Credit card companies don’t just make money by charging interest on balances that aren’t paid in full. They also make money by charging various fees to cardholders. No matter how many credit cards you have, here are four fees to avoid.
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1. Late payment fees
Late fees come into play when you fail to make your minimum payment by the time your bill is due. Want to avoid these fees? Don’t be late with your payments. Set up a calendar reminder so you don’t forget when your minimum payments are due. And also, be careful about the fees you make during the month so that you don’t end up in a situation where you are late with your minimum payment because you don’t have the money.
Believe it or not, one late payment could damage your credit score. The lower your score, the fewer options you will have for borrowing money when you need it. It is therefore better to avoid being late.
2. Cash advance fees
Many credit cards allow account holders to access cash, but at a cost. When you take a cash advance, you will usually have to pay a fee that can easily add up to 5% of the amount you withdraw. If you get a $ 1,000 advance, that could mean paying $ 50 more to get that money.
If you need cash in a pinch, you may want to consider taking out a personal loan instead. One drawback with personal loans is that they generally have a minimum borrowing requirement. If you only need to borrow a few hundred dollars, a personal loan may not make sense. But he Is pay to explore your options apart from a cash advance from your credit card because of the high fees involved.
3. Annual fees that don’t pay for themselves
Annual fees aren’t always a bad idea. Annual fees that don’t pay on their own, however, are a waste of money and should be avoided. If you have a credit card with an annual fee and that card doesn’t give you more airline miles, cash back rewards, or perks than a no-fee card, then you’d better ditch that card.
Also, before signing up for an annual membership card, research the benefits. And make sure you are likely to harvest them. A card with lots of cash back rewards for travel may not be a good choice for you if you don’t do a lot of travel. In this case, you could end up paying an annual fee for no good reason.
4. Foreign transaction fees
Some credit cards will charge you for switching your card abroad. And it’s not uncommon for overseas transaction fees to hover around 3%, which can get expensive if you spend a lot of time overseas and use your credit card frequently. Many travel credit cards don’t charge an overseas transaction fee, so do your research, especially if you plan on traveling a lot.
Credit card charges are not always inevitable. Do your best to avoid the above fees so that you can pocket more of your hard earned money for yourself.