Ways to Avoid Common Credit Card Fees

Credit cards can be really handy for building up your credit score, but it’s important to keep in mind the potential costs, like various fees that come with certain cards. A credit card payoff calculator can help you get a clearer understanding of these expenses. Using credit cards wisely can enhance your credit history, increase your credit score, and even help you save money if you use rewards cards strategically. Just remember that these perks often come with costs. There are several types of credit card fees to watch out for if you’re aiming to save money. Thankfully, many of these charges can be avoided, and I’ve got some tips for that.

**Annual Fee**

An annual fee is a common charge with credit cards. Banks and credit card companies charge this yearly fee for card ownership. Though it might seem like a necessary expense, it’s often avoidable. There are plenty of credit cards without an annual fee, which is a great option if you want to dodge this charge. However, popular rewards cards often include this fee to balance out the rewards they offer.

It’s nice to earn rewards, but it’s crucial to understand their real value. If a high annual fee only gets you minimal cashback, it might not be worth it. It’s important to assess each case on its own. For example, a $50 annual fee on a rewards card gave my spouse and me free stays at a resort, making the fee worthwhile. On the flip side, I had to cancel a card that charged $175 annually because the rewards weren’t enough to justify the cost. After talking to a representative, I switched to a card without an annual fee while keeping my rewards. If you pay your bills on time, you can ask for a fee waiver, though it’s not always successful.

**Late Payment Fee**

Late payment fees can really mess up your finances. If you miss the minimum payment, you typically get charged a fee between $25 and $35. While this might not sound like much, these fees can add up if you’re consistently late, and that money could be used better elsewhere. To avoid this, make sure to pay on time every month. Most companies send reminders before your payment is due, or you can set reminders for yourself or use autopay to prevent late payments. Consistently paying on time can also boost your credit score.

**Balance Transfer Fee**

A balance transfer is when you move a debt balance from one credit card to another, usually to get a lower interest rate and pay off debt faster. This typically involves a fee. While avoiding this fee can be tough, cards like Barclaycard and Chase Slate occasionally have promos that skip this fee. If a balance transfer can help you pay off debt much faster, a small fee might be worth it.

**Foreign Transaction Fee**

While credit cards offer added protection against fraud, making them seemingly ideal for use abroad, there’s usually a foreign transaction fee involved. This fee is for transactions made outside the US and can range from 1% to 3%. Cards like CapitalOne Quicksilver and Chase Sapphire Reserve, which don’t have these fees, could be worth considering for travel.

**Final Thoughts**

Not all credit cards are the same—some have more fees than others. You can often dodge or reduce many of these fees depending on the card’s quality. A good credit score can get you access to the best low-or-no-fee cards, helping you save money. Think about what you want to use the card for. If travel rewards or cash back interest you, factor that into your decision.