Annual Fee
Many cards, and specifically rewards cards, come with an annual fee. The amount reflects the benefits you will receive (such as travel points and cash back offers) for using the card. Even if you don’t use the card once during the year, this fee still applies. In fact, unless you can find a promotion where it’s waived for the first year, your annual fee will appear on your very first credit card statement.
Annual fees typically range from $20-120, but can be more or less. As a credit card’s benefits increase, however, so does its fee. For example, the TD Aeroplan Visa Infinite includes priority seating on Air Canada flights and a welcome bonus of 15,000 Aeroplan Miles, for an annual fee of $120. The American Express Centurion, on the other hand, includes complimentary hotel rooms, dedicated concierge and personal shoppers; it also comes with a $5,000 initiation fee and the annual fee can go as high as $2,500.
Authorized User Fee
If you want your child, partner, or spouse to have a secondary card attached to your credit card account, you will have to pay an authorized user fee for each additional card. This can be a good option for couples to consider, or for a parent to give a kid before they move away for school, but it’s important to remember that you – the primary cardholder – are responsible for any and all transactions made by the other users.
Overlimit Fee
Each credit card in your wallet has its own credit limit, which is the maximum amount you can charge to your account. If you make a purchase that pushes you over that limit, you may be subject to an overlimit fee. For Canadian bank-issued credit cards, overlimit fees typically range in the $25-30 range. To avoid this, and to keep your credit score up, it’s always best to use less than 35% of your limit at all times.
Foreign Transaction Fees
When you make a purchase in a foreign currency (e.g. not in Canadian dollars), the credit card issuer charges a fee to do the conversion. For example, let’s say you have a CIBC credit card with a foreign currency conversion fee of 2.50% of the amount converted. If you were in England and you made a purchase with your credit card, CIBC would effectively buy British Pounds on your behalf, pay the merchant for the purchase and then charge you for the convenience of doing this conversion. You may not see the conversion on your statement. Instead, you will see the amount charged to you in Canadian dollars after the conversion fee has been done.
Interest Fees
This is the most common, and usually the largest, fee associated with using a credit card. As we explained in how credit cards work, if you pay off your balance in full by the payment due date, interest can be avoided entirely. However, if you do not pay off the balance in full, you start to accrue interest at the annual percentage rate specified in your contract. You can read more about how credit card interest fees are calculated and added to your credit card statement each month here.
