Thinking of Applying for a New Credit Card? Check Out These 3 Fees First

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Find out what a card will cost you before you sign up.

Signing up for a credit card can often entitle you to exciting new cardmember benefits. If you find the right card, you can earn generous rewards and take advantage of perks that add value over the long term.

But before you decide to get a new card, it's crucial to know how much using it could cost you. Always check out these three fees before applying for a new card.

1. Annual fee

You owe annual fees just for having some cards. Sometimes, these fees can be quite high, even topping $500 for certain credit cards. While this may seem like a lot, consider whether the perks offered by cards with annual fees make the price worth paying. Many cards with high fees offer generous benefits, such as a credit for making certain purchases, free airline lounge access or hotel nights, companion airfares, and rewards programs with lots of bonus opportunities.

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Consider how often you'll use the card to earn rewards and whether the membership perks are worthwhile before committing to a card that charges an annual fee.

2. Foreign transaction fee

If you plan to travel outside of the United States, or you make purchases abroad over the internet, watch out for cards that have foreign transaction fees.

These fees are often around 3%, and they needlessly increase the cost of purchases. If you spend money outside of the country's borders, look for a card that won't charge you for doing so.

3. Interest charges

You can avoid interest charges if you pay your balance in full every month. But if you carry a balance, the finance charges can be huge.

You don't want a card with a high interest rate if you don't pay your balance off in full every month -- even if it offers a great rewards program or other generous benefits. The cost of a higher interest rate will likely trump the value of any benefits.

If you are committed to never carrying a balance, then you may not care about the interest rate. Or you may find a card that offers a 0% promotional rate for a time, which can be a good option if you plan to carry a balance for a short time to finance big purchases. Just make sure you are confident you'll have the balance paid off before the promotional rate expires -- otherwise, you'll get stuck with interest.

When looking for a new card, find out the interest rate and assess the likelihood that you'll end up paying high finance charges. If there's a good chance that will happen, it's best to take a pass on opening the account.

By considering the interest rate, the annual fee, and foreign transaction fees, you can make the right choice about whether a card is a good fit for you.

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