you’ll pay a currency conversion fee on top of the exchange rate.Average fee – 3%There are some fee free currency credit cards (e.g. Caxton).
Cash WithdrawalsRemember that credit cards are not debit cards and they’re not designed for people to use every day and especially not for cash withdrawals.Typically 3%Use your debit card and you can use your one-off withdrawal code on your banking app if you’ve lost your debit card.
Late Payment chargesAll credit card providers will charge you a late payment fee if you don’t pay the minimum payment at least.Normally £12 to £15Make sure that you set up a direct debit to collect your minimum payment every month.
Exceeding credit card limitsIf you go over your agreed credit limit on your card then you’ll pay a fee for doing this, even though you shouldn’t be able to.Normally £12 to £15Set a limit on your card to stop this from happening and keep an eye on your balance.

Absolutely, you’ve got standard rights with any credit card that you use against unfair and incorrect charges. You should always check your credit card statements closely to make sure that there are no nasty surprises.

If you do see something that you don’t recognise or you think is incorrect then you should contact your credit card company immediately. If they don’t resolve the matter then you can escalate your complaint to the Financial Ombudsman Service.

The normal process for disputing any charges on your credit card is:

  • Send a complaint in writing if the dispute is not resolved.
  • Forward your complaint to the Financial Ombudsman Service (FOS).

[FOS block]

The interest charge is by far the biggest and most common credit card fee, which is also the most avoidable. One of the best and simplest ways to avoid paying interest on your credit cards is to transfer your balance to a 0% or interest free credit card to repay your balance in a longer period.

You can visit our comprehensive guide and tools to find the best 0% balance transfer deals for your family. This will almost certainly help you to save £100’s or even £1,000’s on your credit card charges.

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