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Did you know that credit card fees cost consumers over $30 billion dollars each year? Often, credit card fees seem to appear out of thin air, particularly when you don’t stay on top of your credit card accounts. Accidentally triggering fees and paying more for items that can already be difficult to afford is the last thing you want, so avoiding fees should be done at all costs.
The worst offender: late fees
Late fees are one of the most common credit card fees and are automatically charged to your account if you fall behind payments even a single day. Avoiding late fees can be difficult when life is busy and you have other worries but that doesn’t mean you should ignore the problem. Late fees can be as high as $39, depending on your credit card issuer and balance. They can also lead to penalty interest rates as high as 29.99%. The best way to avoid late fees is to find a way to remember your payments that works for you.
One of the easiest ways for most people to avoid late fees is to pay your bill online. Online bill pay is usually free and can be scheduled in advance, giving you the freedom to decide when and how much you want to pay. You can choose to schedule a simple one-time payment to your account, or choose to have your account paid each month before it’s due. Online bill payments are easy to do and allow you to pay your bill in seconds, avoiding the problem that comes from forgetting to mail your payment on time. Just remember to check how long payments take to process when you pay online. Some issuers will credit your account the same business day, while others can take two or three days. Avoiding late fees with online bill pay means understanding the processing period and paying a few days before your bill is due.
Balance transfer fees
Another big problem for many people is the fee that’s charged when you transfer your balance with Balance Transfer Credit Cards. Transferring your balance can, unfortunately, seem like an answer to your prayers when you’re given low or zero interest rate offers. The truth is there’s a somewhat hidden fee: you’re almost always charged a fee when you transfer your balance. Sometimes the amount of the fee has a cap, often around $75. If you aren’t careful though, the fee is simply 3-5% of the amount you transfer. If you’re transferring $2,000 you’re looking at $60-$100. If you’re transferring a small balance the fee most likely won’t affect you much. If you’re transferring $1,000+ dollars, on the other hand, watch out that you don’t end up giving your credit card company hundreds of dollars for nothing. Always check how much you’ll pay when you transfer a balance to avoid a fee you can’t live with. Also check to make sure the amount you’ll save in interest is higher than the amount of the fee.
Over the limit fees
If you’re approaching your credit limit and go over, even by a single dollar, you will be automatically hit with an over the limit fee. These fees range depending on your balance and card issuer but can be as high as $39! The best way to avoid the over the limit fee is to pay your balance in full each month so you can always utilize your entire credit limit if need be. Another option is to always be aware of your current available credit before you make a new charge. You can check your balance online or call customer support, although the amount they have may not be up-to-date. The best course of action is to keep a record of every credit card purchase so you know exactly how much you have to spend and never have to worry about the over the limit fee.
There are other fees you need to watch out for as well, such as the minimum finance or monthly service fee. These fees can range from $2 to $6, adding up to almost $70 per year! Another fee to avoid is the check access fee, which is charged if you use the checks sent to you in the mail by your credit card issuer. Always read the terms and conditions of your credit card to make sure you are aware of all the potential fees you may be charged on your account.
Credit card fees are an unpopular aspect of the industry. The good news is there is plenty you can do to avoid the extra costs of owning a credit card. Don’t let yourself wind up paying for late fees and unnecessary balance transfer costs; read the terms of any transfer and make sure you find an easy way to pay your bills early.