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Fees, fees, fees. The credit card industry is renowned — especially since the Credit CARD Act of 2009 — for exacting fees on customers. How can you avoid credit card fees? Here are five tips.
Very rarely do cash advances come without some sort of fee. Avoid putting yourself in a situation where you need to take out a cash advance on your credit card. Credit card companies often send convenience checks that you can deposit in your bank account as cash. Sometimes, these checks come with a special offer, where you can deposit the money, or use it to pay a bill or make a store purchase, with no fees attached. If you haven’t received any in the mail, call your credit card company and ask if there are any offers available currently.
Balance transfers, too, often come with fees attached. If you plan to do a balance transfer, keep your eyes open for a “no-fee” balance transfer offer from your credit card provider. Again, if you don’t see any offers online or in the mail, call your credit card provider and ask what’s available.
Sometimes, you can get the best offers by opening a new card and making a balance transfer immediately. Before you decide to do this, weigh all the pros and cons of doing a balance transfer, including the effect on your FICO credit score when you open a new account.
Most credit cards carry a late payment fee of $29 to $39. Make all your payments on time to avoid this fee. If you mail in your payment, give it plenty of time to arrive by the due date. If you pay online, many credit card companies require you to make the payment 24 hours or more in advance of the due date in order for it to clear in time. The Credit CARD Act of 2009 requires that your due date remain the same every month, and that payments that arrive by 5 PM (Eastern time) on that business day are considered on time. This makes it easier for consumers to pay their bills on time.
If you do make a late payment, call your credit card company, because they might waive the fee for a first offense. Sometimes if you agree to set up automatic payments, the credit card company will also waive your fee.
If you think you are going to be late with your credit card payment, call your credit card provider in advance of your due date. Many major credit cards offer “payment holidays.” However, you’ll still pay interest for the month in which you took a payment holiday. Do the math. Depending on your interest rate and the balance on your card, it may be less expensive to make your minimum payment a few days late and pay the late charges.
Going over your credit limit, again, carries hefty fees of up to $49. Keep close tabs on your available credit by monitoring your credit card usage and payments online. Better yet, keep your credit card balances to less than 30% of your available credit — it will be better for your FICO credit score and you won’t have to worry about going over your limit. Credit cards like American Express and certain versions of the World MasterCard offer no pre-set spending limit. If you often use your credit cards for big ticket purchases or travel — and pay the outstanding balance in full before your next due date — you can use these cards to avoid going over your credit limit on large purchases.
Credit card insurance, which permits you to suspend making payments if you lose your job or suffer another financial hardship, can cost as much as 89 cents on the dollar. This is a hefty monthly fee you can avoid by saying no to credit card insurance and other special offers. Read more about credit card payment protection plans here.