The Secret to Avoiding Credit Card Fees

Thursday, July 18th, 2013
Updated: July 18th, 2013
The content is accurate at the time of publication and is subject to change.

No one likes to pay more for something than they have to—especially when the thing they are paying is credit card fees. Credit cards are supposed to make our lives easier, provide a convenient and safe payment method, and even pay us in the form of rewards. So getting charged fees isn’t something anyone is happy about. Fortunately, there are ways to avoid being charged credit card fees.

The secret to avoiding credit card fees is to know what your card charges fees for. After all, if you don’t know about it, you can’t avoid it. Here are the three most common fees that credit card customers get charged, and how to avoid them:

  • Annual fee: This one is the easiest to avoid, and the only one that can sometimes be worth paying. If you do not wish to pay an annual fee for your credit card, pay close attention to the terms and conditions on the card before you apply. All credit card issuers are required to tell customers whether or not they charge an annual fee. Sometimes an annual fee is waived for the first year you have the card; if so, be prepared for that fee when your first anniversary rolls around. If you have a rewards credit card that gives you a big percentage of cash back or big travel bonuses, the benefits you receive might be worth more than the annual fee. Do the math and figure out if an annual fee is worth it in that case.
  • Late payment fee: Most credit cards charge a fee of around $35 if your payment is not received by the due date each month. Look at your statement and find out when your payment is due. The payment due date will be the same each month, so once you know what it is, it should not be too difficult to remember. Many issuers will let you choose your own due date, as well. If the date falls during a time of the month that is not very convenient for you, choose another one that works better. Set up text and email alerts to remind you when your due date is approaching, and if you mail your payment, send it at least a week in advance of the due date. Paying online is faster and provides you with confirmation when your payment clears.
  • Over-the-limit fee: The key to avoiding an over-the-limit fee is knowing what your credit limit is and keeping close track of how much you charge to your card. Some people mistakenly believe that if they try to charge something that goes over their credit limit, the transaction will not go through and they will be protected from this fee. In some cases, that is true. However, it is more common for the transaction to go through, but for your credit card issuer to charge you an over-the-limit fee, which averages $35. It’s best for your credit score if you stay under 30% of your credit limit anywhere—so try to keep your balance low enough that this is never a worry. For example, if your credit limit is $5,000, try to keep your balance below $1,500.

If you read the terms and conditions of your credit card carefully and know what fees your credit card charges, you never have to pay another one again. It just takes some vigilance and careful use of your card.

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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