Credit Cards

Credit Card Fees You Probably Don’t Know You’re Paying

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Ryan Ong

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When you get a credit card, you’ll also receive a book of terms and conditions. This book will be helpful, to about the same degree as a waterproof tea bag. Because just look at it; there are bar exams which require less legalese (and effort) to get through. As a consequence, most credit card users would have no idea if they just agreed to scrub the bank’s toilets for a year, let alone the exact fees:

 

1. Transaction Fees

Do you use your credit card overseas? Buy stuff online? Subscribe to foreign magazines?

Well you might want to take a close look at your credit card statement. Chances are, the invoices won’t match the statement. And if you check where the difference went, it’ll probably be a single heading, like “foreign currency transaction”.

If you think that just reflects the exchange rate, you’re wrong. And you’re going to be in for a big surprise (true story. If it can happen to our CEO, it can happen to you).

Besides the currency difference, credit card companies have their own fees. Here’s an example of a breakdown of an overseas transaction, if you use the Standard Chartered Manhattan card:

  • Cross-Border Transaction Fee – 0.8%
  • Foreign Exchange Fee – 0.5%
  • MasterCard Fee – 1%
  • Total fee for overseas transaction – Approx. 2.3%

This is on top of the currency difference. So hurry and apply for the Manhattan Card at…wait. I’m doing it wrong aren’t I? This might explain our rapidly decreasing ad revenue.

But seriously, you need to work out what you should or shouldn’t buy with certain cards. Amex has a very different system because they are both a network and issuer, so there is no distinction between bank fees and network fees, and they just charge a flat 2.5% rate.

You may also want to check the policies with different banks. Use the wrong card, and you could end up paying twice the fees.

 

Other Bank Examples

A Visa credit card imposes a transaction fee of 1%, when you make an overseas purchase.

A MasterCard credit card imposes a fee of between 0.2%, to 1%. If you…

  • Convert the currency and buy outside Singapore, the charge is 1%
  • Convert the currency, but make the transaction in Singapore, the charge is 0.2%
  • Buy something overseas, but in Singapore dollars, the charge is 0.8%

A lot of banks just lump all the extra charges into one “you may be charged x% extra” statement in their terms and conditions on their credit card pages, so do make sure that you find out what exactly you are getting charged before, before happily going on some online shopping spree. Here are some examples from some other banks:

CIMB

  • Visa Card Transaction Fee – 1.0%
  • MasterCard Transaction Fee – 0.2% to 1%
  • Foreign Exchange Fee – 1.2%
  • Cross Border Transaction Fee – 0.8%

The total charges for using Visa (if you convert currency) would be around 2.2%. For transactions in Singapore dollars (but buying overseas), it would be around 1.8%.

For MasterCard, the amount will vary as described above.

UOB

  • Visa Card Transaction Fee – 1.0%
  • MasterCard Transaction Fee – 0.2% to 1%
  • Foreign Exchange Fee – 1.5%
  • Cross Border Transaction Fee – 0.8%
  • Amex Foreign Currency Fee – 3.25%

The total charges for using Visa (if you convert currency) would be around 2.5%. For transactions in Singapore dollars (but buying overseas), it would be around 1.8%.

For MasterCard, the amount will vary as described above.

Citibank 

  • Visa Card Transaction Fee – 1.0%
  • MasterCard Transaction Fee – 0.2% to 1%
  • Foreign Exchange Fee – 1.5%
  • No Cross Border Transaction Fee

The total charges for using Visa (if you convert currency) would be around 2.5%.

For MasterCard, the amount will vary as described above.

 

TV sets
“Oh, they’re interest free alright. After you buy one, we completely lose interest in you.”

 

2. The Interest on “Interest Free” Repayments

So you’re finally buying that giant Plasma TV, which costs the annual defence budget of Uganda. Congratulations. You may not even be worried about the cost, since your credit card has “interest free repayments”.

For the most part, that deal is true. Until you make so much as one slip-up.

Many credit cards reserve the right to bring back the standard 24% interest rate (in fact, most of them are much higher now), if you miss even one repayment. And you may not get an e-mail or phone call about it. So if you’ve ever made a late payment, I’d advise you to check the statements; you may have started paying interest on that “interest free” plan.

For more on “interest free” or 0% interest tricks, follow us on Facebook. We’ll let you in on them as we find them.

 

Have you ever paid hidden credit card fees? Comment and let us know about it!

Image Credits:
Dave DugdaleMurky1jofreund

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.

  • komatineni

    great point and I started to realize why the credit card conversion rate is so bad.. Now it makes perfect sense with my CITI Bank card which is approx 3% higher than the bank rates. Sadly we have no option..

  • Mothership

    Can you please provide source for this information? Thanks!