The One Credit Card Fee You Should Never Pay

Tuesday, September 23rd, 2014
Updated: September 23rd, 2014
The content is accurate at the time of publication and is subject to change.

Late fees. Balance transfer fees. Inactivity fees. Swipe fees. Overlimit fees. Transaction fees.

No one likes paying credit card fees, but some are more painful than others.Some fees are actually worth paying, and some aren’t worth worrying about. Before you decide not to apply for that high annual fee credit card, or turn down a balance transfer offer that has a fee, find out if it might be worth the fee. Here are three common credit card fees that aren’t worth worrying over— plus the one fee you should never pay.

  1. Annual fee – Sure, there are plenty of no annual fee credit cards around. So why pay $35 or more per year for the privilege of carrying a specific card? Easy. Those high annual fee credit cards generally come with amazing perks. Want to rack up frequent flyer miles, stay at hotels for free, or get 6% cash back on groceries year-round? Credit cards with annual fees will let you do that. Concierge service, travel insurance, high credit limits, and great rewards await those who are willing to pay this fee.
  2. Balance transfer fee – If you’re carrying a large balance at a high interest rate, don’t be afraid to do a balance transfer just because there’s a fee. It used to be that there were plenty of no-fee balance transfer offers around, but this isn’t the case anymore. Most transfers will cost about 3% of the amount transferred. However, if you’re currently paying a 19% APR on your debt and you have the opportunity to pay 0% for a year or more, paying that fee is well worth it. Do the math and see how much you’ll save. This is a fee worth paying.
  3. Swipe fee—officially called “interchange fees,” the so-called swipe fees have gotten a bad rap over the last few years. Why? Merchants sued MasterCard and Visa, claiming that they were unfairly gouging them with high interchange fees. The lawsuit dragged on for nearly ten years, and some retailers are still fighting the settlement offer.

Merchant groups have tried to get the public worried about this issue, saying that stores will pass on the fees to consumers. As a result, you may have heard that using your credit card will result in a fee. In truth, most merchants are not passing this fee on to shoppers. The interchange fee is usually between 2 and 3%, and is a transaction fee charged to the merchant or salesperson running your credit card.

If you’re worried about this fee, ask the retailer if there is a discount for using cash. Small businesses or solo entrepreneurs may give a discount, to avoid the swipe fee on their end. However, most big stores aren’t charging you for the interchange fee—so you don’t need to worry about it.

  1. Late fee—This is one of the most annoying fees to have to pay. The good news? You might never have to pay it again. Many credit cards now do not charge a late fee, at least for the first late payment.

If your credit card does charge a late fee, there are two other ways to avoid paying it. The first one, of course, is to always pay your bill on time. Set up automatic withdrawals and reminder texts or emails to ensure your minimum payment reaches your issuer by the due date each month.

In case you do get behind, just call your credit card issuer. Most of them are happy to cancel a late fee if you have a good track record of payment. Picking up the phone or sending an email—even chatting with an account manager from the online account center—can save you that $35 fee.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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