Fees to Avoid

Credit card providers make a huge amount of money from the fees they charge. However, if you want to use your credit card and not have to worry about paying out in fees, there are ways to avoid getting caught in the fee trap.

Late Fees

If you are late paying your credit card bill, it is likely your card issuer will charge you a fee. This fee can be $25-$50, so if you consistently miss payments, you will find that these fees really stack up. And if you have more than one credit card that you are late in paying, then you will really feel the burden.

These fees can be avoided by setting up a direct debit for your bill. This will mean the payment comes directly from your bank account to make sure the bill is paid on time. Just remember to have enough money in your account to cover the bill or you may find yourself hit by fees from the bank and your credit card provider.

Alternatively, you could set yourself a reminder on your smartphone or your computer to remind you when the payment is due each month. This will allow you to make arrangements to pay the bill and avoid late fees.

Over the Limit Fees

If you make a large purchase that takes you over the agreed limit on your credit card, your card provider could charge an over the limit fee. To avoid this, always be aware of how much you have spent on your card and how much credit you have available.

Internet banking makes it much easier to keep track of what is going on in your account, and can be used to avoid fees like this.

It also helps to pay off the balance of your card in full each month so you will not be so close to your spending limit when you do use your card.

Monthly Service Fees

Even if you have a credit card that charges no annual fee, you could still be charged a monthly service fee. Check the terms and conditions on your card to find out if you will be paying this and how much it is.

Annual Fees

Most people are aware of the annual fee they are paying for a credit card. If you choose a prestige card then it is likely your annual fee is quite high.

To cut back on annual fees, make sure you are getting what you pay for with the credit card you are using. Sometimes you may find that the amount you pay in annual fees is actually more than you receive in rewards or other benefits.

Cash Advance Fees

Not only will you be charged the higher interest rates attached to cash advances, you may also have to pay a cash advance fee when you use this service. With their higher interest and fees, cash advances should be kept strictly to emergencies only.

Currency Exchange Fees

If you travel overseas regularly or make purchases from overseas retailers, then you may be charged a currency exchange fee. This can be up to 3% of the purchase price, so if you are buying a lot then you may want to look for a credit card that doesn’t charge this fee.

Balance Transfer Fees

While most card issuers will not charge a fee for balance transfers, there are some that do. This can be around 2% of the amount being transferred, so think about your options before you sign up.

Merchant Surcharge Fees

This is the fee that is charged by the merchant when you make a purchase from them with your credit card. This fee is set by the merchant, so be aware of what you are paying before you buy it.