Last Updated on April 15, 2023 by – Moneyinfo99.com Team
Have you ever been surprised by hidden fees on your credit card statement? You’re not alone – many consumers are unaware of the costs associated with using a credit card.
These hidden fees can add up quickly, making it difficult to keep up with payments and ultimately leading to more debt. In this article, we’ll discuss what these fees are and how to avoid them. We’ll start by looking at eight common credit card fees and then move into tips for avoiding them altogether. By the end of this article, you’ll have a better understanding of the hidden costs associated with using a credit card and be empowered to save money in the long run.
Credit cards can be great for managing expenses and accessing credit, but there are some fees you should be aware of.
1. Interest charges
Interest charges are one of the most common fees associated with credit cards. They’re applied when you don’t pay off your balance in full each billing cycle and can really add up over time.
Your annual percentage rate (APR) is listed on your cardholder agreement and will determine how much interest you’ll be charged.
This can vary depending on whether it’s a fixed or variable APR, as well as any promotional rates that may be in effect.
The best way to avoid paying interest on your credit card is to always pay off the entire balance each month. If this isn’t an option for you, consider using a debt repayment method such as the debt avalanche or snowball method to prioritize payments and reduce your overall outstanding balances faster.
With either of these methods, try to focus on reducing unsecured debt first since it typically has higher interest rates than other types of debt like mortgages and car loans. If you plan ahead and budget carefully, you can manage your credit card use without paying too much in interest charges!
2. Late payment fee
Late payment fees can be a huge bummer if you’re not aware of them. A late payment fee is a fee charged to your credit card account when you fail to make at least the minimum payment by the due date listed on your statement.
This fee can range anywhere from $29 for first-time instances to up to $40 for subsequent violations within six billing cycles.
Fortunately, there are ways to avoid paying this fee altogether! First off, look into opening a credit card that doesn’t charge late fees, such as the Petal® 2 “Cash Back, No Fees” Visa® Credit Card or Citi Simplicity® Card.
You can also set up autopay for your minimum due each month so you never miss a payment again. Finally, make sure to budget carefully and plan ahead so you don’t have to stress about making those payments on time!
3. Foreign transaction fee
Nobody likes hidden fees, and foreign transaction fees are definitely no exception. When you make purchases outside the U.S., you may incur an additional fee each time you swipe your card.
These fees can vary from credit card company to company, but typically it’s around 3% per transaction. That might not sound like a lot, but if you’re making bigger purchases or shopping abroad frequently, those fees can really add up!
Fortunately, there are ways to avoid foreign transaction fees altogether. Consider getting a credit card with no foreign transaction fees, such as the Capital One Platinum Credit Card if you have average credit.
You can also look into balance transfer cards that offer 0% APR on foreign transactions for a certain period of time (just make sure to read the fine print!). Finally, be sure to budget carefully and plan ahead so you know exactly how much money is coming in and out of your account while traveling abroad!
4. Balance transfer fee
Balance transfer fees can be a real burden when it comes to managing your credit card debt. These fees are typically 3% – 5%, with a $5 or $10 minimum, and they’re charged every time you transfer your balance from one card to another.
That means if you’re trying to take advantage of an introductory 0% APR offer on another card, you could end up paying more in balance transfer fees than what you save on interest!
Fortunately, there are ways to avoid these pesky fees. First, look for cards that don’t charge balance transfer fees – these cards typically require good-to-excellent credit scores.
You can also consider using the debt avalanche or snowball methods which can help you pay off your debts faster without any added costs. Lastly, always budget carefully and plan ahead so that you know exactly how much money is going in and out of your account each month.
5. Cash advance fee
Cash advances are a great way to get cash fast, but they come with hidden costs. For starters, most credit card companies charge a 3%-5% fee for cash advances – that means if you withdraw $500, you’ll be paying an additional $15-$25 in fees.
Furthermore, cash advances usually don’t count towards your minimum payment, so it’s easy to get stuck in a never-ending cycle of debt if you aren’t careful.
To avoid these costly fees and the burden of debt, consider alternatives to taking out a cash advance. Borrowing from family or friends is always an option (just make sure to pay them back!).
You can also take out a personal loan which typically offers better terms than a cash advance. Lastly, financial literacy is key – budget carefully and plan ahead so you know exactly how much money is going in and out of your account each month.
6. Over-the-limit fee
It’s easy to get frustrated when your credit card is declined at the store. But did you know that you can opt-in to an over-the-limit fee? This fee is a bit different than most other fees because you have to approve it first, according to the CARD Act of 2009. For a fee of up to $35, your creditor will allow transactions that exceed your credit limit.
While this may be tempting in a pinch, it’s always best to avoid going over your limit and pay off any balances as soon as possible.
If you do find yourself close to or exceeding your credit limit, there are several ways you can avoid the dreaded over-the-limit fee. First, try transferring funds from another account or using a debit card for purchases instead.
Additionally, try increasing your credit limit or setting up automatic payments so you never miss one. Lastly, if all else fails, talk with your creditor about reducing or eliminating the fee altogether – they may be willing to work with you!
7. Returned payment fee
It’s important to remember that if you have a credit card, you need to be aware of any potential fees. One fee in particular is the returned payment fee, which can be a nasty surprise if you’re not careful.
A returned payment fee is charged when your bank account doesn’t have enough funds to cover your scheduled payments. This can happen if you don’t keep track of your balance or overestimate how much money is in your account.
To avoid this fee, make sure you review your statement and check the balance on your account prior to scheduling payments. It’s also helpful to set up reminders so you don’t forget to make payments on time.
If all else fails, it may be worthwhile calling the card issuer and asking them to waive the fee – they may be willing to work with you!
when it comes to credit card fees, knowledge is power. Understanding the different fees and how to avoid them can help you save money overall and keep your finances in check.
It’s best to read through the fine print of any credit card agreements you have so that you know exactly what fees are applicable and how they work. Additionally, keeping track of your spending and payment due dates can help ensure that you don’t incur any unnecessary costs.
