Caution! Credit Card Fees Ahead

FDIC - Credit cards offer great convenience to consumers, but that convenience comes at a price. In recent years, card issuers have raised or added new fees for their products and services. While these costs are described in the mailings and card agreements (contracts) consumers receive from card companies, too many people forget about these fees or aren't aware of them until after they've run up a sizable bill. FDIC Consumer News asked Janet Kincaid, a credit card specialist with the FDIC in Kansas City, for examples of fees that are becoming more common or more costly, yet still go unnoticed by many cardholders:

Monthly maintenance fees. Rather than charge an annual fee, some lenders impose a monthly fee, often from $6 to $12 a month, whether you use the card that month or not. "Many people don't blink twice over $6 a month-it doesn't seem so bad," Kincaid says. "But if they stopped to think that they're paying $72 a year just to be able to carry a card, they'd realize they could have done better by paying a lower annual fee."

Balance transfer fees. You've probably received mail from a credit card issuer trumpeting a "can't-beat-this" low Annual Percentage Rate (APR) of, say, 2.9 percent on any balance you transfer to that card from a competitor's card. But, there also could be a fee for the balance transfer that could outweigh the benefit of the low interest rate. In addition, there may be no grace period on the balance you transfer. "Interest often begins accruing the moment the balance transfer is completed," Kincaid explains. "Even if you paid off the balance by the due date, you may still incur interest charges."