Cashing In: 5 Credit Card Fees to Avoid
Credit card fees may be something that you think are inevitable and that you have to deal with. Good news — that’s not the case. There are many things you can do to reduce the fees you’ve come to expect each month. If you’re conscientious enough, you may be able to avoid paying credit card fees altogether. But, before you can figure out how to avoid fees, you need to know what to look for. Here are five of the top credit card fees and tips on how to avoid them.
1. Annual Fee
Many credit card issuers charge a pesky annual fee; however, there are a select few that don’t. According to Credit, here are a few good credit cards with no annual fee that are worth checking out.
Chase Slate: This is a basic credit card that offers a great feature. It offers a 0 percent APR promotional balance transfer with no balance transfer fee. It also features Chase’s Blueprint program, which helps cardholders avoid interest by paying some charges in full while carrying a balance on others.
Discover It: This card offers a 0 percent intro APR for 14 months on purchases and balance transfers. Even better? It’s also a rewards card. All purchases earn 1 percent cash back, while those from select categories or merchants can earn 5 percent back.
American Express Blue Cash Everyday: This no-fee card lets customers earn 3 percent back at supermarkets, 2 percent on gasoline purchases and at select department stores, and 1 percent back on all other purchases.
2. Foreign Transaction Fee
Here’s how it works: Credit card issuers exchange currency at interbank exchange rates (meaning the best possible rate) and impose these charges on any transaction that is processed outside of the U.S., even if it’s in U.S. dollars. Banks then tack on a 3 percent foreign transaction fee to all of these charges. Many banks, though, are now choosing to avoid this fee. Capital One, Discover, and the Pentagon Federal Credit Union have eliminated the fee on their products, says Credit. Just make sure to use one of those cards when you’re in a foreign country.
3. Penalty Fee
The first fee to fall under this category is the late payment fee, which is the charge that is assessed when your monthly payment is received after the due date. A late fee cannot exceed your monthly minimum payment, and sometimes, you can get this type of charge waived the first time it happens.“Now, issuers can charge you $25 if you pay late, then increase that to $35 if you make another late payment within six billing cycles of the first one. Keep in mind that making a partial payment or failing to pay the minimum — even if only by pennies — is enough to trigger the fee,” according to Bankrate. If you’re notorious for late payments, try setting up an automatic payment each month to avoid incurring unnecessary fees.
Next is the over-limit fee, which is when your balance exceeds your approved credit line, writes Card Hub. Although this hasn’t been as big of a problem since the CARD Act began that required cardholders to opt-in for the ability to exceed their spending limits and capped the resulting penalty fees at the amount by which the limit is exceeded. Finally, there’s the returned payment fee. If you send a check to your credit card company but don’t have enough money in the bank to cover it, you could be charged a fee.
4. Cash Advance Fee
On average, cards have a cash advance fee of 3 percent with a minimum of between $5 and $10, writes Credit. There’s also a higher APR charged on a cash withdrawal, and unfortunately, there’s no grace period. This one’s simple — if you want to avoid paying this fee, never use your credit card for a cash advance. If you think you’ll be tempted to use it, don’t set up a PIN code for your card.
5. Balance Transfer Fee
If you see a credit card featuring 0 percent APR promotional financing on cash advances, also look at what the card company charges for the balance transfer fee. Often, it’ll be around 3 percent. To avoid this fee, you’ve got two options. First, check out Chase Slate, which has a promotional balance transfer offer and no balance transfer fee, according to Credit. Also, most of these offers also feature interest-free financing on new purchases, so if you need to finance a purchase with a credit card, use a 0 percent offer on new purchases before you do — don’t use a balance transfer offer afterward.