Did you know that you can avoid paying credit card fees unnecessarily?
Most credit cards card come with associated fees such as annual fees, balance transfer fees, and late payment fees, among others. And all, without exception, can be avoided through discipline and adhering to the terms and conditions offered with the card.
So what are these hacks that can help you stay on the favourable side of credit? Below, we look at five tips to help you avoid standard credit card fees.
Consider A Credit Card With Zero Annual Fees
Credit cards come in all shapes and sizes. Some credit card companies charge annual fees on their cards, while others have zero rates. The catch is, credit cards charging yearly fees may also offer excellent features and benefits such as rewards, points, and cashback programs.
In our opinion, however, a zero-rated annual fee credit card is always the best option, because:
- Why pay for a credit card just to have the credit card?
- The rewards on fee-free credit cards may not exceed the annual fees you’re being charged to have the card
Pay Your Credit Card Balances On Time
Your credit card will charge you interest whenever you carry a balance, some as high as 19.99% APR or more. While it is an annual rate, the charges are piled on, on a daily or monthly basis.
One credit card can have one or several fees such as balance transfer fees, cash advance rates, purchase rates, and promotional interest rates.
Stay away from these minute charges by paying your credit cards on or before their due dates. You’ll not carry forward a balance, which means that your card will be interest-free.
Opt For Credit Cards Free Of Foreign Transaction Fees
When you use your credit card on international ecommerce platforms or overseas transactions, you may find that you’re also paying currency conversion fees or foreign transaction fees.
These fees range between 1% and 3.5% of all your overall transactions, and these small charges do eventually add up. You may find that you’re incurring extra costs on your card, which could easily have been avoided.
If you want to avoid such fees, you should consider credit cards that do not charge them, or otherwise use international payment sites such as PayPal for online transactions or prepaid travel cards when travelling overseas.
This way, you’ll save yourself from these often unnecessary credit card transaction fees.
Always Stay Within Your Credit Card Limit
Though not all, some credit card providers will charge you over-limit fees. This fee applies when you spend beyond your credit card’s limit. The charges are between $5 and $35. For you to avoid these fees, you should check your available balance regularly.
When you notice your credit is near the set limits and the due date is yet, consider increasing the limit. Following this approach will help you avoid over-limit fees and continue using your credit cards on purchases or travels.
Avoid Using Your Credit Cards For Cash
Another way to stay away from standard credit card fees is to avoid cash withdrawals. Credit cards often allow you to withdraw cash from ATMs. However, this approach comes with several costs.
When you cash out on your credit card, the card charges you a cash advance fee of between 2% and 3.5% for the entire transaction.
Apart from this, some cards will charge interest daily on cash advance rates for the transaction date. The only way to avoid such unnecessary fees is to avoid cashing out your credit cards as much as possible.
Credit cards are not all bad – they offer us a quick line of credit in emergencies, show creditworthiness, and help us to build positive credit histories, which could lead to approval for higher loans in future.
They also allow you to make a transaction without cash in your bank account and often come with notable reward and cashback loyalty programs.
Be mindful, though, that most credit cards also come with hefty fees.
We hope this article has highlighted these fees to help you steer clear of them when using your credit card. Have we missed out on any tips to avoid standard credit card fees? We’d love to hear from you!