New Credit Card Study Says Watch Out For These Six Fees
In an analysis of over 100 popular cards, it has been observed that the average credit card charges six potential fees. The First Premier Bank has been ranked at the top with a holder having over 12 possible fees. The most friendly on the other hand is the Pentagon Federal Credit Union Promise Visa, which charges just one. While a credit card can end up giving a holder more burden than benefits, the good news is that all of those fees can be avoided with smart financial habits since the most common fees are pretty easy to dodge. Here are some tips:
Avoiding Annual Fees
In a close study of 100 credit cards, only 24 actually charge an annual fee. While these annual fees can get you a lot of perks from some issuers, it can do more harm than good for some people.
If you happen to be using a card that charges annual fees, you can try and call the issuer and ask if you can have the fee waived or reduced. Another observation shows that when cardholders called their creditors to negotiate a lower fee, around 8 out of 10 were successful. If your credit card issuer would not agree, you might want to consider closing your account. However, do be aware that doing this can negatively impact your credit score. You can also lessen the damage by making sure that you have other open cards with a good credit rating so you do not suffer its adverse effects.
Always Pay on Time
All creditors would not be too happy if you do not pay on time. If however, you have developed such a habit of not paying on time, you might be repeatedly charged for late payment fees. In 2015, late payment fees were capped at $36, but they were increased to $38 in 2016.
Getting charged this much just for delaying payment which you would make anyway is a huge waste of money. However, you can avoid getting charged just by simply paying on time. If you pay late because of oversight, a good option would be to set up an autopay from your bank account for the minimum due on your card.
Avoid Balance Transfer Fee
You get charged a balance transfer fee when you move debt from one credit card to another. You might think that you are stretching your debts but in reality, you are increasing your burden and will pay more in the long run. By doing this, you typically get charged for 3% to 5% of the amount that is transferred. There are some cards which offer 0% interest on balance transfers for a certain amount of time however, you have to decide if the savings would make up for the transfer fee.
Cash Advance Fee
When you borrow cash against your credit card, you get charged a cash advance fee. Most of the time, this runs from 2% to 5% of the amount advanced. While this looks fairly manageable, this can cost more after all is said and done. ATM fees can apply and a lot can charge higher interest rates on advances rather than on purchases.
If you are in need of cash in an emergency, the best option would be to get it from your savings account. You should make sure that you have your emergency account in check with enough money to cover a reasonable length of time for expenses.
Foreign Transaction Fees
These kinds of fees are getting less frequent, as a close observation reveals that only around half of all credit card companies charge this fee as compared with almost 80% of all cards that charged this just in 2015. If your credit card company charges this, you could be set back for an additional 3% more to foreign transactions. This is pretty big since you could use that amount for other things.
To avoid this fee, just sign up for a credit card that does not charge it. There are a lot of credit cards that are marketed towards travelers. Not only can you avoid this fee, those offer great rewards as well.
You can surely enjoy all the benefits that a credit card has to offer while avoiding or minimizing the fees that come with it. Just be mindful of all the charges that come with your credit card and you should be able to keep your debt to a minimum. Do you know any other fees and how they could be avoided? Hit us up in the comments below
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