Common Credit Card Fees and How to Avoid Them
If you’re a regular credit card user, chances are you’ve encountered at least one credit card fee. There are several common credit card fees around, and they’re a risk you take for having the card. However, you want to avoid credit card fees at all costs because they can quickly add up. Credit Fast has collected the most common credit card fees. We’re going to tell you how to avoid credit card fees. So this can help you keep your credit under control and keep your finances healthy.
The Most Common Credit Card Fees
Many credit cards charge an annual fee. You get this fee once a year for the convenience of having your credit card. Even the best travel cards, rewards cards, and credit card applications for bad credit usually have higher annual fees. Your annual fee can range anywhere from $40 up to over $500 depending on the card type.
This fee will show up on your first billing statement. It’ll also reduce your available credit until you pay it. Your lender may waive this fee for the first year as an introductory offer. If they do, it’ll show up on your first statement after the year starts over. So if you can justify the annual fee with the rewards you earn, it’s worth it.
How to Avoid the Annual Fee
If you have a high annual fee, you want to avoid credit card fees if it’s possible. Start by calling your bank and asking them to waive the annual fee. If they refuse, look for cards with lower annual fees or no annual fees. You’ll have to cancel your card, so be sure to use any rewards before you do. Credit Fast only recommends closing a credit card account if done correctly.
Late or Returned Payment Fees
When you try to avoid credit card fees, late or returned, payment fees are the easiest ones. If you don’t make your minimum payment by the due date, you’ll pay a late fee. Your first late payment has a maximum cap of $27. Every payment after that has a $38 cap, up to six consecutive months. If your payment bounces due to insufficient funds, you’ll pay a returned payment fee.
If you don’t pay anything for 30 days past the due date, the lender will report you to credit bureaus. This can quickly hurt your credit score. Also, if you bounce a lot of checks, the bank may freeze your account. Your late payment fee ranges from $25 to $25 per bounced check, and this adds up. There are things you can do if a bill payment is missed.
How to Avoid Late or Returned Payment Fees
The easiest ways to avoid credit card fees like this is to pay your credit card on time. Your due date falls on the same day each month. If it’s a weekend, it’ll credit to your account on the next business day. To avoid returned payment fees, check your account’s balance before you pay anything. If you’re on auto-pay, make sure you have enough money in the account to cover your payment.
Foreign Transaction Fees
To avoid credit card fees like this one, read your card’s terms and conditions. If you plan to travel, you want your card to have a 0% foreign transaction fee. Many cards have a 1% to 3% foreign transaction fee. So this means you’ll pay 1% to 3% every time you have a transaction that goes through a non-US bank.
How to Avoid a Foreign Transaction Fee
Your card’s terms and conditions will tell you if you’ll pay a foreign transaction fee or not. Read everything carefully before you apply for it. If you don’t plan to travel, this won’t be such a big deal. You can avoid credit card fees like this by getting a card with a 0% foreign transaction fee.
Interest charges are one of the harder common credit card fees to avoid. So if you carry a balance from month to month, you’ll pay interest fees. The amount you’ll pay depends on your credit score and your credit card. Further, you can find out the exact amount by calling the card lender or reading your terms and conditions.
You may have a grace period between billing cycles to pay the balance in full without interest. This credit card grace period ranges from 21 to 25 days. However, if you pay a partial payment, expect to see interest charges on your next statement. Your card may not offer a grace period, so it’s always best to double check.
How to Avoid Interest Charges
If you want to avoid this fee, pay your card off in full each month. So if you can’t, consider opening a balance transfer cards. They usually have a 12 to a 21-month interest-free period where you can pay off your balance. You won’t get any more interest charges if you pay it in full by the end of the promotional period.
Balance Transfer Fee
If you transfer your balances from one card to another, you may pay a balance transfer fee. Typically, this fee ranges between 3% and 5% of your balance amount. There is also usually a minimum amount fee of $5.
How to Avoid a Balance Transfer Fee
Some cards offer a promotional period where you won’t have balance transfer fees. However, this means you’ll have to open another credit card. Also, make sure you can pay off the balance before the introductory period ends. If you can’t, you might end up in the same situation. The most popular balance transfer credit card with a 0 introductory balance transfer fee is the CHASE Slate® Credit Card. Even more with Chase Slate, cardholders enjoy 0 interest on the balance transfer(s) for up to 15 months.
Bottom Line – Avoid Credit Card Fees
Common credit card fees are the hazards of having a credit card. To avoid credit card fees, stay on top of your finances. So make sure you’re making your payments on time. Finally, watch your annual fee and your interest rates. All of these small things can add up to savings fast.
Latest posts by Monica Kowollik (see all)
- Best Credit Cards for Ride Sharing – Uber and Lyft 2019 - January 16, 2019
- Apply for a Credit Card – Best Time and Worst Time - December 31, 2018
- Shop Your Way Sears Credit Card Application - November 21, 2018