How To Avoid Credit Card Fees
Smart Money

How To Avoid Credit Card Fees

Last updated

Do you know exactly what your credit card charges in fees? Chances are, you probably don’t. Unless you’ve studied the small print, that is. Understanding how your credit card works is key to making it work for you – and that means reading the small print to find out what fees and charges may apply, and how you can avoid them.


Depending on how you use your credit card, interest is likely the biggest cost you will pay out on it. Credit cards in New Zealand typically have a standard interest rate on purchases, cash advances and balance transfers, so the rate that is applied to your balance will depend on the type of transactions you make.

How To Avoid This Cost: As long as your card offers a certain number of days ‘interest free’, you can avoid paying interest on your purchases by paying off your closing balance by the due date each month. To take advantage of this feature, you cannot have any balance transfers on your account. It’s also worth avoiding cash advances, as interest starts accruing on those from the day they’re made.

Find out more about how interest free days work in this guide.

Account Fees

By providing you with a credit card, your card provider is offering you a service, extending you credit in a relatively unsecured way. While most card providers make money on this service through the interest they charge, they also charge account fees, especially on feature-heavy cards and cards that offer rewards programmes.

How To Avoid This Cost: There are plenty of credit cards out there with no account fees, which essentially allow you access to credit ‘for free’. These cards tend to be basic, with few features on offer. If you want more from your credit card, be prepared to pay more in account fees – but make sure what’s on offer in features and rewards makes paying those account fees worthwhile.

Joint Accountholder Fees

If you choose to add a joint accountholder to your account, you may be charged a joint accountholder fee. This is an ongoing fee, just like the standard account fee, and is typically paid every six months.

How To Avoid This Cost: You can avoid paying this fee by choosing a card that has no joint accountholder fee, or alternatively, opt not to add a joint accountholder to your account.

Late Payment Fees

This is the fee your card provider will charge if you are late making your monthly repayment.

How To Avoid This Cost: Avoiding this fee is simple. All you need to do is make your repayment on time, even if it means only making the minimum repayment. If you tend to forget your payment date, try setting a reminder on your phone, or create an automatic payment from your bank account.

Over-limit Fees

Your credit card features a credit limit, which is the amount of credit your card provider has extended to you. Your credit limit will depend on a number of factors, such as your income, your credit history, and your history with the provider. If you spend more than you should on your card, going over that credit limit, you may be charged an over-limit fee.

How To Avoid This Cost: Use online banking or your card’s app to keep track of your spending. If you know you’re close to your limit, avoid spending on your card, or pay down your balance to free up more of your available credit. You may have the option to increase your credit limit, but you should think carefully about whether you can afford the implications of this increased potential to spend.

Cash Advance Fees

When you use your credit card to make a withdrawal at the ATM, this is called a cash advance. As you are essentially borrowing money from your card provider to make the withdrawal, these transactions typically come with a higher rate of interest (charged from the date of the withdrawal), and in some cases, a fee. Note, other types of transactions can also be defined as cash advances, such as gambling transactions and foreign currency purchases.

How To Avoid This Cost: You can avoid cash advance fees by avoiding cash advances. Check what your card provider defines as cash advances, and be especially mindful of withdrawing cash overseas using your card, as the fee will usually be much higher.

Foreign Currency Fees

Whenever you use your credit card to pay in a foreign currency, you may incur a foreign currency fee. This would include using your credit card overseas while travelling, or shopping online with overseas merchants. The fee is typically represented as a percentage, so you would pay 1-3% of the converted amount of the transaction as a fee.

How To Avoid This Cost: If you tend to travel overseas frequently, or shop online with overseas retailers, you may want to choose a credit card with no foreign currency fees to keep those costs down.

Transaction Fees

Merchants generally have to pay a fee for each credit card transaction they process. Usually, they cover that fee themselves, however, there are some that pass the cost on to their customers. When you book travel or buy tickets to events for example, you will usually pay a transaction fee.

How To Avoid This Cost: For the most part, there is no way to avoid this fee. However, you may find in some cases, there is a way around paying it, which will usually involve using a different payment method, such as a debit card or bank transfer.

Balance Transfer Fees

Some card providers charge a fee on balance transfers, which is either a flat fee or a percentage of the amount transferred. This is called a balance transfer fee.

How To Avoid This Cost: You will find most providers here in New Zealand don’t charge a balance transfer fee, so this fee is easily avoided.

Replacement Card Fees

If you lose your credit card, your card provider may charge a fee to replace it. You will generally find this fee is higher when you lose your card overseas, as the replacement card has to go further to get to you.

How To Avoid This Cost: You can avoid this cost by being careful with your card, or by using a digital wallet instead of your plastic card.

Founder - Roland B Bleyer

Roland Bleyer

Founder of Roland has extensive knowledge about credit cards in New Zealand. Known as a credit card expert, he has been featured on tv and in various publications.
Help us improve

By submitting this feedback you agree to our privacy policy.

My credit card is not listed

By submitting this form you agree to our privacy policy.