Almost all types of debt charge one-time or recurring fees – additional expenses over and above interest rates – for their provision of cash or the ability to access cash.
In many cases the bank or other debt provider makes the bulk of its profits on fee income rather than the interest. And unfortunately there are a significant number of cases where these fees can be surprising, frequent and extreme.
Credit and debt consumers – both individuals and businesses – tend to focus on interest rates rather than fees when making comparisons, because it’s easier to focus on one number. That’s why so many credit and debt providers work hard to provide low interest rates but then pile on various fees. It is similar to what airlines experience with fares versus baggage fees.