Credit card fees and charges explained
Written by
Emily Tye
Reviewed by
Amy LancashireMost credit cards in the UK can be used without paying a penny in fees, as long as you pay your balance off in full and on time every month and stick to standard purchases. Fees usually apply to specific actions, like taking out cash or moving a balance, and to slip-ups, like paying late.
The catch is that fees vary a lot between providers. Some charge for things others don't, and the amounts differ. This guide explains the fees you might come across, what typically triggers each one, and how to avoid them.
Always check your own credit card agreement for the exact charges that apply to your card.
What fees can a credit card charge?
Here are the main fees you might see on a UK credit card. Not every card charges all of these, and costs for each vary by provider.
Fee | What usually triggers it |
|---|---|
Cash advance fee | Withdrawing cash, or cash-like transactions |
Balance transfer fee | Moving a balance from another card |
Money transfer fee | Moving credit into your bank account |
Foreign transaction fee | Spending in a non-sterling currency |
Annual or monthly account fee | Holding certain types of card |
Late or missed payment fee | Paying late or below the minimum |
Over-limit fee | Spending past your credit limit |
Interest vs fees, what's the difference?
Interest isn't technically a fee, but it can be the biggest cost of a credit card, so it's worth being clear on the difference.
A fee is a set charge for a specific action, like withdrawing cash. Interest is what you're charged for borrowing, worked out as a percentage of the balance you don't pay off. If you clear your statement balance in full each month, you normally pay no interest on purchases at all. If you don't, interest is charged on what's left.
To understand this side of the cost properly, read our guides on how credit card interest works and what APR means on a credit card.
The main credit card fees, explained
Cash advance (cash withdrawal) fee
Using a credit card to get cash, whether from an ATM or over a counter, usually costs you in two ways. Many lenders charge a cash advance fee of the withdrawn amount, often with a small minimum (e.g. the greater of 3% of the amount or £3). On top of that, interest may start building from the day you take the cash out, with no interest-free period, even if you clear your balance in full at the end of the month.
With some providers, certain everyday transactions can also count as "cash-like" and trigger the same charges, such as buying foreign currency. If you're thinking about it, our guide on withdrawing cash from a credit card covers how it works and what to watch for.
How to avoid it: use a debit card for cash wherever you can.
Balance transfer fee
A balance transfer moves debt from one credit card to another, often to take advantage of a lower or 0% promotional rate. The trade-off is that most cards charge a one-off transfer fee, usually a percentage of the amount you move.
Even with the fee, a balance transfer can still save you money if it moves you from a high interest rate to a much lower one. Our guide on what a balance transfer is walks through how to weigh it up.
Learn more about balance transfer credit cards.
Money transfer fee
A money transfer is similar, but instead of moving a balance between cards, you move credit from your card into your bank account. Providers that offer this typically charge a money transfer fee. It's a distinct product from a balance transfer, and the fees and rates are usually different. Our guide on money transfer vs balance transfer explains when each one makes sense.
Foreign transaction fee
If you spend in a currency other than pounds, whether abroad or on an overseas website, some UK cards add a foreign transaction fee (also called a non-sterling transaction fee).
Not all cards charge it. Some providers charge no commission on overseas spending; these travel credit cards are designed to be used abroad. Our guide on using a credit card abroad covers this in more detail.
How to avoid it: check whether your card charges a non-sterling fee before you travel, and consider a card built for overseas spending if it does.
Annual or monthly account fee
Plenty of UK credit cards have no annual or monthly fee at all. But some do charge one. It's most common on two types of card: rewards or premium cards, where the fee pays for perks like cashback or travel benefits. Whether a fee is worth it depends entirely on whether you use what it pays for.
How to avoid it: if you don't want to pay an account fee, look for a card that doesn't charge one and check the perks are worth it on any card that does.
Late or missed payment fee
If you pay after your due date, or pay less than the minimum, most providers charge a late payment fee. Beyond the fee itself, a missed payment can be reported to the credit reference agencies and hurt your credit score, which is usually the more expensive consequence over time.
Making at least the minimum payment on a credit card by the due date avoids the fee.
How to avoid it: set up an automatic payment for at least the minimum payment so you never miss a due date.
Over-limit fee
If you spend beyond your agreed credit limit, some providers charge an over-limit fee. Many UK providers have stopped charging this and simply decline transactions that would take you over instead, but it still exists on some cards, so it's worth checking.
How to avoid it: keep track of your balance and leave some headroom below your limit.
What about card surcharges?
There's one charge you shouldn't see in the UK. Since January 2018, businesses have been banned from adding a surcharge just because you pay by credit or debit card. So a shop or website can't legally charge you extra simply for choosing to pay with a personal card.
There are a couple of narrow exceptions, such as commercial cards, and businesses can still set a minimum spend for card payments. But a straightforward "credit card surcharge" on a normal purchase isn't allowed. If you're charged one, you can challenge it.
How can I avoid credit card fees?
Used carefully, a credit card can cost you nothing. The main ways to avoid fees:
Pay your statement balance in full and on time each month to avoid interest
Set up an automatic payment like a Direct Debit or CPA (Continuous Payment Authority), for at least the minimum payment, so you never pay late
Use a debit card for cash rather than taking a cash advance
Check for a non-sterling fee before spending abroad, and consider a travel card if you go often
Weigh up any balance or money transfer fee against the interest you'd save
Stay below your credit limit
Choose a card with no annual or monthly fee unless the perks genuinely pay for themselves
Can credit card fees affect my credit score?
The fee itself doesn't show on your credit file. What can affect your score is the reason behind some fees. A late or missed payment can be reported to the credit reference agencies and stay on your file for six years, which is why the late payment fee is one to avoid for more than just the cost. Paying on time, on the other hand, helps build a positive record and can improve your credit score over time.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
