Buried in credit card fees? Uncertain what to do and fearing the curtain of bankruptcy?
In 2017 alone, the total credit card debt among U.S. residents stands at $830 billion. It’s an astounding amount but it’s not as surprising when you discover there are many myths surrounding credit cards that increase your debt.
There are some credit card fees that can sneak up on you, and that can ruin your score if you can’t pay up. Of course, they’re required to show you these fees, but often this information is somewhere hidden in the fine print of your long, boring, credit card agreement.
Here are some of the fine print credit card fees and how you can handle them:
Annual Credit Card Fees
It’s a self-explanatory kind of fee that lets you get the privilege of carrying a card on an annual basis. It’s not common for credit cards to have this kind of fee but most offer sign-up bonuses.
That’s the reason why many cardholders don’t like paying this kind of fee.
However, in certain circumstances, an annual fee might be worth your money. It’s common for annual fees to appear on travel credit cards. It offers higher rates of signup bonuses and other rewards compared to its cash-back counterparts.
If you want to know whether an annual fee is a worthy investment, do the math. When you spend, is it enough for you to earn rewards to compensate for the fee? If you earn enough extras that can beat the things you get with a cash-back card, the annual fee becomes negligible.
Balance Transfer Fee
When you move your debt from one credit card to another, you get charged a balance transfer fee. The typical amount ranges from 3-5% of the amount you transferred. A lot of cards have a 0% interest on the balance transfers as long as it’s within a year.
When your card offers this fee, you need to decide whether the interest savings can make up for the transfer fee you spent. There are some cards that don’t charge credit card fees when transferring debt under certain situations. For example, a credit card company can waive the transfer fee during the first few months after you open an account.
If you want to save a lot of money, choose a credit card company that doesn’t charge this fee.
Cash Advance Fee
When you borrow cash against your credit card, you’re charged a cash advance fee. A lot of credit card companies can charge you fees ranging from 2-5% of the total amount you borrowed. However, no matter how you look at it, cash advances will cost more than that.
When you do a cash advance, ATM fees can apply. A lot of credit card companies charge you with higher interest rates when it comes to advances instead of purchases. When you need emergency cash, the best course of action is to pull it from your savings.
Always have an emergency fund with you. This money should cover three to 12 months’ worth of expenses. If you do, you won’t need to worry about credit card fees because you made a cash advance.
This fee is the interest that accrues on the balance you carry on your credit card. If you want to avoid paying these fees, the easiest way to do so is to pay your balance in full each month. When you can’t help but carry a balance, then aim to make your interest charges smaller by using low-interest credit cards instead of rewards cards.
Rewards credit cards often have high APR’s. The interest rate you accrue with this type of card is enough to offset a majority or all the value provided by your rewards.
If you need to know how much finance charge you’ll get for your purchase, there are tools available online to compute it.
Foreign Transaction Fee
When you buy products outside the United States, your credit card could charge a foreign transaction fee. It can range from 1% to 3% of your purchase’s total value. Majority of credit cards charge this fee, but if you want to avoid it, simply use a travel credit card.
Most travel credit cards don’t charge foreign transaction fees. Some credit card companies won’t charge it no matter what kind of card you’re carrying. If you want to avoid these credit card fees, your choice of company can play a big part.
Late Payment Fee
When you can’t make it to the minimum payment amount by the due date, late payment fees get applied. The amount they charge varies depending on the credit card company you chose. The best way to avoid getting late payment fees is to enroll in auto-pay.
You can opt-in for this service by going to your account online. However, some credit card companies don’t charge late fees. No matter what, making late payments is a bad habit because it can hurt your credit card score if you’re more than 30 days late in payments.
If your card’s balance goes beyond your usual credit limit, this fee applies. The Credit Card Act of 2009 forbids you from enrolling automatically in programs that cover you when you exceed your credit limit. However, you can opt-in for the fee if you need to make sure that your transactions don’t get rejected at the register.
If you ever opt-in to make purchases even in emergency settings, the best way to avoid the over-limit fee is to never go beyond your credit limit. You might have a spending problem if you’re always on the near the maximum limit of your credit card.
Returned Payment Fee
When your check to the credit card company bounces, they charge you with a returned payment fee. Another reason is when you got insufficient funds and your bank account blocks the automatic payment from your credit card. The amount can vary depending on the card you’re using, but the usual fee is $35.
A great way to avoid this is to double check your bank account. Make sure that you have money in your account before writing the check or clicking the pay button on your credit card’s website.
Customer Service Fee
Most of the credit cards companies factor in the cost of customer service to their other fees. Others charge you an additional fee whenever you call them. Most of the time, you get charged when you opt for the privilege of talking to a live person, but some actually charge you even for automated calls.
Thankfully, these fees are more common on prepaid cards than credit cards. Avoiding this depends on your choice of Credit Card Company. An alternative way is to research on the internet for answers instead of depending on customer support.
Internet Access Fee
When you sign up to access your credit card account online, some companies charge this fee. Most of the time, it’s a one-time fee. However, because of the increasing popularity of online banking, internet access fee is becoming rarer each passing years.
It won’t be long until this fee becomes extinct. If you’re a new user, check with your company if they charge this fee. Most companies don’t, but it pays to know whether they do. It can save you some money if you can avoid this easy-to-miss fee.
Paper Statement Fee
A lot of credit card companies charge you extra if you want to receive paper account statements through traditional mail. Most companies charge these credit card fees to promote “green” banking and electronic statements via e-mail, as well as save on postage. There are some out there that charge you something extra if you request a copy of a previous month’s statement, so be vigilant about it.
Replacement Card Fee
Your issuer will most likely give you one free replacement card. However, your subsequent replacements can cost you a lot. This is especially when you’re expediting the process and mailing.
The best way to avoid these credit card fees is to be careful where you put your credit card. Do your best not to lose it and keep it safe all the time. Replacing a card can take a while to complete depending on your company’s policy.
Learn More About Credit Card Fees Today!
There are a lot of other fees that can sneak up on you in the fine print of your credit card agreement. If you want to avoid getting charged for something you’d otherwise avoid, read carefully and do your research. There are a lot of resources for you online no matter what credit card company you’re in.
When you read the agreement and do your research, you’ll know the things you need to avoid. You’ll know what spending habits you need to cut and what other behaviors can get you charged.
Do you have more questions about credit card fees? Do you need help reducing your debt and managing your finances? Visit us today to read more and find out.