Account set up fees

An account set up fees is a fee that a credit card issuer can charge to set up the credit card.

Account set up fees do not tend to be charged on credit cards where there is a competitive market, so this can include low rate interest cards and silver cards.  However when the card provider believes that they have an offering which is for any reason differentiated, then they can start to charge account set up fees.

Account set up fees are rarely included on any quoted interest rates, and need to be counted separately on any calculation of whether a card is suitable or not.  The account set up fees will be added on to the credit card balance, and so will not be noticed by most borrowers.  Although they should always be included in the small print of advertisements, they are rarely well publicized.  Similar fees include balance transfer fees and annual credit card fees which are usually charged a year up front.

Cards that are sold as a way of repairing credit will often charge an upfront fee.  Like most credit card account set up fees this will be added on to the balance of the card.  Secured cards, cards that are secured on either a property, or more commonly money deposited in a savings account, will also charge a setup fee, although this is often because the card does have genuinely high administrative set up costs, rather than as a way to get more money.  Secured credit cards are often used by people when repairing their credit.

At the other end of the credit card spectrum, prestige cards will often charge set up fees, although these are often called initiation fees to give the card a club like atmosphere.  These can be a couple of hundred dollars for gold and platinum cards, but can increase to $5,000 for some of the invitation only “black cards” (this is on top of the $2,500 annual fee that is charged upfront).  These cards offer a wide range of services, and aim to keep an exclusive aura partly through not enabling the card to be applied for except by invitation and partly through high fees.

Another type of credit card that can charge account set up fees are reward based cards.  These cards offer rewards for spending on the cards.  Some of the cards with the most generous programs will charge a setup fee.