Credit card fees can quickly add up, reducing the value of rewards and increasing overall costs. Understanding how to avoid these charges can save you hundreds of dollars each year. Here’s a breakdown of the most common fees and how to avoid them.
1. Annual Fees
- What It Is: A yearly charge for using the credit card, ranging from $50 to over $600.
- How to Avoid:
- Choose a no-annual-fee credit card.
- Ask for a retention offer or a fee waiver from the issuer.
- Ensure the card’s benefits outweigh the fee.
2. Interest Charges (APR Fees)
- What It Is: The cost of carrying a balance, often 15%-30% APR.
- How to Avoid:
- Always pay your balance in full each month.
- Consider a 0% APR credit card if you need to carry a balance.
- Set up autopay to avoid missed payments.
3. Late Payment Fees
- What It Is: A penalty fee (often $30-$40) for missing the payment due date.
- How to Avoid:
- Set up payment reminders or autopay.
- Use credit cards with no late fees (e.g., Citi Simplicity® Card).
4. Foreign Transaction Fees
- What It Is: A fee (typically 3%) on international purchases.
- How to Avoid:
- Use a credit card with no foreign transaction fees (e.g., Capital One Venture, Chase Sapphire Preferred).
- Avoid dynamic currency conversion when traveling.
5. Balance Transfer Fees
- What It Is: A 3%-5% fee when moving debt from one card to another.
- How to Avoid:
- Use cards that offer no balance transfer fees.
- Calculate whether the interest savings outweigh the fee.
6. Cash Advance Fees
- What It Is: A charge (usually 3%-5% or a flat rate) for withdrawing cash from a credit card.
- How to Avoid:
- Never use your credit card for cash withdrawals.
- Consider a low-interest personal loan instead.
Final Thoughts
Avoiding credit card fees requires careful planning, responsible spending, and choosing the right credit card. By following these strategies, you can keep more money in your pocket while maximizing credit card benefits.
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