Seven credit card fees you should never pay
There are a handful of fees associated with owning a credit card.
While most people find credit cards a great way to build credit or join rewards programs, others are caught in a revolving door of fees.
While these unwanted charges can be alarming, they can also be avoided.
These are seven of the most common credit card charges you should never pay.
1. Annual subscriptions
An easy way to avoid paying an annual fee is to apply for a credit card that doesn’t have one.
There are many cards that offer great benefits with no annual fee.
These cards with no annual fee are suitable for those who plan to use it occasionally.
For those who want credit cards with high rewards programs, issuers offer great rewards by charging fees.
So if you want these types of programs, fees will be unavoidable.
You can simply ask for it to be removed – this doesn’t always work, but ask and you may receive.
2. Financial charges
A finance charge is the cost of borrowing money.
This usually includes interest and any other additional charges associated with the card if you carry a balance each month.
It can also be called annual percentage rate (APR) and is based on a few different factors.
To avoid this fee, consider paying the balance in full if you can afford it.
Due to credit card liability and disclosure (CARD) law of 2009, credit cards are required to give you a grace period.
The minimum grace period is 21 days, and issuers must give cardholders at least that much time before interest can be accrued.
Another way to avoid finance charges is to choose a card with 0% APR on purchases.
Most cards like this offer 0% APR as an introductory period for up to 12 months, then a standard rate will normally apply after that period.
3. Balance Transfer Fee
Generally, when you transfer a balance from one card to another, you will be charged.
These fees end up adding more to your debt and should be considered when applying for cards.
Balance transfer fees are usually around 3% to 5% of the transferred amount.
Another great option is to join a credit union.
Often their credit cards have great balance transfer offers and some don’t charge a fee to transfer your debt to one of their cards.
4. Late fees
Late fees are a very common mistake made by credit card users.
This happens when you don’t make the required minimum payment.
Not all credit cards will charge you a late fee for a missed payment, but most do and it can end up impacting your credit score.
Or, they may charge you what’s called an APR penalty and may be higher than your card’s current variable APR, which may cost you even more than a late fee.
An APR penalty can be worse and last for several months until you have made regular payments on time or indefinitely.
This can be avoided in a number of ways, but the best way to avoid it is to pay your bill online and then set up automatic payments.
5. Overlimit Fee
Overlimit charges occur when the cardholder spends more than their limit and is then penalized.
The fees are between $25 and $35.
However, the CARD Act of 2009 prohibits an issuer from charging an overlimit fee more than once during a billing cycle.
Additionally, an issuer must give you the opportunity to authorize charges above your limit before charging you a fee.
These charges can be avoided by not making any purchases that cause you to exceed your credit limit.
6. Cash advance fees
If you withdraw money from an ATM using your credit card, you will most likely have to pay a cash advance fee.
You will be charged a fixed fee or a percentage of the amount you withdraw.
You may also be charged interest often at a higher rate than the standard purchase APR on your credit card.
Moreover, the ATM may even charge you a fee.
Here are some ways to try to avoid these fees:
- Create an emergency fund
- Borrow from family or friends, if possible
7. Card Replacement Fees
Credit cards can be stolen, lost, or damaged, and depending on your issuer, you may need to pay for a new one.
Most places will issue you a new card for free the first time, but if you’re in a rush and need it right away, you might be charged an expedited fee.
A great way to avoid these charges is to upload your credit card to your digital wallet.
If you plan to travel, always have a backup payment plan.
Depending on what happened to your card, you can always ask your issuer to waive the charge.
If your card was damaged and you don’t have to cancel your account, they might be more inclined to waive the fee for you.
This credit expert offers seven tips to boost your credit score.
Additionally, millions of Americans could see their credit scores jump 100 points after reporting a change.
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