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How to Avoid Credit Card Fees

If you have a credit card, then you know about all the potential fees they come with. From annual fees that can cost upwards of $100 to foreign transaction fees and over-limit fees, having a credit card can be expensive. Luckily, we’ve put together some tips and tricks to avoid paying some unnecessary fees. 

Annual fee

Annual fees are those that are charged yearly. Fees vary but are generally more expensive for credit cards with greater perks. One way to avoid paying an annual credit card fee, at least in the first year, is to apply for a credit card that waives the first annual fee as a signup bonus. In addition, not all credit cards charge annual fees. So if you’re looking to avoid this fee entirely, consider a card with zero fees (please note that these cards tend to come with fewer perks, so it’s worth weighing the potential cost of the perks against the cost of the fee). 

Interest fee

An interest fee, also known as a finance charge, is added to your account when you fail to pay off your balance each month. Interest fees vary considerably, and the best way to avoid them is by paying off your credit card in full by the due date. If you do this, you can likely avoid paying interest the entire time you hold your credit card. However, suppose you are frequently unable to make payments. In that case, it might be worth looking for a credit card that offers a 0% APR (annual percentage rate). Many credit cards offer 0% APR as a promotion, though it may only be applicable in the first six to 18 months of having the card.  

Late payment fee

Late payment fees are a type of administrative fee that credit card companies may charge for late payments. Luckily, an easy way to avoid this fee is to make your payments on time! You can avoid paying a late payment fee if you make the minimum payment amount every month. If you often miss payments by mistake, consider setting up monthly automatic payments or setting a calendar reminder on your smartphone or laptop. 

Balance transfer fee

A balance transfer is the act of moving a credit card balance from one card to another. Financial institutions charge a fee anytime you do this. The amount charged is usually a percentage of the amount you transfer (e.g. 3% or 5%). Some credit card issuers don’t charge balance transfer fees, so look for one that doesn’t if you anticipate frequent balance transfers. It’s also worth noting that many balance transfers aren’t set in stone. Therefore, we recommend calling your bank and asking if there is any wiggle room on the fee. 

Foreign transaction fee

Lastly, foreign transaction fees are charged when you buy something in foreign currency. Not all credit cards charge foreign transaction fees, but if yours does, it could be anywhere between 1% and 5%. To avoid paying a foreign transaction fee, avoid using your credit card abroad. Instead, take out cash in the local currency ahead of time. You can also look for a credit card that offers travel perks like no foreign transaction fees. 

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