Tips For Avoiding Credit Card Fees And Hidden Charges
Fees is a four letter word that people avoid like the plague. The fees applied to credit cards are not always bad because you can generally find a method to avoid paying them. Depending on the situation you are facing you can consider some of the most common fees and the methods you can use either to avoid them or perhaps just be an ordinary individual and pay the costs. Let us look at some of the credit card fees that can be avoided.
The annual credit card fees
You are required to pay an annual credit card fee for having the privilege to carry a credit card. Quite a few cardholders are adamant they should not be charged annual credit card fees by the issuers. However, this is one fee which may be worth the expense. In order to understand whether the annual credit card fee is actually worth the expense, you will have to get into some calculations.
You must try to understand whether your spending is earning you enough reward points every year before you conclude whether you can in any way beat the annual fees that are charged. If you are earning enough reward points you can rest assured you will easily be able to beat the charges by the credit card issuer.
Balance transfer fee
Balance transfer fees are charged by credit card issuers when you decide to move debt from one credit card to another and the fees generally range from 3 to 5% of the amount transferred. A number of issuers also offer 0% interest on balance transfers for a certain period of time but it will be up to you to decide whether the charges you pay for the balance transfer are worth the expense. You must be careful about the balance transfer fee particularly if you are in a debt situation because the interest charges on the outstanding balances can take away a significant amount of money.
Cash advance fee
If you decide to borrow cash from your credit card you will be required to pay a cash advance fee. Most credit cards are charging around 2 to 5% of the amount borrowed but the actual costs can be even higher. You may be required to pay ATM charges and the interest rates cash advances are higher when compared with purchases. Therefore if you are in need of cash for an emergency you will be better off pulling the money from your savings account or an emergency account where you may have set aside some cash.
When you have a balance on your credit card and do not pay it according to schedule you will become liable to pay finance charges which are nothing but interest on the accrued balance. If you want to avoid finance charges you should ensure that you pay the entire balance by the end of the month or at least shop around for a credit card which is offering low-interest credit card rather than reward points.
Late payment fee
Late payment fees are generally charged when you fail to make the minimum required balance before the due date. The late fees will vary according to different cards but the charges can be easily avoided by setting up automatic billing online.
You can find some credit cards that do not charge any late fees but rather than make an application for one, you should be getting into the habit of making your payments on schedule in order to safeguard your credit score.
Returned payment fee
When you issue a check for the payment of your credit card balances but do not have significant funds in your account to honor the check, you will be charged a returned payment fee in the region of $35. You can easily avoid this fee by ensuring you have sufficient money in your account before writing the check.
Having a credit card is certainly beneficial until you decide to use it appropriately. Make mistakes of any type and you will be liable for some of the charges we have discussed. Avoiding the charges will be a better option if you want to make the best use of your credit card.
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