How to Escape the Credit-Card Fee Trap

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By Valerie Young

NEW YORK -- Tired of getting hit over the head with costly credit card fees?

You may find it tough to avoid them altogether -- a recent survey of 100 cards by found only one with no fees at all and two cards with a dozen (literally) -- but it's still possible to cut your costs significantly.

"You can avoid most of these fees by taking two steps," said Matt Schulz, senior industry analyst at "Shopping around when you're first getting the card and setting up auto-payments once you get the card."

Schulz said that it's important to look at the terms and conditions before applying for a card. Afterward, setting up "auto-pay" will help you to avoid one of the most-common fees: a late charge, he added. Other frequent charges include annual fees, balance transfer fees, foreign transaction fees and cash advance fees.

In the survey, 99 percent of the the cards charged late fees and 81 percent had returned payment fees, typically $35.

Still, credit-card users are better off in many ways than a decade ago. With the implementation of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, also called the CARD Act, late fees were capped at $27 for the first late payment and $38 thereafter.

"The CARD Act really just slashed a lot of the fees," said Linda Sherry, director of national priorities for "They made it much more consumer friendly."

Twenty-six percent of cards in the survey had an annual fee ranging from $25 to $195, while nearly 80 percent charged balance transfer fees that were typically 3 percent of the transfer amount. Foreign transaction fees were found on 77 percent of the cards, usually charging 3 percent of each transaction in U.S. dollars, according to the survey.

Finally, 98 percent of cards surveyed charged cash-advance fees, ranging from $10 to as much as 5 percent of the advance amount.

Other less common fees, according to
  • Account re-opening fees
  • Overdraft protection fees
  • Statement hard-copy fees
  • Pay-by-phone fees
  • Replacement card fees
  • Expedited card-shipping fees
  • Stop-payment fees.
The most obvious way to limit fees, of course, is maintaining a good credit score, since lenders tend to offer the best deals to the customers most likely to pay back what they borrow. That said, here are the three cards that placed at the top and the bottom of the survey:

No Fee

The PenFed Promise Visa Card, which has no fees, is issued by the Alexandria, Virginia-based PenFed Credit Union. (The name is a reference to the Pentagon, not the state of Pennsylvania.) Established in 1935 as the War Department Credit Union, the institution has more than 1.3 million members in all 50 states as well as Washington, D.C., and military bases in Guam, Puerto Rico and Okinawa, according to its website.

Sherry recommends credit unions because they often offer better deals for their members.

"It's a great card," said Sherry. "Almost anyone can join some kind of credit union, somewhere, and they should look into their credit union card."

First Premier Bank Credit Card and First Premier Bank Secured MasterCard, issued by Sioux Falls, South Dakota-based Premier Bankcard, topped the list with 12 fees. One fee noted by is a $25 charge when customers qualify and receive increased credit limits.

First Premiere is a subprime lender, which caters to people with a poor track record on bill payments. Its "primary purpose is to provide individuals with damaged credit histories an avenue to obtain credit through the use of a credit card," according to the company's website.

"We actually advocate for secured credit cards as a way to build credit," said Consumer-Action's Sherry. "As you build credit and show that you are responsible for using a credit card and paying it back, then you can go out and get an unsecured card."

You can see the full list of the credit cards with the least and most fees at
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