Credit Card Fees and 10 Ways to Avoid Them
Every credit card that is out there comes with all sorts of fees that can end up costing you. They’ll charge you if you’re spending too much and they’ll charge you for spending too little. So knowing all possible credit card fees and staying ahead of them will save you tons of dollars.
The federal reserve has taken steps to protect consumers from enormous rates such as inactivity fees or unreasonable penalty fees but still credit card companies seem to come up with some method of taking more of your money, so you have to understand the different fees that come with your credit card and the best possible ways to avoid hidden credit card fees.
In this article, I’m going to be showing you simple ways to avoid hidden credit card fee and keep your payment history clean.
Ways to Avoid Hidden Credit Card Fees
Annual Credit Card Fees
Not all credit card charges an annual fee, but make sure you read the fine print be you apply for yours so that you are aware of it. If you are trying to apply for a credit card with a bad credit history, be prepared to cough up annual fees.
However, while this may pinch you in the beginning, remember that it is a great way to rebuild your credit history.
Balance Transfer Fee
The balance transfer fee is the fee applicable to transactions made to transfer the balance amount from one credit card to another which is usually a certain percentage of the transfer amount. However, not all credit card attracts this fee.
Cash Advance Fee
The cash advance fee is the fee charged when you borrow cash against your credit card. Most credit card charge an average of 2% – 5% of the amount you borrow.
This is not advisable because this usually attract a higher interest rate and it’s best to withdraw fund for an emergency from your saving account.
Foreign Transaction Fee
A foreign transaction fee is incurred on all transaction made overseas. This is generally anywhere between 1% – 3% on credit cards. You can avoid this charge by opting for a travel credit card instead.
This is a fee that is charged when you don’t pay the minimum amount on your credit card bill by the due date. Late fee varies from card to card but can be avoided by merely enabling auto payment from your credit card bill from your savings account month on month.
Returned Cheque Fee
When you issue a cheque to your credit card company or an automated payment towards your credit card bills bounces or get blocked, a return cheque fee or return payment fee is levied. Always make sure your bank account has enough balance to avoid such instances.
An over-the-limit fee is charged when you exceed the credit card limit provided to you. You can avoid this charge by keeping your credit card expenses well within your limit.
Card Replacement Fee
If your credit card gets damaged or lost, some credit card companies in Canada charge you card replacement fee for a new card. While keeping track of your card is the best way to avoid this fee, you can also look for a card with a policy of free replacements.
A finance charge is an interest that accrues on the balance you carry on your credit card. There’s an easy way to avoid finance charges: Pay your balance in full each month, and you’ll never pay a penny in interest.
If you just can’t help carrying a balance, then you should aim to minimize your interest charges by using a low-interest credit card rather than a rewards card. Rewards credit cards tend to have higher APRs, and the interest you accrue will erase much (or all) of the value of your rewards.
Expedited Payment Fee
The expedited payment fee is charged when you need to make a last-minute credit card payment by phone to avoid being late.
The fee will be around $10 to $15 but is less expensive than a late payment fee.
You can avoid an expedited payment fee by making your credit card payment earlier in the month. However, if you need to make a last-minute payment, the expedited payment fee beats a late payment fee.
Less Common Fees
Some credit card issuers may charge other fees, but these fees aren’t common.
- Application or processing fee is a one-time fee charged for applying for the credit card, whether you’re approved or not. This fee is more common with credit cards aimed at applicants with poor credit.
- Credit limit increase fee is charged when you request to have your credit limit increased.
- Credit card replacement fee may be charged if you need to have your credit card replaced in a short amount of time since your last credit card replacement.