Credit cards are great financial tools when used responsibly.  In an emergency, they come in handy to cover unexpected expenses.  However, credit cards can be expensive.  In order to borrow money from the issuer, in addition to your balance, you must be prepared to pay credit card fees.  Fees to use the card, fees for late payments, returned payments etc.  Luckily, all cards come with an agreement that lists its terms and agreements.  Included in those terms are all the fees and penalties associated with having the card.  It is not an exhaustive list, but in all honestly, most people don’t pay attention to these important figures.  With this in mind, The Passport Collective has compiled a list of 5 credit card fees you should know as a cardholder.

1.  Interest charges

Interest charges are fees applied to credit card balances if it isn’t paid in full before the grace period.  They can be fixed or variable, but most credit cards charge variable interest rates.  Different creditors use different calculations.  Some use the adjusted balance, average daily balance, double billing cycle, ending balance, or previous balance.  You can find the how’s on your billing statements.  On the whole, higher balances equal higher finance charges.  Always try to pay your monthly balance in full to avoid finance charges.

2.  Annual Fees

Annual fees are charged for simply keeping the account open.  Unlike some charges, these fees can be avoided.  Plenty of travel cards, like the United Gateway, do not carry an annual fee.  But for the best travel rewards and perks, credit cards will charge anywhere from $95 to $550.  Chase Sapphire Reserve, for instance, comes with a high $550 annual fee but offers exceptional rewards.

3.  Late Payment Fees

Most credit card companies will tack on a late charge anytime payment is submitted after the due date.  Late payment fees were capped by the 2009 CARD Act, but nevertheless, the fees can vary depending on your card.  To avoid this charge, make sure you pay, at the very least, the minimum due.  Missed payments not only increase finance charges but affect credit scores.  Remember, payment history accounts for 35% in credit score calculation.

4.  Over the Limit Fees

When you are approved for a credit card, you are usually assigned a credit limit. That is the maximum amount of money you can spend on the card.  However, some issuers will allow you to occasionally go over your limit, for a fee.  This might be common especially if you have a low credit limit.  Just like late fees, these charges are also capped at $40.  There is a choice to opt-out, but be prepared for the possibility that your transactions will be declined.

5.  Balance Transfer Fees

A balance transfer means you can move your high balances from a high APR credit card to one with a lower APR.  This allows for debt repayment for a set period of time at a low APR, like 0%.  For instance, the Discover it Miles charges 3% on balances transfers until January 2021, after which the rate increases to 5%.  If you have good credit, you are more likely to get more access to 0% APR balance transfer offers.