The Perils of Hidden Fees in Credit Cards

The Perils of Hidden Fees in Credit Cards
July 28, 2017 Mrs. K Compare
he Perils of Hidden Fees in Credit Cards-Karlocompare

In a country like Pakistan; where it is generally advised not to carry excess cash, credit cards have certainly made life easier in terms of spending on the go. Almost anything could be purchased up to a certain limit easily if an individual has a credit card in hand. However, it goes without saying that there are some hidden costs that you should be aware of when you are spending on your credit card!

Let’s take a look at the kinds of hidden fees you could potentially face when using credit cards:

Lack of Protection:

Some credit card companies do offer protection against lost or stolen cards, but it is completely up to their discretion, and it is not mandatory. If your card is stolen or lost, you have no way to get the money back if a transaction is done on it. Some banks in Pakistan do offer protection and insurance for your credit card. But the chance of losing money already spent on your card, is a real threat.


Credit card companies can’t control your spending obviously. It is upon you to stay on budget and use your credit card wisely. While a debit card can help you control your spending you have in a way that a credit card won’t; they still facilitate spending.

If any of the above-mentioned reasons are not enough to indicate the mess you could be in if you use your credit card liberally, let us give you an idea of the costly fees attached. If you do decide to get a credit card, it’s important to know what you’re paying for. The companies that issue the cards need to make money, and they may do so with a monthly fee or activation fee. Some may even charge you a fee if you don’t keep a minimum balance or make regular purchases, so you are paying the bank for using the credit card as a facility.

Costly fees kept aside, there are hidden fees associated with credit cards as well, and the best way to protect yourself from this peril is to become an educated consumer. Mentioned below are the top hidden fees associated with your credit cards:

  • Cash Advance Fee:

Most credit cards charge a fee for cash advances. It might be a percentage of the amount of money you are withdrawing, such as 2%-4%, or it could be a flat charge. Additionally, cash advances are often subject to a higher interest rate than purchases. If you plan on using cash advances, investigate how the credit card issuer credits a minimum payment. Cash advances are not a good idea in general. If you find yourself using them regularly, explore other areas to get the cash you need, such as a personal loan or other sources.

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  • Closure fee:

Credit card issuers can charge a fee for closing the account. If there is a closure fee, call the customer service line to see if you can negotiate it down or eliminate it. You should also consider whether closing a credit card is in your best interest. Canceling one, especially one you’ve had for a long time, can end up hurting your credit rating. It’s often better to just keep the account open and not use it to avoid the hidden charges that one may not know about.

  • Inactivity fees:

Some cards charge a fee if you don’t use the card for a certain period of time or fail to reach a set annual spending limit. Some cards waive annual or inactivity fees for the first year, then implement them every year after that. To save from this peril, read your agreement thoroughly or ask a customer service representative so you understand any minimum purchasing amounts or fees associated with card inactivity.

  • Foreign Transaction Fee or Conversion Fee:

Many credit card companies charge a fee for transactions performed abroad, usually 2%-3% of your total purchase. This is to cover the cost of converting current currency to U.S. dollars. In some cases, credit card companies even charge a conversion fee for purchases made online from foreign merchants. If you’re a frequent international traveler, be sure to find a card that waives off this fee.

  • Late fee:

The best way to avoid late fees is to always pay your bill on time. Bill payments that are even one minute late can incur a fee. Enrolling in an online bill payment program that allows you to set up automatic payments will help you keep track of bills and due dates. This ensures your payments are credited on time.

Fees are only hidden if you don’t know about them. Even if the text is small, all potential fees will be included in your credit card agreement. So whether or not you end up surprised by fees is on you. Use your card wisely, make on-time payments, and avoid behaviors that incur fees, however, doing your research before you get a new credit card will help you understand all of the fees associated with the card you choose, how much they are, and when they will be applied and in return could save you from perils of hidden fees in credit cards.

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