Is there a cost to using a credit card? Credit card fees 2025
What are credit card fees in Australia? Here's a look at all the fees and charges you could – and importantly, ways to avoiding paying them.
Credit cards don't come free: there are loads of different fees and charges that can add up when left unchecked. But if you want to keep the convenience of using a credit card but also answer the question: How can I avoid credit card fees? Then here are the most common fees and how to avoid them, along with fictional but realistic examples of how you could save.
1. Interest
While not technically a fee, credit card interest is the biggest cost you may pay. The amount you pay is based on a percentage of your balance that remains unpaid by the due date. It's a little complicated, but this percentage is represented by an annual rate (for example, 19.99% p.a.), and is calculated daily and charged monthly.
You could have any or all of the following interest rates applied to your balance:
- Purchase rate. The interest rate charged for new purchases. The Reserve Bank of Australia reports the average standard credit card interest rate is 20.99% p.a., but standard purchase rates can be 8.99% p.a. to 24.99% p.a. (variable).
- Cash advance rate. The interest rate applied for cash advances, such as ATM withdrawals. It is usually between 19.99% p.a. and 25.99% p.a. (variable).
- Balance transfer rate. The interest rate applied to any balance you have moved from an old card to the new or current card. With a balance transfer credit card, after the BT period ends, a higher standard interest rate will apply for any remaining balance transfer debt you're still paying off.
- Promotional interest rate. Usually offered to new cardholders for a set period of time, such as the first 12 months. Make sure you also check the standard interest rate that kicks in afterwards.
How to avoid it:
Most credit cards in Australia won't charge you interest if you pay your balance in full by the due date on your statement. If you can't pay the total balance in full by the due date, aim to pay more than the minimum each month, or choose a card that has a low ongoing interest rate or a 0% promotional interest rate.
Example: Thien's interest savings
Thien's credit card has a $5,000 balance on an interest rate of 19.99% p.a. (variable). If he makes minimum payments each month, he'll pay around $955 in interest for the year. If Thien switches to a card with a lower interest rate of 12.99% p.a., he could save $354 in interest over the year. He could also avoid interest charges completely by transferring the debt to a 0% balance transfer card, and paying it off before the introductory period ends.
2. Annual fees
Most credit cards charge an annual fee, ranging from $20 to $700+.
- A standard credit card with few extra features usually has a fee of $50-$150.
- A credit card with a lot of features and benefits, like a rewards program or complimentary travel insurance, generally comes with a higher annual fee of $200-$400.
- Annual fees on business credit cards can go even higher, from $400 to over $1,000.
Annual fees are charged when you first activate a card, and again on the anniversary of that date every year you have the card. If you take advantage of credit card perks, the value they offer in things like free insurance and airport lounge offers could outweigh the cost of the annual fee.
How to avoid it:
Some cards waive this fee in the first year to entice you to sign up for the card. You may also qualify for an annual fee-free credit card if you take out a home loan with an eligible package. Or, consider a card with a lower fee or one that charges no annual fee.
"I have two credit cards and earn thousands of points every year without paying any fees. I use an Amex for maximum points-earning, and a Mastercard for when a retailer doesn't accept Amex, ensuring I earn points on every purchase. I don't pay any fees because the cost of my Mastercard is covered through my annual package fee with CommBank mortgage, while the $450 annual fee for my Amex Ultimate is offset by the free $450 travel credit, which I use immediately each year."
Learn more about home loan and credit card packages
3. Balance transfer fees
Some balance transfer credit cards charge a fee for moving your existing debt from a current card to the new account. This gets charged as soon as you transfer a balance and is added to the principal amount of the debt you transferred, not accruing interest until the introductory period expires.
They are usually between 1% and 3% of the total debt you move. For instance, if you transfer $5,000 of debt and the fee is 1%, you'll pay $50.
How to avoid it:
Compare balance transfer credit cards and look for options that don’t charge a balance transfer fee.
Example: Move your debt and save like Miranda
Miranda has seen a balance transfer credit card that offers 0% interest for 12 months, with a 2.5% balance transfer fee. She has a $6,000 debt she wants to move, but a 2.5% fee adds a $150 transfer fee. Miranda compares with other balance transfer options and finds a different card that charges no balance transfer fee – so she can transfer her debt, save $150 on the fee, and pay off her balance faster.
4. Cash advance fees
This fee is charged when you withdraw money from an ATM, buy foreign currency, or pay with plastic whilst gambling. You’ll be charged between 2% and 3.5% of the total transaction value. Some cards also have a substantial minimum cash advance fee of between $20 and $35 – so if you only cash advance $100, you're still charged a whopping cash advance fee.
You’ll also be charged the cash advance rate of interest from the day the transaction is made.
How to avoid it:
Don’t use your credit card to get cash out – it should be an absolute last resort. Avoid using it to buy foreign currency or for transactions in a casino.
Example: Valentina's cash advance mistake
Valentina has run out of cash at a music festival. So, she withdraws $300 using her credit card. When she gets her next statement, she sees she has been charged a 3% fee worth $9. The cash advance interest rate of 21.99% p.a. has also been charged for 20 days. She makes sure she takes cash next time.
5. Late payment fees
If you don’t make a payment on your credit card by the due date on your statement, you could be charged a late payment fee of $15 to $30. Some providers charge this straight away, while others may not apply a late fee unless they have to contact you to get you to make a payment. Note that even if a late fee is not charged, other penalties could apply, and it may affect your credit history.
How to avoid it:
Set yourself a reminder to make payments at least 2 business days before the due date on your statement. You may even want to set up an automatic payment from your transaction account so you always meet this deadline.
Example: Asad uses reminders to avoid late fees
Asad has racked up a few late fees after forgetting to pay his balance on time, so he sets up a calendar reminder for the 10th of each month. His credit card is usually due around the 13th, so this gives him time to check his statement, pay the minimum or full balance due, and allow for processing time.
6. Foreign transaction fees
Most credit and debit cards apply a foreign transaction fee when you use your card overseas or when you shop online with an international merchant. Also known as an "international transaction fee" or "currency conversion fee", it's usually between 2% and 4% of the total transaction value. So a $100 purchase could have a $2-$4 fee added on top.
How to avoid it:
Look for a credit card that doesn't apply a foreign transaction fee, like the Latitude 28° Global Platinum Mastercard or any platinum Bankwest credit card. You could also consider a prepaid travel card that lets you load and use funds in several currencies.
Example: How Jai saved on transaction fees on holiday
Jai has just got back from a trip to Brazil, where he spent $5,000 on his credit card. He checks his statement and sees that a 3% foreign transaction fee was applied each time he used the card, adding $150 to his total bill. While Jai has to pay the fees this time, he decides to shop around for a card with no foreign transaction fee so that he saves money on his future trips.
"The worst thing about foreign transaction fees is that you often end up paying 3 times: first, with the currency conversion margin that's applied to the transaction. Then with the credit card surcharge most places add to the bill. And thirdly, with the foreign exchange fee. For instance, on a recent trip to New York, a number of hospitality venues advertised a discount of up to 3% for paying cash, or a surcharge of up to 3% for using a card. It was a very big incentive to pay with cash, and saved us several hundred dollars."
7. Over limit fees
You could be charged an “over limit fee” if you max out your credit card in a statement period. For instance, if your credit card limit is $2,000 and you go on a shopping spree and push the balance up to $2,200, then you've gone over your limit.
Not all credit card companies apply this charge, but if they do, it's usually between $5 and $35.
How to avoid it:
Regularly check your credit card balance so that you know what your available credit limit is when using the card. If you regularly get close to going over the limit, consider requesting a credit limit increase.
Example: Marie shops up a storm
After a fun day of shopping with her friends, Marie realises she's charged $500 worth of purchases to her card, which will put it over the limit. She quickly transfers $300 from her savings to her credit card to avoid an over limit fee.
List of bank's late and over limit fees
8. Reward program fees
Some rewards credit cards charge an annual fee for choosing a particular rewards program. Usually this only applies to cards that give you a choice between standard rewards and Qantas rewards, such as the Citi Qantas Rewards program that you can opt into with a Citi Rewards card. This fee is usually between $30 and $75 and applies on top of the card’s annual fee.
How to avoid it:
Read the terms and conditions or a review of any rewards program you’re considering. If a fee is charged for opting to earn Qantas rewards, make sure the value of points you will earn from the card will outweigh this cost (and the annual fee). You may also want to consider a Qantas frequent flyer card that doesn’t charge a reward program fee.
Example: How Antony got the most out of his rewards credit card
Antony opted to earn Qantas rewards on his current credit card, at a rate of 1 point per $1 spent. He pays an extra $30 per year for the program, and an annual fee of $200. He decides to switch to another card, which has an annual fee of $95 and offers 0.75 points per $1 spent. This saves him $135 a year, while also giving him the opportunity to earn almost as many points.
Finder survey: What annual fee would people be willing to pay for a rewards credit card?
Response | |
|---|---|
| Up to $100 | 40.13% |
| $0 | 34.48% |
| Up to $200 | 10.97% |
| Up to $300 | 7.21% |
| Up to $400 | 4.7% |
| Up to $500 | 1.57% |
| More than $500 | 0.94% |
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
9. Credit card surcharges
This fee is actually charged by businesses, rather than your credit card provider. Credit card surcharges are usually between 0.5% and 3% of the total transaction cost, but some merchants apply a flat fee that could be much higher. All merchants legally have to notify you of a surcharge before you make a payment - but in practice, many don't, and the first you learn about it is when you see the charge after you've paid.
How to avoid it:
Wondering: How can I avoid credit card surcharge? Always ask if they charge one and if they do, try to have another payment option available, like a debit card, cash, direct transfer or by using a service such as POLi or PayPal.
Example: How Doug avoided extra fees
Doug uses his credit card to pay his everyday expenses, then pays it off in full at the end of the month. He noticed that the surcharge he pays when he's in a cafe, restaurant or bar is often 1-2%. It's a small amount per transaction, but it all adds up. He starts using his debit card when eating out to avoid the unnecessary charges.
10. Extra cardholder fees
A supplementary card is an easy way to share your account with someone else and can double your opportunities to earn points. But if you want to allow someone else to use your credit card, such as your partner or child, you may be charged an additional cardholder fee.
How to avoid it:
Compare options and look for a credit card that offers additional cardholders for free.
Example: Leila and Lui share cards without the fees
Leila wanted to give her university-aged daughter Lui a credit card to use in emergencies. As Lui won't use the card very often, Leila wasn't keen to pay any extra fees for the convenience of an extra card. So, she shopped around and found a suitable card that offers free supplementary cardholders.
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These credit card fees are less common, but it’s still good to know when they may apply and how you can avoid them.
- Chargeback fee. If you need to reverse a credit card transaction through your credit card provider, you could be charged a fee of around $10–$25. You can avoid this fee by trying to get a refund with the merchant before going to your credit card provider.
- Card replacement fees. Most credit card companies don’t charge a fee if you need a replacement card in Australia. But for fast-tracking or overseas replacements, you could pay anywhere from $30 to $200 for the service.
- Paper statement fee. Some credit card companies will charge you a fee if you request paper statements for your account. Usually this will be around $2 to $7, but you can avoid it by opting for paperless statements delivered to your email or via Internet banking.
- Non-bank ATM fee. If you use your credit card to withdraw cash or check your balance at an ATM outside of your credit card provider’s network, you could be charged a fee of up to $5. There may also be additional charges from the ATM operator, so avoid getting cash out and check your balance via Internet or mobile banking instead.
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Is it common or acceptable for a bank to charge the monthly fee on a new credit card only days after activation?
My rewards card can reverse the charge if spending so much per month but only gave me 7 days out of the first ‘month’ then slugged me the fee and said that was fair.
This wouldn’t happen on a subscription service.
Hi Andrew, Monthly fee cards are still relatively uncommon and the rules tend to vary a lot between cards. In the situation you describe, it sounds like the bank is working off a calendar month, rather from the activation date, which is what typically applies for annual card fees (and, as you say, for subscription services). While irritating when it happens unexpectedly, this approach isn’t totally unknown in banking – for instance, bonus interest on savings accounts is generally based on the calendar month too. It’s annoying, but it will have been somewhere in the terms and conditions.
Hi. I am interested to know if there is a limitation on how many times a Credit Card Company can charge a ‘late payment’ fee and/or a ‘missed payment’ fee during the course of one year? I have heard that they can only charge this fee once in a twelve month period, is this the case? Can I request the reversal of subsequent, repeat charges of these fees or am I mistakenly optimistic? Thanks for your expertise, its worth its weight in ‘credit card fees’.
Hi Spencer,
Thanks for your inquiry
Generally, a late payment fee (a late charge) is charged to a borrower who misses paying at least their minimum payment by the payment deadline.
Depending on your credit card’s late fee policy and whether it’s your first time being late in the past six months. You’ll be charged a late fee each month your payment is late or less than the minimum payment.
It would be best to check the terms and conditions of your credit card or contact your credit card issuer to clarify this matter.
Hope this information helps
Cheers,
Arnold
I’ve recently switched credit card providers and was shocked when they charged me a cash advance fee for buying a lotto ticket online at tatts.com.au, and then interest on the cash advance fee! Their answer is that website is considered a gambling website and they will charge me extra fees for gambling online. I’ve never gambled, I always pay off my balance in full each month and never get charged any interest or extra fees until now. Can you recommend a credit card that wouldn’t charge me extra for buying a lotto ticket online? Thank you.
Hi Leanne,
Thanks for your question.
We have a guide about gambling transactions and credit cards. You may want to check it out for an answer to your question.
It depends on the provider as to whether the transaction is treated as a purchase or a cash advance. Some providers don’t allow these types of transactions at all.
Hope this has helped. Let us know if you have any further questions.
I hope this helps.
Regards,
Jacob