How to Avoid Credit Card Fees and Charges

When looking over your credit card statements, you may be surprised to find additional charges on top of your purchases. Credit cards can come with fees for certain transactions or actions. While you’ll likely want to avoid some fees like interest or over-limit charges, some of them will be necessary expenses. Let’s look at some fees and charges you might encounter while using your credit card, and how to avoid paying them in the future.

Common credit card fees and charges

Smart credit card use means understanding what fees you can be charged and under what circumstances. Here are some of the most common:

Interest

When you don’t pay your credit card balance in full by the due date, you will be charged interest on the amount you still owe. Most credit cards have grace periods between the closing date of each billing cycle and the payment due date. If you pay your entire balance in full within this timeframe and do not carry a balance from the previous billing cycle, you won’t be charged interest. Grace periods can vary from card to card, so check your terms. 

By using your credit card responsibly, you can avoid paying interest on your purchases. Keep track of how much you spend with a budgeting app so you aren’t left owing more than you can afford. Set up calendar reminders or automatic payments to ensure you pay on time. If you have a Citi credit card, you can enroll in AutoPay via Citi^® Online or the Citi Mobile^® App.

Cash advance fees

When you use your credit card to take out a cash advance, you may encounter multiple fees. You are required to pay interest on cash advances, which may be higher than the interest rate you pay on purchases. Unlike standard purchases, which have a grace period, cash advances begin accruing interest immediately. If you carry a balance to the next month, you will be charged interest daily until you pay off what you owe. This is called trailing interest.

You may also have to pay a fee when you use your credit card to take out a cash advance, separate from the interest. The exact amount can vary depending on your card and the amount you withdraw, but typically it is a percentage of the cash advance or a flat amount, whichever is higher.

These fees only apply when you take out a cash advance, so if you’re looking to avoid them, consider using your debit card to take cash out of your checking or savings account.

Late fees

Most cards require a minimum payment on your balance every month. If you don’t pay by the due date, you can be charged a late fee. This applies if you pay less than the minimum or if you miss the payment altogether. 

The best way to avoid a late fee is to make payments on time. Even if you can’t pay the whole balance, paying the minimum is preferable to being late. Setting up automatic payments can help you avoid this kind of fee.

Foreign transaction fees

Some cards charge a foreign transaction fee for making purchases abroad. Foreign transaction fees are usually a percentage of the transaction.

If your card charges for foreign transactions, you can avoid these fees by paying in cash when you’re traveling abroad. You can also look into a card that does not charge foreign transaction fees, such as a Citi^® / AAdvantage^® Platinum Select^® World Elite Mastercard^® or a Costco Anywhere Visa^® by Citi,  which was rated one of the best credit cards of 2025 by money.com. 

Annual fees

Some cards feature exclusive features like airport lounge access, travel credits or more opportunities to earn miles and points. However, these cards often come with an annual fee to help pay for these perks. The fee is usually charged on the anniversary of the day you opened your account.   

Some annual fee cards, like the Citi^® / AAdvantage^® Platinum Select^® card, may waive the fee for the first year. If you’d like to avoid an annual fee altogether, consider a card like the Citi Simplicity^® Card  or Citi^® Diamond Preferred^® Card that doesn’t charge for use.

Balance transfer fees

A balance transfer fee is charged when you move a balance from one card to another. 

Balance transfer fees tend to be a percentage of the balance you’re transferring or a flat rate, whichever is higher. You may be able to find a card with no balance transfer fees, but often, the only way to fully avoid these fees is not to transfer a balance.

Over-limit fees

Credit limits vary based on the type of card, your creditworthiness and other financial factors. If you spend more than your credit limit, some credit card providers may charge you an over-limit fee. However, a card provider cannot charge this fee unless you have opted in and allowed the provider to accept charges that go above your credit limit. If you’re worried about going over your limit, tell your card provider not to accept these kinds of charges.

Over-limit fees can vary, but they cannot exceed the amount you went over. For example, if you go over your limit by $20, the card provider can’t charge you more than $20 in over-limit fees. 

Returned payment fees

If you do not have the funds to cover a credit card payment, you may be charged a returned payment fee.

To avoid this fee, keep track of your card usage to ensure you’re not spending more money than you can repay. If you’re enrolled in automatic payments, set a reminder to check your linked bank account before the payment due date to verify that you have enough money to cover the payment.

Understanding credit card fees

This list is not comprehensive, but these are the most common credit card fees you might encounter. When you open a new card, be sure to review the cardmember agreement, which lists all potential fees. Shop smart and stay on top of your budget so you can avoid any unexpected charges. 

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.