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How To Avoid Credit Card Fees

How to avoid credit card fees in Canada

Amanda Lee Freelance Contributor

Want to avoid credit card fees? Here are six ways to steer clear of paying unnecessary fees, including annual fees, foreign transaction fees, and high-interest charges.

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Credit cards are useful, but hidden card fees can be frustrating.

Maybe you think credit card fees are as inevitable as that old idiom about death and taxes. Used wisely, your credit card is a financial tool. Plus, there are some pretty sweet perks to having a piece of plastic in your back pocket – managing cash flow, travel rewards, comprehensive insurance, and consumer protection. After all, how else are you going to afford that suite overlooking the Vegas strip?

But credit cards can also come with some hefty charges. It pays to know what fees are associated with credit cards, and even ask yourself: is it worth it to pay an annual fee for a credit card? (Depending on what you want from your credit card, the answer may be yes) Even if you’re the type of person who pays off their balance each month, there are other credit card charges you may not be aware of, as well as some tricks to avoid paying the fees. Here is how to avoid credit card fees – and our recommendations for the best credit cards to help you.

Annual fees

$484

First Year Value

$384

Annual Value

Welcome Bonus: Get a bonus 10% cash back for the first 2 months – up to $100. Plus, a 1.95% promotional balance transfer interest rate for the first 6 months.

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Many banking institutions charge for the honour of carrying their card in your wallet. Annual credit card fees can vary widely, depending on the product. While fee-carrying credit cards often come with perks such as travel rewards, roadside assistance, or a concierge service, if these things don’t matter to you, why pay an annual fee at all?

The Tangerine Money-Back Credit Card is one of the best $0 annual fee credit cards on the market. Applicants only require a minimum personal income of $12,000 and are recommended to have Good credit. Another perk is the cash back rewards. Earn 2% cash back on two categories of your choice (e.g. groceries, recurring bills, gas, drug stores, etc.) and 0.5% back on all other purchases. Get a Tangerine Savings account and add a third 2% cash back category.

Tangerine pays out rewards monthly – either applied to the balance of your credit card or directly into a Tangerine Savings Account. Not only can you save money, but you’re also not paying an annual fee for the privilege. 

*Terms and conditions apply

Interest charges

In an ideal world, the easiest way to avoid credit card fees is to pay off your statement in full and avoid interest charges. But sometimes life gets in the way, and you find yourself carrying a balance. Credit cards typically come with a 19.99% interest rate. So, it makes sense to avoid additional credit card charges and switch to one of the best low-interest credit cards in Canada.

READ MORE: The best low-interest rate credit cards.

Foreign transaction fees

Let’s face it – travelling can be expensive. On top of paying for air travel and accommodation, there’s a hidden expense that you may not be aware of: foreign transaction fees. Foreign transaction fees are charged by your credit card company when you make purchases outside Canada or with a non-Canadian retailer. The fees—around 2 to 3 percent—are usually incorporated into the exchange rate, so they’re not always noticeable. But they can add up, especially if you’ve got the itch to wander, are planning to study abroad, or are an entrepreneur who makes online purchases in foreign currencies.

up to $1,300* value

Welcome Bonus

$926

First Year Value

$0

Annual Value

Welcome Bonus: Earn up to $1,300* in value in the first 12 months, including up to 40,000 bonus Scene+ points*

Learn More Apply Now On Scotiabank's Secure Site

One savvy strategy to avoid paying these charges is to get one of the best no foreign transaction fee credit cards. We’re big fans of the Scotiabank Passport® Visa Infinite* Card, as cardholders are not charged a Foreign Currency Conversion mark-up on foreign currency purchases, whether you make them online or outside of Canada. Only the exchange rate applies. 

Rates, fees and other information are effective as of January 3, 2025. Subject to change.

Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

*See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

READ MORE: The best no foreign fee credit cards.

Cash advance fees

The best way to avoid paying cash advance fees altogether is to have savings set aside that can be accessed in an emergency. But for those times when it is an emergency, it’s wise to understand how cash advance fees work before you hit up the ATM. As a rule, cash advances are charged at a higher interest rate than usual purchases – around 22% and upwards. And unlike a regular purchase, cash advances don’t have a grace period, meaning you’ll be charged interest from the day you withdraw the money. You may also be charged ATM fees on top of other credit card fees.

0.99% rate

Welcome Bonus

$0

First Year Value

$0

Annual Value

Welcome Bonus: Get a 0.99% introductory interest rate on Balance Transfers for 9 months with a 2% transfer fee and BMO will waive the $29 annual fee in your first anniversary*.

Learn More Apply Now On BMO's Secure Site

However, it is possible to find a credit card that won’t ding you so hard with high-interest rates on cash advances. For instance, the BMO Preferred Rate Mastercard®* offers a rate of 15.99% on cash advances. The APR on purchases is 13.99% and BMO covers theft and damage protection for items bought with the card*. Add to that, the BMO Preferred Rate Mastercard®* comes with a low annual fee of $29 (waived on the first anniversary when you opt for the introductory balance transfer offer*).

*Terms and conditions apply.

BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.

Interest rate fees

One strategy for tackling credit card debt and avoiding sky-high credit card interest rate charges is through a balance transfer promotional interest rate. Essentially, it involves paying off one credit card with another, by transferring your current debt from a higher-interest card to a credit card with a significantly lower interest rate.

Typically, a balance transfer credit card offers an extremely low or even 0% interest rate, which means you’ll save money on interest charges.

Late payment fees

Even if you’ve got the best intention to settle your balance in full every month, it pays to understand how late payments lead to added credit card fees. Canadian credit cards offer a minimum interest-free grace period of at least 21 days after the billing period. However, if you fail to pay in full by the due date, you’ll be charged interest.

All Canadian credit cards charge interest on unpaid balances, but you may be able to escape a penalty for a tardy payment. For instance, some Canadian banks may not impose a late payment “fee” on their credit cards, but you’ll still rack up interest on the outstanding balance. However, making late or missing payments could cost you in other ways: some institutions may automatically hike the APR (Annual Percentage Rate) if you make two late payments in a 12-month period. Make a habit of it and late payments could damage your credit score.

The bottom line? Missed or late payments on your credit card are never a good idea. Avoid this sticky situation by setting up pre-authorized payments from your chequing or savings account on (or ideally, before) your payment due date.

Amanda Lee Freelance Contributor

Amanda Lee has been a freelance lifestyle writer for 10 years. She is the former Managing Editor of Toronto.com, which is owned by the Toronto Star. Her bylines have appeared in major Canadian publications, including the Toronto Star, WestJet Magazine and Today's Parent. Amanda is enrolled in an MFA in Creative Nonfiction at King's College and working on her first book.

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