Credit Card Fees to Watch Out for
Credit card fees to watch out for
If you’re not staying ahead on your credit card monthly bills and balances, sneaky credit card fees can start to appear in your account. It’s important to watch out for these fees to ensure you are getting the most out of your credit card.
Although the fees may vary depending on your creditor, the following are common credit card fees to watch out for.
Various credit cards may require an annual fee just for the privilege of using that card. Oftentimes, these are travel credit cards that may offer greater sign-up bonuses and rewards than cash back cards. As a card user, you may be against annual fees entirely or you can decide if you think you can earn enough rewards each year to outweigh the annual fee. Southland credit cards do not have annual fees.
Balance Transfer Fee
A balance transfer fee is charged when you move a balance from one credit card to another. The typical fee is 3% to 5% of the amount transferred. Some cards, like Southland's, offer a 0% introductory APR on purchases and balance transfers, which can minimize the cost of moving a balance. Make sure you understand your new interest rate and the balance transfer fee before you decide to transfer a balance.
Cash Advance Fee
If you borrow cash against your credit card, you will pay a cash advance fee. Many cards charge a cash advance fee of 2% to 5% of the amount borrowed. And, cash advances can end up costing you more with ATM fees and higher interest rates.
If you need cash fast in an emergency, the best option is to pull it from savings. Aim to have an emergency fund with enough money to cover three to 12 months worth of expenses. Another option is to take out a personal loan, which may have better terms than cash advance fees.
Foreign Transaction Fee
Many credit card companies charge a fee for transactions performed abroad -- usually 2%-3% of your total purchase. This is to cover the cost of converting foreign currency to U.S. dollars. However, most travel cards do not. If you are a frequent traveler, make sure to find a credit card that waives foreign transaction fees.
Late Payment Fee
A late payment fee is charged when you don’t pay the minimum balance on your credit card bill on time. Although the minimum amount may vary between companies, they can all be easily avoided by paying your bill on-time.
An over-limit fee is charged when your card's balance exceeds your credit limit. The Credit Card Act of 2009 prohibits issuers from automatically enrolling cardholders in programs that cover them when they exceed their limit, thus triggering an over-the-limit fee. However, cardholders may opt in to the fee, usually up to $35, to keep transactions from being rejected at the register. Just make sure to avoid these fees by staying well below your maximum limit.
Returned Payment Fee
If you don’t have enough money in your bank account to pay your scheduled credit card bill, your payment may be returned. As a result, your card issuer may charge you a returned payment fee, usually up to $40. Avoid these fees by ensuring that you have sufficient funds in your account before scheduling payments.
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