Four Credit Card Fees to Avoid

by on June 27, 2012

As the credit card industry gets revamped, courtesy of the government trying to protect consumers, new credit card fees are on the rise, and the credit card companies are sticking them to you as often as they can.  Here are four fees that are very common and should be avoided if possible.  Often, if you are in good standing with your credit card provider, you may be able to get some of these fees waived if you ask properly or threaten to leave.

Avoid Late Payment Fees

This one is pretty obvious but millions of people pay this fee each year.  And while many people pay these fees because they don’t have the money to make their payment, most of the time these fees get charged to people that make a late payment because they are not organized.  For example, if you put off your bills, don’t sort your mail properly, or don’t have reminders to pay your monthly bills, you can easily miss a payment.  Avoid these pesky fees by setting up a system that ensures you don’t miss any bills.  And if you do get this charge and you are in otherwise good standing with your credit card company, ask them to remove the charge.  They often will.

Foreign Transaction Fees

top credit card fees to avoidWhether you are traveling overseas, or simply buy a product from a foreign company, you may get charged a transaction fee for making a purchase in a different currency or country.  While this typically doesn’t apply to Canada, it can apply to most other countries.  Check with your card company before you make these transactions.  Many cards including most American Express credit cards don’t charge this fee, so it’s important to check before you spend if you want to avoid this fee.

Balance Transfer Fees

Balance transfer checks and offers show up in the mail on a regular basis.  They often promise 0% interest for a period of time or have some similar “offer” that makes them seem attractive.  Before proceeding, make sure you find out what the balance transfer fee is.  They typically range from 3 to 5% of the transfer.  These are another of the fees that you should be aware of.  And before you decide on whether to transfer a balance, make sure that you look at the interest you would have paid on the other card versus the amount of interest you’ll save and the transfer fee on the new card.

Cash Advance Fees

A cash advance on your credit card is when you use an ATM to withdraw cash from your credit card.  Sometimes using a check or the online cash advance from your credit card is also considered a cash advance.  Cash advance fees are often 5% of your withdrawal, with a minimum fee of $10.  That means that if you took out $100 from the ATM on your credit card, you would pay $10 in fees.  That equates to 10%!  Furthermore, interest is typically charged on the amount of the advance immediately, without the typical grace period.  And interest rates can be as high as 20% or more.  Furthermore, when you pay off your balance, the payments will be applied to your other balance before this amount, so even if you sent the $100 back to your credit card company you would still be paying interest on it until your entire account is paid off.  These are fees that should be avoided unless it is an emergency.

In my opinion, these are the four biggest credit card fees to avoid.  Do you have any advice or experience to share?

{ 3 comments… read them below or add one }

FIA Login August 13, 2012 at 7:20 am

Thanks for this article, these credit card fees are really a pain specially when it already accumulated as much as you owe. We do have to understand our billing statement and be aware of these charges. 🙂

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Williamasebmem October 19, 2012 at 10:52 am

Informative post. We should be aware all these things before we decide to do it. Doing cash advance fees is not good but if we have a purpose and especially if we are an in emergency we don’t have a choice. Thanks for sharing this great information. Keep it up.
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Andrew November 12, 2013 at 3:02 pm

Hi Chris,
These are the worst kinds of fees that you have to pay to your credit card company. The late fee is the hardest to avoid, since often bills can stack up and forgetting them can be quite easy. My advice for people would be to get organized with your bills and set up reminders everywhere about your different bills. Thanks for sharing this information,
Andrew
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