Five Unnecessary Credit Card Fees You Can Avoid

Credit card companies are in business to make money. They don't run charities for down-on-their-luck consumers, and they don't have access to the Money Fairy who provides them with funds to give their customers. Instead, they make money off fees and finance charges paid by the people who depend on them. Of course, this makes credit card companies sound evil, which they are not.

However, you can find yourself going broke over credit card fees, particularly when you don't know how they work. When your statement comes in the mail, you might find yourself unpleasantly surprised by the total owed, which is to be avoided wherever possible.

Following are five credit card fees you can avoid if you practice due diligence in maintaining your accounts.

1. Late Fees

If your credit card payment isn't sent and posted by the due date, you will be charged a late fee, which in some cases can be up to $39, depending on your balance owed. Late fees not only cost you in the present, but they can also be ammunition for the credit card provider to raise your interest rate and increase your finance charges.

To avoid late fees, you can sign up for electronic alerts with most credit card companies. Six or seven days before you minimum payment is due, they will send you an e-mail reminder. It gives you sufficient time to post a payment and can save you plenty of money in the process. You can also sign up for automatic payments with some accounts, which are withdrawn directly from your checking account.

2. Over-the-Limit Fees

When the balance on your credit card exceeds your credit limit on the account, you will be charged an over-the-limit fee. This can happen if your forget about interest charges on your purchases, or if you forget how much you've already charged during a billing period. Unfortunately, most credit card companies will allow you to go over your limit without declining the card, ostensibly to collect the over-the-limit fees.

If you want to avoid this scenario, you can request that purchases that exceed your limit be denied. Some financial institutions-such as WaMu and Bank of America-allow this to help protect their customers. Overdraft protection is another option, but fees are usually associated with this service as well.

3. Balance-Transfer Fees

Another credit card fee to avoid is the balance-transfer fee. In addition to charging interest on the amount you transfer, your credit card will also be charged a fee under most accounts. The amount varies from 1% to 3% of the total amount, though it is usually capped at around $75. Unfortunately, these fees can also put you over your credit limit (see above).

To avoid balance-transfer fees, find a card that doesn't charge them. Although they are few and far between, some cards have special balance transfer rates for an introductory period, and you can consolidate your debt without incurring any fees.

4. Foreign Conversion Fees

When you use your credit card in another country, the credit card issuer (Visa, MasterCard, etc.) will charge you a foreign conversation fee, which is usually around one percent of the total purchase price. In addition to that, your financial institution will charge you another fee (between two and three percent) to add insult to injury.

Some credit cards, such as the Discover More card and a few Capital One cards, don't charge foreign conversion fees. Apply for one of these and use it exclusively while out of the country to avoid these enormous credit card fees.

5. Payment Fees

A growing trend among credit card companies is the push for customers to pay online. With many companies, you get charged a fee ($3-20) if you insist on paying by telephone. The fee will be charged to your account and payable on the next billing cycle.

If this is the case for you, avoid the fees by signing up for an online account and paying over the Internet. This is easier-no hold times-and you won't be charged extra for the convenience.

Source: Credit & Debit Cards