Credit card fees can be avoided by understanding what causes the fees and strategically working around those triggers.
Late Payment Fees and Penalties
When a credit card user is late on a payment, a late fee is applied and sometimes interest rates increase. You can avoid this fee by setting up autopay. If you’re not a fan of autopay, you can set monthly calendar reminders to ensure you don’t miss payment dates.
Interest Fees
Interest fees can be avoided by paying your monthly balance in full. The best thing you can do is not spend money you do not have. Your credit card should be handled like a debit card; this allows you to repay the balance immediately with the funds that you have available.
Annual Fee
Many credit cards charge an annual fee ranging from $30 to $500. Once you accept the card that has an annual fee, you are obligated to pay that charge. The best way to avoid an annual fee is to choose a card that does not charge an annual fee. Compare and contrast no-annual-feecards and choose the one that best suits your needs.Bankrate.com is a great place to compare card pricing as well as features.
Over-the-Limit Fee
There is a fee for spending over your credit limit. You may have the option of spending over the limit of your card if you opt in. Be careful, you can avoid this fee by choosing not to opt in to the over-the-limit fee. Avoid spending over your limit by monitoring your spending and living within your means.
Balance Transfer Fee
Balance transfer fees are standard. The fees can range from 3 to 5% of the amount transferred. Depending on the size of the transfer, this fee can be significant. The benefit of transferring a balance to a card with an interest rate lower than your current rate typically proves to be a good financial deal because this will help you to save on finance charges. However, be mindful to make note of when this promotional rate will expire so that you can do another balance transfer or have this balance paid off by this date.
Always remember you do not have to apply for a new card to transfer a balance. You can use an existing card to save on interest rate fees. This is ideal because it avoids reducing your average credit age and hard credit inquiries, both of which will reduce your credit scores however you do need to have available credit on a card to do this.
Source: Cash, Kevin. 2018, U.S. News, How to Avoid Paying Credit Card Fees. <https://money.usnews.com/credit-cards/articles/how-to-avoid-paying-credit-card-fees#:~:text=Avoiding%20Credit%20Card%20Fees%201%20%5BRead%3A%20Best%20No-Annual-Fee,card%20like%20a%20debit%20card.%20…%20More%20items>
