Of all the mistakes that people make with credit cards (and boy are there a lot of them) one of the biggest is thinking that any and all credit card fees must be paid and simply can’t be avoided. The fact is, credit card companies are businesses just like any other and if you don’t like the fees and surcharges that they are charging you, you have all the right in the world to look for another company. There are also many fees that can be reduced to a more palatable level. With that in mind we put together a short blog about the top 5 most common credit card fees, what they are and how to avoid them (or at least reduce them). Enjoy.
Your credit card’s annual fee is # 1 on the list as more and more credit card issuers are charging an annual fee for their cards. Many credit cards still don’t have an annual fee however and using one of them is the easiest way to avoid having to pay it. If you do have a card with an annual fee that you’d like to keep there are several things that you can do to either reduce your annual fee or to avoid it altogether including;
- Waiting for the credit card to offer a way to avoid the annual fee. Usually this is good for new applicants only and only good for the first year but it’s better than nothing.
- Sign up for a card with a large bonus for signing up. If you sign up for a credit card that has a $50 annual fee but is offering $800 worth of points, the annual fee suddenly becomes quite trivial in comparison.
- Since annual fees aren’t exactly set in stone you can always call your credit card company and negotiate with them to lower it. If you allude to the fact that you will cancel your card if they don’t do something you’ll find you get a much more likable response.
- Canceling your card may seem like a drastic step but, if your credit card company won’t budge, it might be your only option. If you end up missing the card you can always sign back up for it and possibly get a new sign-up bonus as well. Waiting for 12 to 18 months will probably be needed before you can reopen with that same company.
If you do a lot of overseas traveling you have probably seen a foreign transaction fee on your monthly bill. This is among the most controversial fees the credit card issuers charge as not only do the banks exchange currency at the best possible rate (for them and for you) but many still tack on a 3% foreign transaction fee because, well, just because. Thankfully there are a number of credit cards that have done away with this controversial fee, including Capital One and Discover. If foreign travel is on your agenda and you’re not keen on paying an extra 3% every time you make a purchase or withdraw money while away, using these credit cards is a very viable option. Either that or bring travelers checks.
As far as late fees are concerned there is one sure way to never get charged this extra fee; don’t pay your bills late. We’re not being facetious, we’re just being frank. If you’re a forgetful person then you definitely should take advantage of automatic payments and electronic billing so that you won’t have to worry about forgetting to pay a bill or one being lost in the mail. There are even a handful of cards that won’t charge you late payment fees but you’ll have to find them on your own because we’re not going to give you information about something that might help you to do something that’s so financially destructive. (Sorry. You’ll thank us later.)
When it comes to cash advance fees the best advice we can give is this; never use your credit card to get a cash advance. If you are like many of us and you rely on your credit card to get cash you should find a bank credit card with a bank that doesn’t charge ATM fees. There are still a few of them out there and, if their interest rates and so forth jibe with the card you are currently using, you may wish to switch. There are some experts that think using a credit card to get cash advances is so bad, financially speaking, that they recommend not even setting up a PIN code with your credit card so that there’s never any temptation to do so.
Lastly there’s the balance transfer fee, a 3% fee to transfer a balance from one credit card to another. Again there are a handful of credit cards that don’t have balance transfer fees so try and find one that doesn’t. Many credit cards also offer interest-free financing on new purchases and, if you’re faced with the choice, we recommend that you use a 0% offer to purchase something rather than a balance transfer after you purchase it to pay it off.
There are other fees associated with credit cards to be sure but these are worst. Hopefully we’ve given you a little insight into how they work and what you can do to avoid them. Right now credit cards are still a vital necessity for many people but, in the near future, there’s a good chance that we will be doing away with them as payments become completely electronic and we use smartphones and tablets with Wi-Fi connections to pay for goods and services rather than swiping plastic. (Of course you can bet that there will be fees on this also.) Until that time, use the tips above to help keep the damage to a minimum and come back to visit us sometime soon. See you then.