A look at credit card fees

As a credit card user, it is worth looking into the hefty fees charged by the credit card companies. Credit card issuers charge all kinds of fees. If as a credit card user you don’t know what those fees are, it will be difficult for you to avoid them. So watch out!

Credit card fees can add-up to greater amounts if you are not careful with the use of credit cards.

Know about these common credit card fees:

• Annual fee. This is what you pay to own a particular credit card for one year. The annual fee generally ranges from $20 to $75.
• Over-the-limit fee. This can be as much as $35 per occurrence. Basically, if your credit limit is $5,000 and you charges exceed this amount, you will be charged the over-the-limit-fee. When you make purchases, read the amount before signing. If there is a mistake in the amount (which is typically when the amount is entered manually), don’t sign until the mistake is fixed. Otherwise, this can result in over-the-limit-fee. Suppose your available credit is $80 but the amount mistakenly entered for your credit card purchase is $180. If this transaction goes through, you are likely to be charged the over-the-limit-fee.
• Balance-transfer fees. These fees are charged to your account whenever you request a balance transfer.
• Cash advance fees. These fees are imposed on your credit card account when you receive cash with your credit card. In essence, you use the credit card as if it was an ATM (check) card. For doing so remember you start paying interest immediately and the cash advance fee can be 3% of the amount dispensed.
• Foreign fees. This applies to your account when you make purchases in foreign currencies. For example, if you use a US-issued credit card with or at a foreign vendor (websites, shops, and so on), you will pay the currency fee. This fee can be as much 3% of the amount charged.

Taking cash from ATM machines with a credit card can cost big.

There may be other fees particular to your credit card that you may need to watch for. In most cases, these fees can be avoided. Credit card companies charge the fees to boost their income. As a consumer, it is in your best interest to avoid paying such fees. Here are some ways to avoid credit card fees:

• the best defense against paying additional fees is probably avoid using a credit card. If you decide to use a card, use it wisely. If you have multiple credit cards, use the one that charges no or minimum fee.
• If you know you will be frequently making charges in foreign currencies, get a credit card that charge no or low fees for such purchases. Also, try consider using a domestic vendor.
• Avoid making charges that will exceed your credit limit. When it comes to credit cards, the idea is to borrow less than your borrowing limit, not more.
• Consider using cards that don’t charge annual fees. If you save, however, more on interest by paying the annual fee, it is probably worth paying the fee.

Posted on: 3:31:28 PM EDT October 21 2007

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