Keeping an Eye Out for Hidden Credit Card Fees

2017-06-09   minute read

Linda Paul

Lifestyle Debt

Having a household credit card or two can come in handy for multiple reasons – which is probably why there are approximately more than 43 million credit cards currently active in Canada. Just how much are these 43 million credit cards costing Canadians though? Hidden credit card fees could be costing Canadians far more than they realize. Here’s a breakdown of a few common fees to look out for when applying for credit:

    • When you use your credit card to make a purchase, the merchant must pay a fee to the credit card issuer. These fees vary among credit card issuers. Although a few merchants will add a specific charge to your purchase to cover that fee, many of them absorb it as a business expense which in turn translates into a higher cost for the products you buy. In these situations, you don’t have direct visibility into what the use of your card is costing you. Unfortunately if merchants are weaving the cost of credit card fees into their product pricing, that also means even when you pay with cash, you’re paying extra in the price of the product to cover the seller’s overall credit card fees for all of its customers.
    • If you have a ‘points credit card’ (which earns you points whenever you use it and you can redeem those for products, travel, etc), you may see that you are charged an annual fee for your card.
    • Alternatively, if you haven’t charged anything on your card for a month or two, you may be charged an “inactive” fee.
    • If you use your card for purchases which aren’t normally paid by credit card (for example, purchases made over the phone or online, taxes, fines, utilities, etc), you may be charged a “convenience fee.” There are some restrictions and limitations on these fees, but it’s a good idea to be aware of them and how much extra you are being charged for the convenience of using your credit card before you enter into the transaction.

    While credit can be an incredible tool, both for building credit and for managing expenses in the short-term, it can end up costing you a lot more anticipated in the long run when the cost of interest and fees go unnoticed. When applying for credit, make sure to get a clear summary of all fees that may apply.

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