Understanding and Avoiding Credit Card Fees

When you have a credit card, it can be easy to get used to the easy money that the service provides. It’s true that spending can quickly get out of control. However, even people who think that they have taken all the steps to manage their money responsibly can be surprise by excessive credit cards fees. With so many hidden or hard to understand charges, it’s important to get a handle on this money drain and make sure that your credit really is working for you. Here’s just a few things to look out for.

Late Fees

This fee is pretty standard among all credit card companies. Your provider wants to encourage you to pay on time and penalizes you if you don’t. Companies make a substantial part of their profits on these credit cards fees. The best way to avoid this is to pay on time. Some companies actually have a specific cut off time that they want to have your payment in hand and will charge the fee if it is even an hour later than specified. Try setting up an automatic payment schedule with your bank. If you get in a real bind, you should be able to call your company and pay over the phone with an electronic check. Just make sure that using that service won’t incur a processing fee as well. All cards have some kind of late fee attached.

Balance Transfer and Cash Advance

Most companies offer the convenience of using a cash advance service. You can use convenience checks sent periodically with your statement to pay bills, buy groceries or even write yourself a check. This service, however, is not free! There are credit cards fees associated with each transaction. If you transfer a balance to get relief from a high annual percentage rate, you can also expect to see a little extra charge. You will need to determine whether the fees associated with these transactions is worth the cost and use the services sparingly, at best. Most cards offer a cash advance service. If you are determining whether to use a balance transfer, check carefully to see what the associated fees are.

Over Limit Fees

Another category where you credit card will try to catch you unaware is your actual credit limit. It used to be that once you reached your particular credit limit, the company would cut off access and your card would be denied. However, the companies now usually let the transaction clear and just charge you credit cards fees for going over your limit. First, if you consistently live that close to the edge, you should really take a good look and your finances and manage your money better. To avoid it in the future, put away cards that you know are getting close to the limit. If you are unsure whether this may apply to your particular card, ask what the policy is on going over your credit limit.

There are several other ways that companies can try to get a little extra money out of you. Some will charge you to maintain your card even when it’s free from a balance. Others may claim that there are administration costs. If you feel you are being taken advantage of, you don’t have to keep your card. A company can not report negatively on your credit report for closing a card that is free and clear, regardless of what they may claim. Also, if you are a good customer, it never hurts to ask for credit cards fees to be removed or reduced. If you have a history of paying on time, your bank will likely be happy to remove a one time late fee to keep you as a happy customer.

How Do You Avoid Credit Card Fees

Have you ever paid a fee related to your credit card? Statistics show that you have if you are like most Americans. Some credit card fees are not a result of misuse but a normal charge by the card company. One example of this is an annual fee. You can often negotiate your way out of annual fees but we can talk about that in another article.

What I hope you will take from this article is how to avoid credit card fees. Fees and interest are two different things. While you should avoid both as much as possible, let’s just look at fees.

The first word of advice is to read the fine print. The words are small and hard to read but find a magnifying glass and read it very closely. I have often advised people to help themselves by summarizing the fine print. Make a list of the important points. All of the fees are going to be buried in the fine print so read slowly and carefully. You aren’t going to avoid the fees if you don’t know the rules.

Have you ever wondered why a credit card issuer charges fees? There are two reasons: First, it helps the card issuer offset the risk of high risk borrowers. If you have a history of paying late, you and others like you represent a higher risk to the card company so they charge late fees in case their high risk borrowers end up filing for bankruptcy or, for some other reason, don’t have the ability to pay. This is important information to know because it tells us that we do not want to find ourselves in that high risk category.

The second reason that credit card companies charge fees is simply to earn more revenue. Each time you use your credit card, the retailer is charged 1% to 3% of the total purchase. This is the primary way that a credit card company earns revenue. They also make additional money by charging annual fees, interest and fees. Each year, as Americans find themselves more and more in debt, these fees are making card companies more revenue.

President Obama recently signed in to law the Credit Card Bill of Rights which puts limitations on how card companies can charge credit card fees but these fees can still mount up very quickly. Even if you have to pay the minimum payment, pay it on time to avoid the fees.

Most card issues will charge a late fee the day after the grace period expires. These fees are often around $35 or more depending on your card balance. On the flipside, the credit card industry is becoming increasingly competitive and because of that, the consumer is winning. The card companies are more concerned with keep their reputation positive so fees are charged with extra care.

What is the best way to avoid credit card fees? Of course the answer is to pay your bill on time. If you are mailing it, send it a week in advance to allow ample time for the payment to arrive and be processed. Remember that although many issuers will waive late fees if your late payment is an isolated incident the best thing to do is avoid having to involve customer service. It will most likely cause you a lot of time and stress to get this resolved so keep yourself out of the possibility.

As is the case with most dealings with banks on the subject of credit card fees, the best thing you can for yourself is to practice good financial habits. Get yourself in to the mindset that there is no excuse for paying late especially since it’s going to cost you a lot of money.

7 Things You Need to Know on How to Avoid Credit Card Fees

Things are always changing in the credit card industry. One of the latest and most widespread trends in the business is the increase of fees and the addition of newly created fees. And let’s face it, credit cards are in the business to make profit – just like any business. They’ve found that people want lower interest rates and more rewards with their credit cards and one of the ways they can deliver those advantages to their customers is by making up the profit in other areas, such as fees.

But that doesn’t mean that you as a credit card holder must take getting nickel and dimed to death for granted. Here are the 7 things you need to know on how to avoid credit card fees…

1. Mail That Check Early – Credit card companies seem to be sending out account statements later than ever before and requiring payments earlier at the same time. This causes late payments and therefore increased fees and extra charges too. If you pay by mail, send that check right away to avoid any problems!

2. Pay Online Every Time – An even better solution than mailing the check early is to pay your bill online. This helps to assure that your payment doesn’t get lost, delayed, or anything else that can happen to a check in the mail. Usually, paying online a few days before the due date is your very safest bet.

3. Keep a Schedule and Set Reminders – Life is hectic these days and staying on top of every last bill can be quite a daunting challenge. Don’t let them get the best of you. By putting together an organizational reminder system to pay each of your bills on schedule, you’ll be removing a stressor from your life and avoiding late fees at the same time.

4. Read the Fine Print – The use of annual fees by credit card companies is becoming really popular again. You’ll see this trend especially with rewards cards or other credit cards that give you significant incentives for signing up. Be sure the rewards you’re receiving will be worth the annual fee charged to your account.

5. Don’t Make Cash Advances – Fees for taking a cash or ATM advance from your credit card can be really pricey. In fact, a 3% fee is not unusual at all. Any convenience usually comes with a price and this situation is no different.

6. Beware of Balances Transfers – Charging a large set fee or charging a percentage of the balance to be transferred is common practice with balance transfer offers nowadays. Again, the advantage of transferring a large balance to a low or zero interest card usually far outweighs the fee charged, but sometimes the fee can be avoidable.

7. Keep Copies of Your Statement – Hopefully you’ll never need to go back and retrieve old credit card statements for any reason. But if the situation does arise and you don’t have the past statements tucked away on file somewhere, credit card companies will gladly produce a copy for you – for a fee of course!

Three Simple Steps on How to Avoid Late Credit Card Fees

Here is a fact; did you know that there are some card companies purposely send bills late in the billing cycle so that cardholders have no choice but to submit their credit card payments within days after they receive their bills in order to pay it on time? It is a technique that many card companies use to increase the amount of money they make through late fees.

So with the odds stacked against your favor, how can you avoid paying late fees?

Fortunately, you can do this in a variety of ways:

Pay Online

Virtually every company allows cardholder to make card payments online. Doing so will not only save you time, you are also paying your bills in the most convenient way possible. Sending payments the traditional way will take more time. The bills have to be transported for roughly three ways and it takes another five to seven days to be processes by your card company. This is the reason why your payments are not able to reach its destination on time.

Arrange Automatic Payments

You can also arrange your bank account to automatically pay credit card fees and payments through checking account on a specified date each month. On the other hand, if your card company do not offer this method of payment, your bank might have a bill pay feature that you can use. Just make sure that you select a date a few days before the bill is due and let the card provider draft your checking account to make the payment.

Prepare in Advance

If you are the type who do not like to pay online or you do not like the idea of allowing credit card companies to access your account to pay themselves, there is still another option to you can use to make card payments. However, this will only work if you know how much your minimum payment is each month. Prepare your check or money in advance and have it ready to mail out or make a habit out of writing the check as soon as you receive the bill. Do what you can to mail out your credit card payments the very next days.

How To Avoid Credit Card Fees

Credit cards are an almost essential part of many people’s lives, because they allow you to increase your cash flow and have more financial freedom. However, if you use credit cards too much or in the wrong way you can be stung with large credit card fees and penalties. Avoiding these fees will help you to cut the costs of using a credit card and get the most out of its benefits. If you want to know how to avoid these credit card fees then this article can help you do just that.

Grace periods

A grace period is the time you have to pay off your credit card debt before you start paying interest. Although many cards used to have good grace periods, these are reducing and some have none at all. This means you will start accruing interest from the moment that you make a purchase. If your card does have a grace period, then the best way to avoid extra interest charges is to pay off the balance in full before the end of each grace period. This will mean you can use your credit card without having to pay interest.

Late fees

One of the most expensive fees you might have to pay is for late payment. Although you might not think this will apply to you, it is very easy to be a day or two late with payment, especially if you have a lot of cards and bills. Late payment fees can be as much as £35, and if you are near the end of your credit limit could trigger other penalties such as over limit fees. Before you know what has happened you might owe £100 in fees, which is basically money wasted. To avoid these late fees, try and pay your bill by direct debit if possible, or use online banking to speed up the process of paying your bill. This will ensure that your money arrives on time. If you think you are going to be late with payment, try calling your credit card company to inform them. If they know it will be late they might be able to waive the penalty fee, especially if you usually pay on time.

Annual fees

Another fee that can cost you money is the credit card annual fee. Although this fee used to be commonplace, less and less cards are now charging an annual fee. Unless you have a gold or platinum card, then you really shouldn’t have to pay an annual fee. Although there will be some issuers charging annual fees, unless the benefits you get for the fee are significantly more than the fee you should find another card.

More than just the fees

Perhaps the biggest problem with some of these penalty fees is that if you have to pay them, it can mean more money lost for you than simply the penalty fee. For example, if you are late with payment a few times, the card issuer may remove your low interest rate. This could end up costing you a lot of money, especially if you have a large balance on your card. In order to avoid these fees, make sure you carry out your payment obligations, and also read the contract in full before signing for the card. That way you will know what the fees are in case the worst should happen.