5 credit card fees you can avoid

credit-card-feesCredit cards can be a slippery slope. On the one hand, they’re real handy dandy for things like building your credit or an emergency shoe purchase. On the other hand, they can be a quick path to a heap of debt, credit card fees, and a lousy credit score.

You need credit because you’re gonna want to buy things that cost more than all the cash in your bank account (e.g. car, house, MacBook Pro). Credit cards are the obvious starting point for most people. And, if you use them wisely, you’ll build up your credit and a good credit score – which will come in very handy when you’re ready to finance a car or home purchase.

So we’re agreed that you probably need a credit card.

Now, there’s lots of info out there about how to use credit cards responsibly. I’m not gonna preach ’cause I’m here to help. If you want to go on a pet toy buying bender, have at it.

Here’s the helping part. You probably know all about credit card interest rates, rewards points, cash back, yada yada… But you might not know too much about the credit card fees that card issuers charge. That’s because they hide them in the tiny print that no one reads.

According to a creditcards.com survey, the average credit card carries six different fees. Look out!

Here are 5 credit card fees you can and should avoid:

  • Late fee – This is the most common fee out there. Paying late hurts twice as much because you’ll get hit with a fee ($38 on average) AND your credit score will take a hit. #gutpunch
  • Balance transfer fee – Paying a fee (usually 3% – 4% of the balance transferred) to move money from one card to another is just insane (unless you’re significantly reducing the interest rate – better do the math first). Transferring a $1000 balance, at 4%, will cost you $40. If you must transfer, do a little Googling to find a balance transfer offer that does not include a fee. Here’s a no transfer fee offer right here.
  • Annual fee – These typically range from $25 to $195 and can go as high as $500. Shut up! It’s easy peasy to avoid this fee. Just don’t get a card with an annual fee. Oh, wait a minute. That requires you to read the fine print. You might be screwed on this one.
  • Foreign transaction fee – Typically around 3% of each transaction. This is in US dollars, so don’t go thinking you’re getting off easy paying a few Rupees to use your credit card abroad. Solution? A card with no foreign transaction fees. Here’s one credit card issuer that does not charge a foreign transaction fee – and yes, they paid me to say that (doesn’t make it not true).
  • Cash advance fee – This is a bank’s best friend; to the tune of $25 billion in fee income in 2014 (according to this report no one wants to read). Most banks charge this fee. I’m not even going to bother explaining it. Just don’t do it ’cause it’s freakin’ expensive! (See previous sentence about $25 billion for the banks.)

This could be just half the story. Paying credit card fees sucks but it sucks even more to have your credit card interest rate jacked up for incurring a late fee or over the limit fee. You can find more credit card knowledge here.






Flickr image courtesy of HockeyholicAZ


About the Author ()

Melvin is the Smart Green Pig. "Smart" as in intelligent. Some would say "Super Intelligent" or perhaps "Genius". But also "Smart" as in surly and sarcastic, so watch your Ps and Qs! By the way, Melvin gets paid (quite handsomely) by SECU, so even though he's completely unbiased, some might think otherwise. Just sayin' (disclosin').

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