Ancillary Credit Card Fees & Misconceptions – Be On Guard

Featured No Annual Fee Credit Card

The HSBC Credit Card is a great no annual fee credit card to make everyday transactions on. There are no hidden fees on this card as it features a $0 annual fee for the life of the card plus a 0% p.a balance transfer offer for the first 6 months.

• $0 annual fee
• 16.99% p.a. on purchases
• 0% p.a. for 6 months on balance transfers
• Cash Advance Rate of 20.75%
• Up to 55 days interest free on purchases

Click here to read the HSBC Credit Card terms and conditions

As time progresses and consumers become increasingly educated and aware of their credit card charges, banks need to work around and devise new methods to capitalise on unaware customers.

Once it was almost enough to simply know the annual fee and interest accumulation rates of your card. Today, a hoard on extra ’secondary’ credit card charges include:
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Exceeding your Credit Limit

If your balance and credit limit is $4000, and you pay off $4050 it won’t be an issue putting in an extra $50 on top of your limit.
However, if you breach your credit limit and go even 40 cents into overdraft, you can be instantly hit with a 2 figure fee. On top of that, a high interest rate subjective only to the overdrafted amount may apply from the date of the breach.
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Store Credit Cards

While not exactly an ancillary fee, the following is the most common way for retailers to profit from their issued credit cards. When offers are made such as “3 years interest free”, it can be a godsend or truly the devil’s advocate for you.
An un-educated assumption may assume that after 3 years, your purchase will begin accumulating interest afresh. Likewise – On the 3rd year and 1st day from the purchase date, you’ll be hit with the full force of the 3 year term. For instance:

• You make a $500 purchase at your retail store with your credit card on a ‘3 years interest free offer’ on January 20th, 2006. The interest rate is 20% p.a.
• On January 21st 2009, assuming you haven’t paid off any of the purchase, you’ll need to repay $800 on the purchase. Two days earlier, it still would have cost $500.
• These offers snap up hundreds as the time lapse breeds room to forget and carelessness on keeping track. If you take part in one of these offers, set up an automatic-reminder scheduled to remind you via phone/email on a future date.

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Interest Free Day Periods

A similar concept to the one discussed prior. Your ‘55 days interest free’ refers to the period between your last and next statement. If you make a purchase on the 5th day of your statement, and pay it off 51 days later, you won’t pay ‘1 days worth of interest’. You’ll pay the full blown 51.
Likewise, if you make a purchase on 53rd day of your statement and pay off 3 days later, you’ll pay 3 days of interest.
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Duplicates

When you want a copy or duplicate of something, whether it’s your statement or a supplementary card, you can count on there being some form of administrative fee associated. Depending on your circumstances and need of duplication, this one can be difficult to avoid.
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Foreign Charges

Performing a cash advance from an overseas ATM? Cash advances already have nasty enough fees domestically, let alone internationally.
For payments in foreign currencies, some providers will charge a small percentage as a fee. For instance, if you use your card at a foreign restauraunt and are charged $90 under a foreign currency, your provider may take 3% ($2.70).

A common practise is to ‘preload’ your credit card before travelling internationally. For instance, if you have a $0 balance on your credit card, and transfer $500 on top of that, you have $500 to spend on your card which will not accrue interest or fees. Keep in mind that this is completely subjective to each independant financial provider – while a valid technique in general, confirm with your bank whether or not you will face any charges using this method.
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Cash Advances

This one is becoming common sense for credit card users. Unless the card is specifically a ‘low cash advance credit card’, assume that the cash advance will be well and truly around 20%. Also keep in mind that no current Australian credit card offers interest free days on cash advances.
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When you’ve finished comparing cards and have found yourself the best credit card, make sure that you’ve covered all these topic areas first.
For concepts and features to look out for on reward credit cards, check our reward card guide here.
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• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0