You don't need to get stuck paying credit card fees. Follow these tips to be fee-free.
Look through the terms on most credit cards, and you'll see quite a few fees the card issuer can charge. These sometimes scare off consumers, especially those who don't want to end up paying extra just to carry a credit card.
The good news is that for every credit card fee, there's a way to avoid it. If you've been charged any credit card fees in the past, or you just want to make sure it doesn't happen to you in the future, here's what you can do.
1. Use autopay
If you miss a credit card payment, even just by a day, the card issuer could charge a late fee. It can also hurt your credit score if you go 30 days or more without making the payment. Most credit card companies will waive your first late fee if you call and ask. But you only get one of these mulligans.
The simplest way to prevent this issue is to set up automatic payments. That way, there's no risk of forgetting.
2. Make sure your bank account has enough to cover your credit card payment
There's one way your payment could go awry even with autopay. If your credit card bill is more than what you have in your bank account, then the payment may be rejected. Your card issuer could then charge you a returned payment fee. To make it even worse, your bank may charge a checking account fee for not having enough money in your account.
Keep an eye on your credit card and bank account balances, especially when your payment is due soon, so this doesn't happen to you.
3. Have at least one card with no foreign transaction fees
Many credit cards have foreign transaction fees, with the standard amount being 3%. These apply to any purchases that go through foreign banks and that are made in currencies other than U.S. dollars.
The most common situation when you'd incur foreign transaction fees is international travel. But you can even incur foreign transaction fees while shopping online. That can happen if you shop at home using merchants based outside the United States.
It's recommended to have at least one credit card with no foreign transaction fees. There are plenty available, and travel rewards cards are a good place to start.
4. Set your cash advance limit as low as possible
A credit card cash advance is when you use your card to get cash. This doesn't just apply to using your card with an ATM. Any type of transaction that involves sending money, such as a money wire, could also be considered a cash advance. Not only do these have fees and often a higher APR, but your card issuer can start charging you interest right away.
I like to be extra careful to avoid cash advances, so I contact the card issuer and ask them to set my cash advance limit to the minimum. Depending on the card issuer, this is usually anywhere from $0 to $100. If a transaction's going to be considered a cash advance and it's more than that limit, it won't go through.
5. Downgrade, cancel, or negotiate credit cards with annual fees
Credit cards with annual fees can be worth it. But if your card's annual fee is coming up and you don't want to pay it, there are a couple options to avoid it:
- Downgrade the credit card to one without an annual fee in the card issuer's lineup. This allows you to keep the account open without paying an annual fee anymore.
- Cancel the credit card. Just make sure you know how to close a card without hurting your credit score.
- Contact the card issuer to see if they're willing to waive the annual fee for a year. Credit card companies sometimes do this as a retention offer to keep you from canceling your card.
6. Don't opt into over-the-limit fees
Your card's credit limit is the maximum amount you can spend. If a transaction pushes the balance above that limit, it will be denied.
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