8 Different Fees associated with Credit Cards and ways to avoid them

8 Different Fees associated with Credit Cards and ways to avoid them

February 6, 2017 7:48 pm Published by Leave your thoughts

Credit Cards are already a headache to most of us. The main reason being the many different Fees associated with Credit Cards.

Do you think you can avoid paying all of these Credit Card Fees? Not all of them.

You know what, if you avoid paying some of these Credit Card fees, that will take you to even worse situations.

But, you can avoid paying most of the Credit Card Fees, if you handle it wisely and I’m going to teach you that today.

Today, we will have a look at the different fees associated with Credit Cards and the possible ways to avoid paying them.

Possible Outcomes of this article

By the end of this article, you will get answer to these questions;

  • What are the different types of Credit Card Fees?
  • What are the possible ways to avoid paying Credit Card Fees?
  • And finally, some of the best Credit Cards which allow you to avoid paying these Fees.

Let’s get started.

Summary of different Fees associated with Credit Cards

  1. Annual Fee
  2. Balance Transfer Fee
  3. Cash Advance Fee
  4. Foreign Transaction Fee
  5. Late Payment Fee
  6. Finance Charge
  7. Over-the-limit Fee
  8. Returned Payment Fee

Let’s dive into them in detail.

#1 Annual Fee

I guess everyone already knows what is Annual Fee for a Credit Card as this is the most common Credit Card Fees.

It changes from Cards to Cards as what it offers to you as benefits, rewards, and perks.

The best part is that most of the Credit Cards, offer a promotional annual fee waiver for the first year.

It worths paying an annual fee for a Credit Card if you have great benefits and can earn lots of rewards from everywhere you spend.

But, what if you don’t want to pay an annual fee and still need everything I mentioned above!

Good news, There are a number of ways to avoid paying an annual fee for your Credit Cards.

What are the possible ways to avoid paying an Annual Fee for Credit Cards?

There are a couple of them and all will get results and it is depending on, how you are going to execute.

  1. Get a No Annual Fee Credit Card for your needs.
  2. Open Premium Banking Accounts to get an annual Fee waiver.’
  3. Negotiate with your Credit for an annual fee waiver

Useful Resource: I have 5 more ways to avoid paying an annual fee, in another article here at CAD Economy.

Some of the best No Annual Fee Credit Cards are;

#2 Balance Transfer Fee

What is Balance Transfer?

Everyone knows that Balance Transfer means, transferring the balance (debt) of any of your Credit Cards to another one, that way you can be debt free from the first Credit Card.

Every time you do a Balance Transfer, you have to pay a certain amount as Balance Transfer Fee to the Credit Card Company which accepts your Old Credit Card Balances.

Unlike the Balance Transfer Interest, it is a one time Fee and it varies from Cards to cards.

But, in most cases, it could be anywhere between 1-2% of the amount of balance you transfer or it could be a fixed amount.

What are the possible ways to avoid paying Balance Transfer Fees?

  • Of course, you can try negotiating with the Credit Card Company but, it is not 100% guaranteed.
  • Even if you get a 0% Balance Transfer Credit Card, you will have to pay a Balance Transfer Fee.
  • Literally, there is no Credit Card Companies are offering zero Balance Transfer Fee. But, you can save money on Balance Transfer Interest, if you get a Credit Card such as MBNA Platinum Plus. It offers 0% Balance Transfer Interest for the first 12 months of Card membership, which is the best in the market.

#3 Cash Advance Fee

What is Cash Advance?

Wikipedia says Cash Advance is a Service provided by most Credit/Charge Card Issuers which allows cardholders to withdraw cash, either through an ATM or over the counter at the Bank, up to a certain limit.

What is Cash Advance Fee?

Cash Advance Fee is a charge that a Credit Card issuer charges a customer for accessing the Cash Credit on their accounts.

What are the possible ways to avoid paying Cash Advance Fees?

I know a lot of people do this when they are running out of money and no one else to support them at the time.

But, you can avoid paying cash advance fees, by choosing the best Credit Cards. I will show you how.

There are two things to know before we dive into that;

Every time you withdraw cash with your Credit Card, you will be charged,

  • Cash Advance Fee (withdrawal charge).
  • Special Interest Rates (Usually a bit higher for Cash Advances than normal APR rates).

So, by choosing a Credit Card which offers low Cash Advance Interest Rates and Cash withdrawal charge, you can pay less or completely avoid paying it.

Let me give you an example. If you choose RBC Cash Back MasterCard, you will get promotional Interest rates of 1.9% for the first 10 months and Cash advance Fee of $3.50 for each withdrawal.

How to use Deposit Transfer Instead of Cash Advance?

Deposit Transfer might be a new term to most of you. It is just the same as Balance Transfer, where you can send cash from your Credit card to a Banking account.

So far, MBNA Platinum Plus is the best in this category, which offers 0% interest rate for the first 12 months of card membership.

But, you will have to pay a deposit transfer fee – 1% of the amount you transfer, which is less compared to a Cash Advance costs.

#4 Finance Charge

What Wikipedia says is that finance charge is the cost of Credit or the cost of borrowing.

Simply, the interest accrued on, and fees charged for owing money (or keeping balances) on your Credit Card.

What is the best way to avoid paying Finance Charge to a Credit Card?

In order to avoid paying a finance charge to your Credit Card, you will need to keep your balances zero or pay in full every month.

#5 Foreign Transaction Fee

What is Foreign Transaction Fee?

Let’s say that you purchased some items while you were traveling overseas or it uses an overseas bank to process the transaction, your Credit Card company will charge you 1-2% fee for the purchases and which is called Foreign Transaction fee.

What are the possible ways to avoid paying Foreign Transaction Fees?

The better way to avoid it is, by getting a Credit Card which charges a less foreign transaction fee.

For Canadians, Amazon.ca Rewards Credit Card is a great choice here.

Amazon.ca Rewards Credit Card comes with No Foreign Transaction Fee and great cash backs for your purchases.

#6 Late Payment Fee

What is Late Payment Fee?

Once started using Credit Cards, some people keep balances on it and some don’t, right?

If you are in the second category, you are good and you can skip this.

But, if you keep balances on your Credit Card, every month you have to make minimum a payment to your Credit Card. Most of you already know these stuff.

What if you miss any of your minimum monthly payments to your Credit Card?

You will need to pay a late payment fee at that time. That completely depending on the Credit Card Company policies.

You now what, this happens not just with Credit Cards, it happens everywhere you have to pay a recurring monthly payment, such as phone, the internet, car insurances, auto loans, etc.

Let me tell you one thing, unlike the other fees I mention here, this one just happens because of our own mistakes.

What are the possible ways to avoid paying Late Payment Fees?

There is no compromise in this category. The only way to avoid paying a late payment fee is, by making on time payments to your Credit Cards.

If in case you missed a payment one time, follow these steps;

Call the Credit Card Company and request them to waive that late payment fee or refund it if you’ve already paid it.

Point out that you are a valuable customer and politely request them to consider the refund request, as it happened for the first time or whatever it may be.

What happens to your Credit if you make late payments?

This is a worst case scenario which can happen if you make late payments to your Credit Cards or any other loans.

Most of these Credit Card companies report our payment histories to Credit Bureaus such as Equifax and the TransUnion, every month.

So, if you miss a payment or made a late payment, that will show up on your Credit Report, may be up to 7 years in some cases.

I have another article here, which tells you more about it – what happens to your Credit if you make a late payment to your Credit card?

#7 Over-the-limit fee

This is a fee charged when your Credit Card Balances exceed the maximum Credit limit allowed to you. Usually, it happens because of carelessness.

The ways to avoid your over-the-limit fee are pretty simple – don’t go over the limits, and spend with your Credit Card, very carefully.

#8 Returned Payment Fee

Let’s say that you wrote a Check to make your Credit Card payments and it bounced due to insufficient funds or some other reasons, it costs you and which is called Returned Payment Fee.

The amount of Returned Payment Fee is depending on the Credit Card Company you are dealing with. It changes from Cards to Cards.

What are the possible Ways to avoid paying a Returned Payment Fee?

  • Always make sure that you have enough money on your bank account to make payment before you write your check.
  • Once the Credit Card company charged you, negotiate to get that refunded. I have done this one time (not for a credit card but it applies the same way mostly everywhere) and they refunded it after considering that it happened for the first time in my account history.

In Conclusion

All these Credit Card Fees could be avoided, either by getting the right Credit Card or by negotiating with your Credit Card company.

Even if it is a single dollar, you are saving it – better than losing it.