credit card advice
Ah, the dream of completely fee-free, 0% credit card!
Unfortunately, when you wake up, you realize you’re paying all sorts of fees on that old card you still use. You finally resolve to get a new card that will be kinder on your bank account, but you’re not sure how to proceed.
Here are six ways to cut credit card fees down to size, or better yet, simply eliminate them:
1. Annual Fees
This is the greediest of all the fees. It’s simply extra money the credit card issuer collects, perhaps to help pay for its fancy headquarters. If you see an annual fee attached to a card offer, and you don’t think the perks are worth it, keep on looking.
There are dozens of great credit cards out there that charge no annual fee. Don’t be confused by cards that waive the fee in the first year only — that’s just a marketing ploy.
2. Cash Advance Fees
There is no problem with this fee because as a responsible consumer, you are NEVER going to get a cash advance. Credit cards charge a fee of up to 6 percent to advance money and then charge interest on it.
Do this instead — add a debit card to your wallet and always keeps some emergency money in your bank account. Debit cards are fee- and interest-free. ‘Nuff said.
Or, if you really want cash, you could simply go to a retail or grocery store that offers cash back, buy something cheap like a stick of gum and then ask for the cash you need without the excessive fees.
3. Balance Transfer Fees
This is another marketing ploy. Some credit cards promise a period of 0% interest on balance transfers, say six months. That’s fine, until you learn that (a) you have to pay a 4 percent transfer fee and (b) the interest rate zooms up to 15, 20, even 29 percent after the end of the grace period.
If you don’t pay off the balance during this period, you’ll have to pay retroactive interest charges. A better idea is to negotiate a lower interest rate with your card provider, under threat that you’ll transfer out otherwise.
Credit card issuers don’t mind a little competition, so don’t be afraid to ask.
However, if you want to consolidate debts on an account with a lower interest rate, and if you can pay off the balance in full before the introductory period, then a balance transfer card may ultimately be a good idea.
4. Late Payment Fees
OK, this one is on you. Yes, these fees are ridiculous because you are already being charged interest. However, the solution is simple — set up autopay with your credit card issuer.
This gives the issuer permission to transfer at least the minimum payment out of your bank account each month. The transfer is free and you’ll never miss a payment again — just be sure to keep a little extra money in your bank account.
5. Finance Fees
This is the APR the credit card charges on balances that you haven’t fully paid by the due date. Each issuer must disclose its APR, but beware of those that charge interest every day, not just after the due date.
The best solution is to curb your enthusiasm for spending more than you can pay off each month. The lower your old balance, the less they can charge.
6. Overlimit Fees
If a purchase makes your balance exceed your credit limit, the issuer will charge an over-the-limit fee and, if it rejects other purchases already in the queue, you could be hit by a returned payment fee.
Once again, the solution is to control your spending. If you have a good credit history, ask your issuer to increase your credit line.
Shop around for the best credit card deals. You might save hundreds a year in unnecessary fees.
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