Credit card fees can be annoying and confusing to understand. Therefore, consumers should pay close attention to them and read the agreement to see what they’re paying for and if those are really necessary. They aren’t always bad since you can get many rewards in return – and most of the times these charges are easily avoidable.
1- Annual Fee
As the name says, an annual fee is a fee that customers pay annually for the use of a credit card. Even though no one likes to pay this charge, it may be worth it due to the travel and cash back rewards. Annual fees can cost from $20 to up to $500. Depending on how much you spend on purchases, they may not be worth it – merely calculate to see if your rewards outweigh the fees to determine that. To avoid this fee, you could get a credit card that doesn’t charge annual fees.
2 – Balance Transfer Fee
In order to transfer a balance from one account to another, credit card networks may charge a fee – a balance transfer fee – this usually ranges from 3% to 5% of the amount transferred. You can escape this charge by getting a credit card that offers a 0% introductory balance transfer fee period.
3 – Foreign Transaction Fee
Customers have to pay foreign transaction fees when a purchase is made on another currency or when the transaction involves a foreign bank. The amount charged ranges from 1% to 3%. This fee is very common, but consumers can bypass this charge by getting a no foreign transaction fees card, which is ideal for frequent travelers.
4 – Cash advance fee
A cash advance fee is charged when a consumer accesses the cash credit line on his or her account. Many of the companies charge from 2% to 5% for this service. The best thing to do is to open a savings account so that you don’t have to get a cash advance when you need money fast.
5 – Finance charge
A finance charge is a fee that you pay for carrying a balance on your credit card. The rate varies according to the company. You won’t have to pay these charges if you pay your balance in full every month.
6 – Late payment fee
This fee is charged when someone misses the payment deadline. To avoid paying this fee, you should enroll in auto-pay or get a credit card with a no late fee policy. Keep in mind that paying your bill after the due date will hurt your credit score.
7 – Over-limit fee
Credit card companies charge an over-the-limit fee when your exceeds your credit limit through purchases, fees, or finance charges. Consumers won’t need to pay over-the-limit fees if they keep their balance below the credit limit or if they choose to opt-out.
8 – Returned payment fee
You’ll have to pay this fee when a credit card company tries to access your account, and there are insufficient funds. Ensure that you have enough money in your account before trying to pay a bill or make a purchase.
9 – Reward redemption fees
Some companies – mostly airline companies – charge reward redemption fees to redeem a reward. These fees usually are $20 to $50, depending on the carrier. However, they will most likely exempt this cost if the customer books the ticket online.
10 – Reward recovery fees
Many credit card networks charge a fee to reinstate rewards – sometimes they’ll even remove a customer’s reward points if the customer makes late payments. To avoid that, always pay your bill on time.
11 – Activity fees
Activity fees is a fee to customers that don’t use their cards. By doing that they ensure that he or she will always use it. These fees usually cost from $50 to $100 a year.
12 – Payment protection fees
Payment protection fees can be defined as a type of insurance cost that customers pay so that in case of unemployment, illnesses or other qualifying hardships, it’ll provide minimum payments and suspend any finance charges. They usually cost ¢80 to $1 for every $100 you spend or carry as a balance. Customers can choose not to pay these charges if they don’t want to.
13 – Paper statement fee
Some banks charge customers to receive a paper statement in the mail. It could cost from 1 to 9 dollars per month. You can avoid it by getting a card that doesn’t charge such fees, or you could get an account statement online.
