Five Tips for Avoiding Credit Card Fees

Here are some tips on how you can avoid paying too much money to your credit card company through different kinds of high credit card fees.

1. Pay off your full balance each month. This will keep you from being charged late payment fees and overdraft fees, in addition to saving you money on credit card interest rates.

2. Even if you only make your minimum credit card payments, pay early! Sending your payment even just a few days earlier than normal will ensure that you don’t get charged late fees if your cheque takes longer than usual to arrive or be processed by your credit card company. Even if you pay online, some payments can take several days to clear your account (especially if you make the payment over a weekend or a holiday), so paying earlier can help you avoid unexpected late fees.

3. Pay all of your other bills on time. Many consumers don’t know this, but if you make a late payment on other bills (from other credit cards to your utility bills), your credit card company will often have a clause in your contract or terms of service that allows them to increase your interest rates.

4. Avoid getting cash advances from an ATM with your credit card. Try to keep enough cash on-hand when you’re able to access it directly from your bank. Taking a cash loan from your credit card generally incurs a cash advance fee, much higher than typical fees to use the credit card directly for purchases.

5. Transfer your credit card balance to a lower-rate card. Some consumers regularly use no-interest credit cards, and then transfer their balances to other 0% interest credit cards when the first card is about to be subjected to a hiked interest rate. The benefit is that you can continually have a no-interest revolving credit account available to you. The risk is that some credit card companies will charge you a balance transfer fee on balances transferred to their card, which can be high enough to make the lower interest seem negligible.

While those tips will help you to avoid some of the most common credit card fees to plague consumers, there are a few others you should look out for:

If you’re not sure that your bank account has enough available funds for your credit card payment, don’t send the cheque yet. You’ll incur a hefty dishonour fee.

Some no interest credit cards will charge monthly fees such as a minimum finance charge, taking on an extra expense consumers may not be aware of. Always review all fees carefully before applying for a new credit card.

If you make a lot of purchases overseas (whether online or while travelling), understand that you may be subjected to currency exchange fees. You may be able to get better rates by looking for credit cards targeted specifically to world travellers.

The best defence against high credit card fees is knowledge. Know what you’ll be charged and when, and do what you can to keep your fees and interest rates to a minimum.

Article correct at its author date: June 2008. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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