Don’t be Fooled by Hidden Credit Card Fees
Not all credit cards are created equal. Different cards have different terms that you should carefully review during your application. In addition to varying interest rates, credit limits, and balance requirements, pay special attention to the fees mentioned in your credit card agreement. It’s important to know which fees you will be responsible for and how you can avoid paying them.
Watch out for these fees when choosing and using your credit card:
High Interest Fees
You are charged interest each month you carry a balance on your credit card. If your credit card bill isn’t paid in full each month, you’ll accrue interest charges on the remaining balance. Interest is calculated as a percentage of your balance. Interest rates on credit cards tend to be high, but you may find yourself with a lower rate if you have a high credit score. Some cards offer low or no interest for an introductory period, but the interest rate will go up after the promotion is over. Try to pay your credit card bill in full whenever possible to avoid paying interest fees. If you can’t pay off your full balance, pay at least your minimum payment amount, or as much as you can afford to pay, to reduce the amount of interest you will be charged.
If you fail to make your minimum payment by your payment due date, you will likely be charged a late fee. The amount may vary depending on your card, but most credit card companies charge $25-$35 for late payments. Since your credit card payment is due on the same date each month, you can easily avoid late fees by enrolling in automatic payments or setting payment reminders. Add your payment due date to your calendar to remind you to submit your payment. Set up an automatic payment for at least your minimum payment amount and you can rest assured your payments will always be made on time. Enroll in today using to automate your credit card payments.
Returned Payment Fees
If your attempted credit card payment is returned due to insufficient funds in your account, you will be charged a returned payment fee. This fee is similar in concept to a bounced check fee; it is a flat fee for each instance of a bounced payment. If you don’t notice that your payment bounced, you may incur additional fees, which can add up quickly. Stay on top of your credit card and banking accounts so you can avoid this fee. Always check your banking account balance before submitting your credit card payment to ensure you have enough money to cover your payment.
Replacement Card Fees
If your credit card is lost and you request a new one, you may be charged a fee for your credit card company to issue you a new card. Many card issuers will provide at least your first replacement card for free, but this isn’t guaranteed. If you request expedited mailing or processing, you may have to pay extra in addition to the regular replacement fee. Be careful to keep track of your card at all times so you can avoid having to pay to get your card replaced.
Paper Statement Fees
Some card issuers charge a fee to send your monthly account statements by mail. With the ease and convenience of online statements, not to mention the added security, there is no need to pay an extra fee to receive your statements in the mail. With electronic statements, you can receive your statement sooner, reduce the risk of having your identity stolen, save paper, and save yourself from unnecessary fees. If you simply prefer having paper copies of your statement, you can easily save and print your .
Balance Transfer Fees
When you move your credit card balance from one card to another, the card company may charge you a fee. The amount of the fee will vary depending on the card issuer, but typically range from 3-5% of the balance transferred, often with a minimum charge of $5-$10 per transaction. Some cards may offer 0% interest for an introductory period before increasing to a higher interest rate. The balance transfer fee might be worth it in this instance if you can pay off your balance by the time the promotional rate ends. However, there are cards that don’t charge a fee for balance transfers, so it’s definitely worth it to shop around for a card without this additional fee so you can avoid paying it altogether. have no balance transfer fees.
Cash Advance Fees
You may be able to use your credit card to borrow cash from an ATM or bank, or your card company may send convenience checks you can cash. This is known as a cash advance. Be cautious before taking advantage of this feature; most companies charge a fee for cash advances, and the amount you borrow often has a higher interest rate than what you pay on purchases. Cash advance fees are calculated as a percentage of the amount you borrow, plus possible ATM fees. Determine all potential fees before utilizing a cash advance so you can avoid any unnecessary fees.
Foreign Transaction Fees
If you buy a good or service in a foreign country or from a company that’s located in a foreign country, you may be charged a foreign transaction fee. You may have heard this fee referred to as a “currency conversion fee.” Credit card companies use these fees to cover the cost of converting transactions from U.S. dollars into a foreign currency. This fee is typically a small percentage of the transaction amount, and will vary by card company. You won’t have to worry about foreign transaction fees if you don’t make international purchases. However, if you frequently travel internationally, a card with no foreign transaction fees will benefit you.
Check to see if the card issuer charges an annual fee before you apply for the card. Though this fee is only charged once per year, you can avoid it and save yourself that money by finding a credit card without an annual fee. have no annual fees.
At Robins Financial, our credit cards work for you, which is why we offer the lowest rates possible and low to no fees. If you’re ready to apply for our , view our information and online. or give us a .