Did you know that not all credit card fees should be paid by you? If you want to really enjoy your credit card, you need to understand it completely. It is not just knowing how you should use it so you will not end up owing so much debt. You have to specifically know which credit card fees and charges can be waived so you can save money on your credit card use.
This mode of payment has gone through a lot of bad publicity after the Great Recession. To be honest, it was very unfair for these cards to be given such a bad rep. There is nothing wrong with owning credit cards. In fact, this is the best way that you can maintain a great credit score so you can take advantage of low-interest rates on your future loans. This can prove to be useful when you plan to borrow a mortgage to buy your own home.
The real problem is the way we managed and used these cards. We abused them because we did not know how it should be used to our advantaged. All we knew is to use it as a status symbol – living with the notion that we can buy just about anything that we like.
This behavior is the very thing that will make us pay all the unnecessary credit card fees. At least, it will lead us to incur charges that go beyond the value of what we purchased. You want to avoid this because the average credit card debt of an American consumer is already high to begin with.
According to the article published on BusinessInsider.com, the average American household owes $15,355 worth of credit card debt. This data was from the survey conducted by NerdWallet on 2,000 households. The data also revealed that 3 out of 10 Americans feel embarrassed about the state of their credit card debt.
You need to understand that proper credit management is the key to continue using your credit cards without worrying about falling into debt. The more you know about the cards, the less worries you will have when it comes to using it.
One of the advantages that you will have is learning how to avoid the various credit card fees that are usually imposed on the consumer. Believe it or not, you do not have to pay them if you understand how credit cards work.
5 fees on your credit card that you can avoid paying
Your ignorance when it comes to credit cards is actually being exploited by credit card companies. They will let you believe that you have to pay for their fees and charges if you want to enjoy the perks of owning their card. In fact, CardHub.com reported that creditors exploit the weakness of consumers when it comes to getting cash. They know that when the urgency to get cash happens, consumers will do just about anything to get it. Creditors are taking advantage of this by imposing high cash advance fees – up to 4.02%. This is practically $14.51. If you are in the midst of an emergency, you will pay this amount even if the truth is, you do not have to.
Given that, you should know these 5 credit card fees that you do not have to pay.
- Cash advance fees. Since we already mentioned it, you need to know that you do not have to pay the high cash advance fees. The key to avoid this is simply to not rely on credit cards for cash. That is just not how it is supposed to be used. It is better to use your debit card instead of your credit card.
- Balance transfer fees. There are credit card fees that seem like worth paying for. This is probably one of them. If it will help you save money when it comes to debt payments, this should be all worth it. But nevertheless, there are balance transfer cards that will not charge you with this fee. It takes a bit of research but you should be able to find a card that will not charge you this fee.
- Late payment fees. This is one of the fees that you should never pay for. It is not something that you need to negotiate with your credit card company. You can avoid paying this fee if you simply practice good credit card behavior. Never make late credit card payments. Use the card for purchases that you can afford to pay for. That way, you do not have to worry about paying beyond what you budget can afford.
- Annual fees. Most credit card companies charge annual fees that credit card holders have to pay. The good news is, not all card accounts should be charged with this fee. In fact, some new card accounts are offered without annual fees. This is meant to encourage new card holders into applying. Of course, this annual fee will not be free for long. This is one of the ways that creditors make money on your account. But even if they tell you that your second year will be charged with this fee, you can say no to it. You can ask them to waive it again or you will take your business to another credit card company. If you are a good credit card holder because you pay your dues on time, they will probably agree to waive it.
- Foreign transaction fees. Finally, the last of the credit card fees that you can avoid paying is foreign transaction fees. It is easier and safer to use your card when you travel abroad. But sometimes, you get charged with high fees. This can be avoided by using credit card accounts that do not charge these fees. Fortunately, a lot of creditors have stopped charging this fee. If you make a lot of foreign transactions, it is wiser for you to open an account that does not charge this fee.
As you can see, these credit card fees can be avoided if you know how to do it. You really have to make time to educate yourself about these fees so you will know how to manage your credit card properly.
How to use your credit cards without falling into debt
The key to manage your credit card well is to educate yourself about it. According to an article published on CNBC.com, Millennials are being hurt financially because of credit card ignorance. An analysis done by NerdWallet said that the credit score of this generation is low – and that is because of wrong credit decisions.
If you want to avoid credit card debt, not using your card is not the answer. You can continue using your card but make sure you follow these rules:
- Guard your credit card balance. Start by guarding your balance. You need to keep it low as much as possible. Try to keep it from growing because a high balance to limit ratio is not good for your credit report. And if you allow your balance to grow, you might find it difficult to pay it off. If you miss a payment, that might lead you to pay credit card fees – which is just a waste of your money.
- Include your credit purchases in your budget. If you have to use your credit card, make sure you place it in your budget plan. That way, you can afford to pay the balance in full when the billing period arrives.
- Use it only for purchases you can pay in cash once the billing arrives. This will allow you to avoid finance charges. That will ensure that you are only paying for the amount of the product or service that you got.
- Guard the payment details in your billing statement. This is one of the ways that you can check if you are a victim of identity theft. If you see unauthorized transactions on your card, someone has your credit card account. You need to report it immediately.
There are only some of the tips that you can do in order to be a smart credit card user. To get more information about being a responsible credit card owner, here is a video that answers the question “how often should you use your credit cards?” Find out the smart way to use your card so it will not end up being cancelled or putting you in a difficult debt situation.