Credit Card Fees
What Fees Can You Expect On Your Credit Cards
New to credit cards? Then you'll probably need to know a few specific credit card terms if you don't want to be caught by a bad term. For your own financial safety, it is strongly suggested that you learn about credit card fees so you'll be ready when you receive your first credit card. Not only will it be useful for you, but it is essential you know these terms for your own financial safety. With these simple definitions you'll understand exactly what each term means and what you should do to prevent these fees.
Annual Fees
The annual fee is a yearly fee associated with certain credit cards. Usually varying between $25 to $300/year, you can expect to pay these fees for secured credit cards, charge cards and credit cards carrying a reward system. If there are no additional benefits such as reward system, you should consider looking for a no annual fee credit card.
Application Fees
The application fee is a one-time fee for your credit card application. It's usually a low amount and can be present for any type of credit card. However, if you ask, you can easily have the fee waived. If not, consider looking for promotional offers. They usually have no application fees and offer very generous benefits for the first few months.
Cash Advance Fees
Withdrawing cash with your credit card is not free. A cash advance fee is usually a percentage (1 to 3%) of the advance per cash transaction. Some credit cards offer 0 cash advance fees and other offer it for a limited time such as a promotional offer. Since you're charged for every advance, make sure to withdraw more cash than enough to avoid paying the fee several times.
Balance Transfer Fees
If you often make a balance transfer, you've probably seen a balance transfer fee. This is a fee varying from 1 to 3% that is charged to your account for every balance transfer you make. This is especially useful when you want to move a balance from a high interest credit card to a low interest credit.
Finance Charge
Also known as interest rate or APR, the finance charge is what credit card company charge you when you carry a balance to the next month. More specifically it's when you carry a balance beyond your grace period. Interest rates cannot be avoided unless you never carry a balance or if you are using a 0% interest credit card from promotional offers. Other than that, it is suggested that you use a low interest credit card to reduce finance charge.
Late Fees
The late fee is a charge applied to your account when your payment is smaller than the minimum due or after the payment due date or both. Usually around $15-$40, this fee can easily be avoided if you pay your bills on time or call your creditor ahead of time to negotiate a possible payment plan if you can't afford the minimum payment. Among all credit card fees, avoid this one as much as possible.
Over-The-Limit Fees
This fee of $15-$40 can only be charged if your balance is above your credit limit. There are not many ways to fix this other than keeping your balance below your credit limit. You could also make a request to increase your credit limit as long as you can afford it.
Return Check Fees
Also known as a check bouncing, you can expect to pay a fee of roughly $40 for having your check returned to you. This is usually because you don't have sufficient funds so to avoid this problem, simply make sure your checking account has sufficient funds before writing a check.
It may seem like a lot to process the first time, but once you've faced these credit card fees once you'll quickly understand which fee is for what. Also take note that some of these fees might not even concern you as they don't show up in every credit cards.
