When choosing a credit card to add to your purse or wallet, it is crucial to do research beforehand to determine what one will work best for your needs. While researching the basics, you must also look into the common fees attached to credit cards, including the following:
1. Application fees.
When applying for a credit card, you may have to pay an application fee between $10 to $50 per application. To avoid the charge, you can ask to have it waived or look for companies that do not carry the fee.
2. Annual fees.
Many credit cards have an annual fee (often over $25) that will be charged to your account once at the beginning or end of the year. When choosing a credit card, be sure to determine exactly when the charge will be tacked onto your account and compare annual fee costs. In some cases, you may even be able to have the annual fee waived, although this will depend on the company.
3. Cash advance fees.
Depending on the company, you may be able to take out cash advances against your credit card. Yet, just like with any other type of service, you will have to pay the fee for such a transaction. You may have to pay a minimum of $10 or 2-4% per cash advance. To avoid the fee, it is recommended to use cards that do not allow for cash advances or to avoid using cash advances altogether.
4. Penalty fees.
There are several types of common penalty fees that credit cards have, including:
Late fees. If you do not make a payment on time or do not meet the minimum requirement, you will be hit with a late fee that can often be between $25 to $35. To avoid the fee, you must make timely payments and meet the minimum.
Over-the-limit fees. If you spend beyond your credit limit, you will be hit with a charge that can be up to $35. To avoid the fee, you must not spend over your credit limit.
Return check fees. If a payment check is returned to the establishment, you will be charged a return check fee that can be up to $35. To avoid the fee, you must have sufficient funds in your account when writing a check.
5. Balance transfer fees.
If you want to transfer the balance of one card to another, you will need to consider the balance transfer fee. People will sometimes transfer an existing debt to another card with a lower interest rate to help make repayment easier.
6. Finance charges.
Every credit card has a finance charge that will occur monthly if you are carrying a balance. The exact amount of the charge will depend on the card’s interest rate, how much you owe, and how the finance charge is calculated. The best way to avoid the finance charge is to pay off any debt owing before the grace period is over.
Whenever you own a card, it is crucial to always understand the common fees attached to credit cards to best avoid earning even more debt.
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