Most of us are better at spending money on our credit cards than figuring out what credit card charges and fees we’re incurring when we flash that piece of plastic. That’s perfectly understandable, because poring over the fine print on credit card agreements doesn’t exactly make for light reading.
Most people only find out what they’re paying for when they check their credit card statements, and even then there are many more fees that are invisible to the naked eye.
Here are some of the usual credit card charges and fees you’re paying without knowing it.
Annual fee
Most credit cards charge an annual fee. The ones that charge the highest annual fees tend to be higher-end cards offering more generous rewards in the form of air miles, perks, exclusive memberships or discounts. You can apply for cards that don’t have annual fees, but be sure to check the Terms and Conditions. In some cases, calling the credit card issuer to ask for a Annual Fee waiver is also something you can do to avoid the payment.
Fee amount: Typically between HK$200 to HK $10,000 depending on the card.
Programme fee
Programme fees are charged when cardholders need to join certain programmes. These banks or FIs usually require that you be enrolled in a particular frequent flyer or travel rewards programme, for which you must pay a fee, before you can take advantage of their benefits.
Fee amount: HK$300 (one time)
Credit card transaction fee
Transaction fee is incurred only when you use your card to make payments, and can be either a fixed fee or vary according to how much you’re charging. Although HK government legislated the fee should not be an extra charge to consumer, merchants normally put this cost in the retail price.
Some examples of credit card usage fees include:
Foreign currency transaction fee
This fee is paid when you effect transactions that are outside of Hong Kong, including any spending you make in foreign countries and any internet purchases made on foreign websites. The total fee includes currency conversion (of about 1.95%) as well as an administrative fee (usually up to 2%). This means you’re probably paying over 3% extra, in addition to any expenses incurred in the actual exchanging of the currency.
Balance transfer fee
These fees are charged when you transfer the balance of a credit card, or even multiple cards, to a second card, usually because it offers a lower interest rate or even a 0% interest rate, usually for a limited period. In order to do that, you’ll have to pay a processing/administrative fee, usually calculated as a percentage of the balance you are trying to transfer.
Cash Advance Fee
Many credit cards can be used to withdraw cash at ATM machines. The money is given to you through a cash advance, and you will pay for it only when your next monthly bill arrives. Cash advances attract transaction fees in addition to daily interest on any outstanding balance. Some cards charge cash advance fees of about 2% to 3%.
Fees for converting rewards points to miles
Some cards that offer rewards points will enable you to convert these points to frequent flyer miles, for instance at a rate of 1 rewards point = 2 air miles. However, some banks or FIs will require you to pay a conversion fee each time you do so. For instance, you may have to pay, say, HK$50 each time you convert your rewards points to a batch of 5000 Asia Miles.