Credit cards are an incredibly popular method of payment, as they offer both the security and convenience that is lacking in cash and checks. In addition, credit cards can feature valuable rewards in the form of points, airline miles, and cash back that you can’t find in any debit card.
But on the other hand, credit card issuers can impose multiple fees on cardholders. To get the most from your credit cards, you need to earn the most valuable rewards while avoiding as many fees as possible. Here are some of the most common fees, and some easy ways to avoid paying them:
Annual fees
The best way to avoid paying an annual fee is to choose from one of the many cards that has no annual fee. There are some cards that have an annual fee that can be worth paying in order to earn lucrative rewards. But to earn greater rewards and avoid annual fees, there are a few tricks. The first is to use credit cards that offer their first year’s annual fee waived, which gives you a year to learn the value of the card. In addition, you can always ask your credit card issuer to waive the annual fee, which some will do in order to retain a valuable cardholder. Finally, you can indicate that you will cancel the card if your annual fee is not waived, which can often motivate the card issuer to do so. When cancelling a credit card, most issuers will refund annual fees billed within 30-60 days and offer a pro-rated refund after that.
Late fees
There are some cards like the Citi Simplicity that have no late fees, and others such as the Chase Slate and Discover it card that will automatically waive the late fee when cardholders make their first late payment. But, nearly all credit card issuers will waive late fees for customers in good standing who make an occasional late payment. All you have to do is call and ask, yet I wouldn’t make a habit of it. You would be better off scheduling automatic monthly payments through your bank or your card issuer to ensure that you never make a late payment.
Foreign transaction fees
Many credit cards impose a 3% foreign transaction fee on all charges processed outside of the United States. These are not currency conversion fees, as you can be charged this fee when doing business with a foreign company in US Dollars, or when visiting a country where US Dollars are used. The easiest way to avoid these fees is to choose a credit card that has no foreign transaction fee. For instance, all Discover and Capital One cards do not have a foreign transaction fee, and there are several other cards that are targeted at international travelers that do not have this unnecessary fee. Examples of travel reward cards without foreign transaction fees include the Sapphire Preferred card from Chase, the Starwood Preferred Guest card from American Express, and the Barclaycard Arrival Plus.
Balance transfer fees
It’s great to be able to transfer a balance to a new credit card and enjoy a 0% APR promotional financing, but nearly all credit cards charge a 3% balance transfer fee. One exception is the Chase Slate card, which offers 15 months interest-free promotional financing on both new purchases and balance transfers, with no annual fee and no balance transfer fee if you make the transfer within the first 60 days of being a cardholder. Another is the Capital One QuicksilverOne card, which has no balance transfer fee and is geared toward people with fair credit scores. The card offers nine months of interest-free promotional financing on new purchases and balance transfers. You can also earn 1.5% cash back on every purchase, but the card has a high ongoing APR of 23.24%.
Cash advance fees
The vast majority of credit cards will impose hefty cash advance fees, which will not be waived. In addition, there is no grace period when it comes to cash advances, so you will be incurring interest on your withdrawals from the day of the transaction. So instead of using your credit card to access cash, carry a debit card of some sort, or an ATM card from your bank account. There are a number of prepaid debit cards that have no monthly fees and offer access to cash from ATMs at little or no cost. To be extra safe, request that your credit card’s cash advance limit be set to zero, and don’t bother to create a PIN.
Interest charges
The easy way to avoid interest charges is to always pay each statement balance in full and on-time. Doing so allows you to take advantage of your credit card’s grace period, which is typically 21-25 days long. However, if you accidentally make a late payment, you can contact your credit card issuer to request that interest charges be refunded, exactly as you would with late fee. In most cases, card issuers will refund the interest charges for an occasional late payment, so long as your account has been in good standing.
By understanding all of the ways to avoid credit card fees, you can minimize your costs while utilizing all of the features that you enjoy.