Know Your Credit Card Fees

Credit cards are a convenient tool for everything, from daily essentials to luxury spending and international travel. While they offer flexibility and rewards, it’s important to stay informed about the fees that may apply — many of which are often overlooked. By understanding these charges, you can avoid unnecessary costs and take better control of your financial planning.

 

1. Annual Fees – What Are You Paying For?

 

One of the most common charges is the annual fee, which varies depending on the type of card and the benefits it offers. Premium cards with airport lounge access, cashback, or travel perks can come with annual fees ranging from AED 200 to over AED 1,500. If you’re not fully utilizing the features, consider switching to a no-annual-fee card.

 

2. Interest Charges – The Hidden Cost of Carrying a Balance

 

Another key fee to watch is interest, which is applied when you don’t pay your full outstanding balance by the due date. Interest charges can range from 2.5% to 3.5% per month — translating into significant costs if balances are carried over. To avoid this, always try to pay your full bill on time.

 

3. Late Payment Fees – A Penalty You Can Avoid

 

Late payment fees are also common and can go up to AED 300. These not only cost you money but may also impact your credit score. Setting up auto-pay or payment reminders through your banking app can help prevent this entirely.

 

4. Foreign Transaction Fees – Charges on International Spending

 

If you travel or shop internationally, keep an eye on foreign transaction fees, typically around 2% to 3.5% of the transaction value. Some banks offer cards specifically tailored for travellers with zero foreign exchange fees — worth exploring if you frequently spend abroad.

 

5. Cash Advance Fees – The High Cost of ATM Withdrawals

 

Using your credit card for cash withdrawals might seem like a quick fix, but cash advance fees are among the most expensive. Banks usually charge a flat fee or a percentage (whichever is higher), plus immediate interest without any grace period. Unless absolutely necessary, avoid using your credit card for cash.

 

6. Balance Transfer Fees – Check the Fine Print

 

Balance transfers can help you manage high-interest debt, but they often come with a fee of 2% to 3% on the transferred amount. While many banks offer 0% interest for a limited period on balance transfers, always check if processing fees still apply.

 

7. Over-the-Limit Fees – When Spending Crosses the Line

 

Some cards may apply an over-limit fee if you exceed your credit limit, although many banks will simply decline the transaction. To maintain a healthy credit score and avoid penalties, it’s wise to stay well below your credit limit — ideally under 30%.

 

Final Thoughts – Stay Informed, Spend Smart

 

In summary, credit cards can be a powerful financial tool when used wisely — but they come with responsibilities. Always read the terms and conditions, review your monthly statements, and keep track of fees to avoid surprises. Being fee-aware isn’t just smart — it’s essential for staying in control of your finances.