Avoiding Credit Card Fees

Having a credit card is supposed to make your payments simpler, not more difficult. Sometimes, though, it might feel like it's the opposite. If you're just starting out with a credit card, or if you're trying to minimize your credit expenses as best as you can, you need to know how to avoid credit card fees. These seemingly sneaky fees might surprise and upset you, so read up now before you're hit with any!

How to Avoid Credit Card Fees

The best way to avoid fees is to know what you're getting into. Carefully read all the paperwork before signing it, and make sure you ask a representative at your financial institution if you're unclear about something. Each credit card is different, but there are a few common fees every cardholder should know how to avoid . . .

Annual Fees

This fee is one your card issuer charges simply for having the card, ranging anywhere from $15 to $500. This is not something all credit cards have, though—it's mainly on cards used for travel or ones with plenty of rewards options, because they offer so many benefits and bonuses. That said, you can avoid this fee by applying for a card without it (simple enough, right?). If you are looking to get a credit card with an annual fee, take some time to do the math: will you take advantage of enough bonuses that it will outweigh the cost of the annual fee? If so, this "fee" could actually work in your favor. If not, keep shopping around.

Over-the-Limit Fees

Your card issuer charges an over-the-limit fee when your balance is greater than your card's limit. According to the Credit CARD Act of 2009, you have a say in this—you can authorize your issuer to allow you to spend more than the limit (incurring the fee), or to prevent you from doing so. If you choose the latter option, the purchase pushing you over the limit will cause your card to be declined at the register, but you will avoid the fee.

Cash Advance Fee

When you withdraw cash using your credit card, you're technically borrowing cash against the card, which comes with a cash advance fee. These vary from card to card, but are usually between 2% and 5% of the money withdrawn, and they often have higher interest rates than ordinary credit card purchases. Again, know what your fee and interest rates are for this situation when you apply for your card. When you want to withdraw using your credit card, weigh the fees against the convenience of the withdrawal to see if it's worth the expense.

Late Payment Fees

Many cardholders face a late payment fee one time or another. The most frustrating part of this fee is that it takes diligence on the cardholder's part each and every month—it's not anything you can opt out of when you're applying for the card. It's just a matter of paying your bill on time. If you're having trouble getting your payments in and keep facing late fees, you may want to set up automatic payments, set reminders for yourself,  or change your payment due date to a day more convenient for you. There are plenty of ways to avoid paying your bill late.

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