Young Woman Looking Puzzled By Credit Card Fees

You’ve probably heard that credit cards come with “fees”—but what does that actually mean? And more importantly, how do you avoid paying them?

If you're a teen just starting to explore the world of money and credit, this guide is for you. Credit cards can be super useful—but they can also sneak up on you with fees that drain your cash for no good reason.

Think of this as your go-to cheat sheet for avoiding credit card fees and keeping more of your money in your pocket—right where it belongs.

The Most Common Types Of Credit Card Fees

Let’s break down the most common fees you might run into—and how to sidestep them like a budgeting ninja.

1. Late Payment Fees

The Fee: Around £12–£30 if you miss your payment due date.

Why It Happens: You didn’t pay at least the minimum amount by the due date.

How to Avoid It:

Set up payment reminders on your phone or in your calendar.
Use auto-pay for at least the minimum.
Try to pay the full balance every month to stay debt-free and avoid interest.

2. Interest Charges (a.k.a. APR)

The Fee: Varies, but most credit cards charge between 15%–25% interest annually on unpaid balances.

Why It Happens: You didn’t pay the full balance by the due date, so the bank charges interest.

How to Avoid It:

Pay your balance in full every month.
Use your credit card like a debit card—only spend money you already have.
Understand your APR (Annual Percentage Rate) before you start using the card.

3. Foreign Transaction Fees

The Fee: Usually 1%–3% of your purchase if you use your card abroad or for international online shopping.

Why It Happens: Some cards charge extra for purchases made in a different currency.

How to Avoid It:

Choose a card with no foreign transaction fees if you plan to travel or shop internationally (great for teens who buy from global online stores).
Use a currency-friendly payment app when possible.

4. Cash Advance Fees

The Fee: A flat fee (like £3–£5) or a percentage (usually 3%–5%) of the amount you withdraw.

Why It Happens: You used your credit card to withdraw cash from an ATM.

How to Avoid It:

Just don’t do it. Seriously—cash advances are one of the worst ways to use a credit card.
Stick to using your debit card or a bank app for cash withdrawals.

5. Over-the-Limit Fees

The Fee: Up to £25 if you spend more than your credit limit—though some cards automatically block the transaction instead.

Why It Happens: You swiped your card for more than your allowed credit limit.

How to Avoid It:

Know your credit limit and track your spending.
Set up alerts to notify you when you're close to the limit.
Use a budgeting app to stay in control of what you spend.

6. Balance Transfer Fees (for older teens who might consider this)

The Fee: Usually 3%–5% of the transferred amount.

Why It Happens: You moved a balance from one card to another, usually to get a better interest rate.

How to Avoid It:

Only do a balance transfer if it saves you more money than the fee costs.
Look for 0% APR intro offers with no transfer fees (read the fine print!).

“Credit card fees are avoidable if you understand how your card works and stay on top of your payments. Knowledge is power when it comes to your money.”

— Jean Chatzky, Financial Journalist and CEO of HerMoney

Final Thought

Being smart with your credit card isn’t just about building a strong credit score—it’s also about not giving your money away for no reason. Avoiding credit card fees is one of the easiest ways to save without changing your lifestyle.

Here’s your game plan: