Is Your Credit Card Charging You Any Of These 9 Fees Dave Ramsey Warns You About?

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You should check the fine print on your credit card statement to find out.

Key points

  • Credit card charges are very common and can cause your credit card to cost you more.
  • Dave Ramsey warned of nine fees to watch out for, including late fees, cash advance fees and returned payment fees.

Credit cards can make shopping easier since you can charge things instead of carrying cash for your purchases. If you use the cards responsibly by not overcharging and paying them back in full, they can also help you build credit and earn you valuable rewards.

But, cards can also cost you money, especially if you end up incurring additional fees that card issuers sometimes add. Financial expert Dave Ramsey has warned of nine common charges you may incur when you have a card, and it’s worth checking to see if you currently cover any of them.

Nine fees to watch out for

The nine charges Dave Ramsey warns about include:

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  1. Annual fees: Ramsey asked, “Did you know you can be charged just for the ‘privilege’ of having a credit card?” He explained that not all card issuers charge for them, but some do. And he warned that sometimes fees are waived in the first year, but come into effect afterwards.
  2. Late fee: These are charged if you pay your bill late. As Ramsey explains, the CARD Act limits the first over-limit fee to $28 and allows subsequent over-limit fees to go up to $39 if you’re late a second time within six months.
  3. Balance Transfer Fee: You will pay these fees if you transfer a balance to your card. “You will be charged a percentage of the amount you move,” Ramsey explained.
  4. Cash advance fees: If you receive money from your credit card instead of just charging for purchases, a cash advance fee is usually added. Cash advances may also cost you more for another reason. “Unlike other purchases, cash advances don’t have a monthly grace period,” Ramsey explained. “That means they’ll start increasing interest as soon as the money is in your hands, not just when the billing cycle is over. That’s a punch in the gut!”
  5. Overlimit Fee: If you go over your card’s credit limit, Ramsey says you may be charged these fees, although not all cards assess them.
  6. Expedited Payment Fee: Ramsey says some card companies charge you if you make an expedited payment because you’re worried your payment won’t arrive on time.
  7. Foreign transaction fees: As Ramsey explained, these fees can be charged both when you’re abroad and when you’re buying something from a seller who doesn’t charge in US dollars.
  8. Returned Payment Fee: If your payment is returned due to insufficient funds or other issues, Ramsey says your card company will typically charge you to return your payment.
  9. Card Replacement Fee: Finally, a lost card may also result in additional charges.

As Ramsey explains, there are so many fees because “credit card companies love people with nothing but pennies.” So, since it’s your money that’s at stake, it’s important to be aware of what you’re being charged and make sure you protect yourself from these additional costs.

How to avoid unnecessary credit card charges

Follow these steps:

  • First make sure that the fees are really unnecessary. In some cases, for example, the annual fee is worth paying if your card comes with generous rewards and benefits that exceed the value of the fee. And the balance transfer fee may be worth paying if the balance transfer saves you more interest than you pay up front.
  • Set up automatic payments to avoid late fees and expedited payment fees.
  • Avoid making cash advances, which can be very expensive and usually unnecessary.
  • To avoid overlimit fees, don’t max out your credit cards.
  • Look for a card that doesn’t charge foreign transaction fees if you go abroad.
  • Keep your card in a safe place so you don’t have to replace it.

Now that you’re aware of these fees, you have the tools you need to make sure you don’t get stuck paying them. There’s no reason for your card to cost you more than you need to, so heed Ramsey’s advice and avoid cards with unnecessary fees.

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