5 Credit Card Fees You Can Avoid

19 December, 2010

Nobody likes credit card fees — no cardholder at least. And even though they’re written out in the fine print of your terms and conditions, as it turns out most credit card fees are really optional. Yes. That’s right. Whether or not you pay most credit card fees is entirely up to you!

Let’s take a look at five common credit card fees and how you can avoid them if you really want to.

1. Late Fees

How to avoid these fees: Don’t just try to meet your payment deadline when you send your payments each month. Instead pay early. Ideally, pay as soon as you receive your statement with the total amount due. Then you never have to worry about payments moving slowly through the post or getting claims that payments weren’t received. You’ll know they were received well in advance of the due date. If you’re not comfortable paying early, another option is to set up automatic credit card payments through your bank account. Payments will be processed later than early ones sent through the post, but you don’t even have to think about them. There’s no chance that you’ll forget to make a payment and get stuck with a late payment fee.

2. Over-the-Limit Fees

How to avoid these fees: The way to avoid this fee is easy, right? Just don’t over-spend. In reality it can be more complicated than that. It doesn’t have to be a purchase that puts you over your limit. If you keep a relatively high balance, even an annual fee or other credit card fee can cause you to go over the limit and be subjected to a fee. The best option is to either pay off your balance in full every month, or at least keep a low enough balance that no fee or interest charged could push the balance over your credit limit.

3. Cash Advance Fees

How to avoid these fees: One of the worst things most cardholders can do is use their credit cards for cash advances. Why? Most credit cards charge very high interest of around (or over) 20% on those cash advances. The Westpac Low Rate credit card, for example, charges 21.49% for cash advances (at the time of writing). But hold on. You won’t only be charged a lot in interest. These transactions can also come with a cash advance fee — either a flat fee or a percentage of the amount withdrawn. If you need cash, use your debit card at the ATM instead. Otherwise use your card itself for purchases whenever possible.

4. Annual Fees

How to avoid these fees: Annual fees are such a standard fee that they might seem inescapable at times. But that’s not true. There are almost always no annual fee credit card offers available, such as with the Bankwest Zero Platinum card. Consider switching credit cards and stop paying a fee just for using a certain card. If the new card offers a special balance transfer rate you might be able to save even more by transferring your existing balance. Also, make sure your no annual fee offer isn’t only for your first year.

5. Balance Transfer Fees

How to avoid these fees: People get balance transfer credit cards to save money on interest by moving their existing balances to lower interest credit cards. But just because a card has a low balance transfer rate offer, it doesn’t mean you’ll save as much as you think. The credit card might also charge a balance transfer fee. Similar to a cash advance fee these can either be a flat rate fee or, more likely, a percentage of the balance transferred. How can you avoid these fees? Start by reading the fine print before applying for a new card. These fees are rarely advertised in marketing materials, so you’ll have to review the full terms to find the details. Then, don’t be afraid to call the credit card company and negotiate. If it means landing a new customer who will immediately transfer a balance and start accruing interest with them, they might just be willing to waive that balance transfer fee.

Don’t assume that just because credit card fees exist, you have to subject yourself to them. You make your own choices every step of the way, and it’s those choices that ultimately determine which credit card fees you pay and which ones you don’t.

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