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Reward Credit Card FeesCharges associated with reward cards show up in a variety of different ways. Some of them are usual and customary and indicated up-front in the card offers, while others may be hidden and unknown to you until you go to collect your reward. Here’s a rundown on what you might meet in the life of a reward card. Annual Fees Annual fees are one of the items that are characteristically advertised right up front, and for most reward cards, there is none. Exceptions are rewards cards that are actually charge cards—American Express has fees for a number of, if not all of, its reward cards—and some Frequent Flyer cards. In one card survey covering a variety of card types, American Express charges from $35 to $125 and frequent flyer card, when they have fees, can be from $39 to $150. APRs Although many rewards card have a 0% introductory Annual percentage rate (APR) on purchases for a certain time or on balance transfers, some—according to the same survey mentioned above—start right in with a fixed rate of from 1.9% to 3.99% for purchases and 1.9% to 9.99% for balance transfers. After the introductory period is up—typically after 12 months, but sometimes after 3 months, 6 months, or beginning immediately, the ongoing purchase APR kicks in, and it can range from 8.95% to 16.99%. And the cash advance rate ranges from 6.99% to 24.99%. As you’re doing your calculations, you might want to compare these figures with figures for cards without rewards:
Late Payment and Over the Limit Fees Some fees, standard for all credit cards, not just rewards cards, are imposed for payments that are made late and for exceeding one’s credit line. The amount of such charges varies, and may also lead to a rise in the APR, either temporarily (depending on subsequent account activity) or permanently. Redemption Fees Although it is less common, be prepared for the possibility of a non-travel per-item redemption fee. When it comes to travel, unless the terms and conditions explicitly say there is no redemption fee (and remember: the terms and conditions can change), expect to be charged a fee for redeeming your points or miles for airline tickets or cruises, and be aware that some card issuers may not tell you up front anything exact about the fee (e.g., the amount), beyond the fact that it is non-refundable. In a quick review of the information that is readily available, I found fees ranging from $15 (per ticket) to $47.95 per ticket, the latter for “full service” international travel. Travel-Related Fees But the redemption fee may not be the end of it. Other travel-related fees can crop up, and you may have to read not only the card issuer’s terms and conditions, but also several different sets of terms and conditions from co-branders to find out about potential costs such as the following: • Purchase Points If the progress towards an airline ticket is not satisfactory, some cards will allow you to purchase points. But of course, that’s another cost to figure in. One card that is more forthcoming lists its fee as $0.02 per point • Transfer Points to Frequent Flyer Account Transferring points might seem like a transaction that should have no charges associated with it, but it turns out that there is a fee charged to cover federal excise tax incurred by point transfer into a U.S. frequent flyer account. The cost is per point, with a $75.00 cap. • Paper Ticket and Mail The standard for travel ticket redemption is electronic tickets. Customers may be charged for paper rather than electronic tickets and the mailing costs incurred to send the paper tickets out to them. • Changes to redemptions after completed Some redeemers allow no changes, and those that do may charge you for the privilege. This is another area the terms of which may be hidden deep in the terms and conditions documentation. • Trip Cancellation Fees Believe it or not, you may also be charged for not taking the trip. Trip cancellation can incur a fee. • Other You will also likely be liable for other airline fees over and above the ticket charge, including, but not limited to:
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