9 Common Credit Card Fees and How to Avoid Them

Despite the natural reluctance that some feel towards credit cards, it is a relatively simple method of payment since the law requires that fees and conditions be communicated in advance.

Credit card companies are prohibited from charging hidden fees or concealing long-term costs thanks to the Credit Cards Act 2009. This consumer protection measure has helped increase the transparency of the terms and conditions of credit cards. credit cards while limiting fees and interest rates.

That said, we all know that carrying long-term debt on a credit card can rack up thousands of dollars in interest. There are also traditional credit card fees to know and avoid, which you can easily do by following a few simple guidelines.

How to find out what credit card fees you’re paying

If you’re curious about the fees or charges that apply to any credit card, you’ll want to research the Schumer Box. Credit card issuers are legally required to provide this easy-to-read table for each credit card. In the Schumer Box you will find the general terms and conditions, interest rates and fees for the card.

Here is an example of what the Schumer box looks like for the Chase Freedom Unlimited®:

If you are comparing credit card offers, you can easily find the Schumer fee and box information online by clicking where it says something like “rates and conditions” or “important rates and information”. When you are approved for a credit card, you will usually receive your card information, including a brochure with a Schumer box, in the mail.

If you don’t hang on to the physical card agreement you get in the mail and later want to refresh your memory, you should be able to find the same information in your online banking account. You can also call customer service and ask them to email you information about the charges associated with your card. Finally, you can consult the online card request page. However, there is no guarantee that charges have not changed since you were approved for your card.

9 credit card fees you don’t have to pay

If you want to use credit to your advantage, you should strive to avoid all credit card fees and charges. Read on to learn about the nine most common credit card charges, what triggers them, and how you can avoid them altogether.

Annual subscription

Annual credit card fees work the same as membership fees for other products and services. Cardholders who choose a card with an annual fee will have that fee added to their credit card bill once a year, and they’ll be entitled to another year of applicable cardholder benefits when they pay it.

Annual credit card fees are generally proportional to the value of the benefits you receive with a given card. For example, you can pay up to $695 a year for a travel credit card, but cards with fees in this range often offer $1,000 or more in statement credits and cardholder benefits.

While paying the annual fee on a credit card might make a lot of sense, you need to make sure the perks you receive are worth it to you. For example, you only have to pay the annual fee on a card with travel perks like airport lounge access, TSA PreCheck credits, and other travel credits if you travel often enough to use them.

How to avoid paying it

The good news about annual fees is that there are a myriad of credit cards with no annual fee, including rewards cards.

For example, the Chase Freedom Flex℠ comes with no annual fee. Nonetheless, it offers cash back as well as cell phone insurance, trip cancellation and interruption insurance, purchase protection, extended warranties and more.

Financial charge

Credit cards add finance charges to your bill when you carry a revolving balance beyond your credit card’s grace period and expiration date. These finance charges are assessed based on your credit card’s annual percentage rate, or APR.

How to avoid paying it

You can avoid paying interest by paying your credit card balance in full each month. Of course, this is easier to achieve when you only use plastic to pay for purchases you can afford and when you use a credit card in conjunction with a monthly budget or spending plan.

You can avoid short-term finance charges by choosing a credit card that offers 0% APR on purchases, balance transfers, or both for a limited time. Many 0% interest cards are even available with no annual fee required.

Foreign transaction fees

Some credit cards charge separate fees when you use them for purchases outside the United States. This fee, usually around 3% of your purchase, may also apply if you shop online with a foreign-based company.

How to avoid paying it

The best way to avoid these fees is to use a credit card that does not charge foreign transaction fees. Fortunately, most travel credit cards do not charge foreign transaction fees. All credit cards issued by Capital One and Discover are free of foreign transaction fees.

Balance Transfer Fee

Balance transfer fees come into play when you transfer your balance from one credit card to another, usually to consolidate debt or get a lower interest rate. While these fees vary, most balance transfer credit cards charge a balance transfer fee that adds between 3-5% to the amount of your transferred debt.

How to avoid paying it

You can look for credit cards that don’t charge a balance transfer fee, although the trade-off for no balance transfer fee is usually less favorable terms. Your best bet is to take steps to minimize the amount you pay in balance transfer fees, usually by getting a card that charges a 3% fee instead of 5%.

Cash advance fees

Cash advance fees come into play when you use your credit card to withdraw cash from an ATM. These charges may also apply when using credit card convenience checks that often arrive in the mail.

Either way, cash advances are usually charged at a higher interest rate than the standard APR for purchases. Cash advances are also subject to interest from day one, as they do not have a grace period like credit card purchases do.

How to avoid paying it

To avoid cash advance fees, you should avoid using your credit card to withdraw money from an ATM. When you receive credit card convenience checks in the mail, destroy them if you are tempted to use them.

Late payment fees

Late payment fees appear when you pay your credit card bill after its due date. Although these fees can vary, they are usually between $25 and $40.

How to avoid paying it

To avoid credit card late fees, make sure you always pay your credit card bill early or on time. Set up automatic payments or add your due date to your calendar as a reminder. If you forget and end up with late fees on your account, it never hurts to call your issuer and ask if they’re waiving it.

A handful of credit cards also don’t charge late fees, so you can always choose from those options if late fees are a sticking point for you. For example, the Citi Simplicity® Card is a popular balance transfer credit card with no annual fees or late fees.

Card replacement fee

Card replacement fees may apply when your credit card is lost, stolen or misplaced and you need to order a new one. However, most credit card companies will send you a replacement card at least once free of charge as a courtesy.

If your issuer charges a fee for this, it will usually be between $5 and $15.

How to avoid paying it

If your credit card is lost or stolen, call your credit card company to see if they will send you a replacement card for free. If they refuse to replace your card without charging you a fee, that’s a good sign that it’s time to look for a new credit card from a different card issuer.

Returned Payment Fee

Returned payment fees typically range from $15 to $40, which issuers charge when the payment you send to your card issuer isn’t accepted. For example, a returned payment charge may apply if you pay your credit card bill with an NSF check due to insufficient funds.

How to avoid paying it

To avoid refund charges, make sure you always have enough cash in your account to cover your credit card payment, even if that means adjusting your payment amount to what you can afford instead of the balance. total.

Overlimit Fee

Finally, some credit cards charge a fee if you go over your credit limit. If your credit limit is $5,000 and you make a purchase that pushes your credit card balance to $5,050, for example, your credit card company may approve that purchase and add an overage fee. limit to your account.

How to avoid paying it

Be sure to keep a close eye on your credit card limit and how close you are to it in any given month. If you need more available credit than you currently have, consider applying for a new credit card.

Credit card companies are also required to ask you if you want them to authorize charges that exceed your credit limit. On the other hand, you can request that purchases over the limit be declined at the point of sale.

You can also consider getting a charge card instead of a credit card. Charge cards are usually without traditional limits, making them a good option for big spenders. However, they require users to pay their balance in full each month, so they are not suitable for everyone.

The bottom line

Most credit card charges are unnecessary and easy to avoid. However, this is only the case when you know and understand all the fees your card could potentially charge in advance.

By arming yourself with information and using credit wisely, you can maximize the benefits of plastic without paying for the privilege of having a credit card.