One of the best tools a person can use in their day-to-day finances is a credit card. When used properly this little piece of plastic can be a source of a free short term loan. However, when used improperly or carelessly, it is the source of a lot of anguish. Everyone knows about the extremely high interest rates charged by credit cards. But many smart people forget to consider credit card fees when choosing a card.
One fee that many people needlessly put up with is the annual card fee. Often it is just $60 or $100 per year, and for someone that uses the card often to rack up reward points, this is not a big deal. For someone who really wants to cut their costs though, they can have the card and negotiate their way out of the annual fee pretty easily.
Getting cash from a credit card is one of the worst ways a person can get cash. Most cards charge a minimum of 5% up front. So if a person takes out $1,000 their card will add $1,050 to the bill. Unless absolutely necessary, a person should never take a cash advance.
There are some fees that are tacked on simply because the credit card can do so. Take the reward redemption fee. It is great to accumulate points on the card, and then redeem them toward airline tickets, hotels, or cash. But many cards will add a small charge (in the $10 to $30 range) in order to redeem the points.
With the internet gaining popularity, and almost everyone using email, many credit cards do not issue paper statements anymore. Those that do will often charge a service fee ($1 to $5 per statement). There is no point to pay this out of pocket, if you need a paper statement, print it from the credit card website.
Travelers are well aware of the foreign transaction fee. Adding on an extra 3% to every transaction done outside of the country will add up quickly for those who are frequent travelers. If this is the case, find a card that waives this fee and use it when traveling.
Credit card fees are annoying. But by knowing what they are ahead of time the consumer can be sure to avoid them (check out some of the changes made to what fees may be charges in 2010). The easiest way is to simply spend within one’s means. Personally, I charge everything. I then monitor my spending and make sure I can afford to pay the card off in full each month. I avoid late fees and outrageous interest this way. To get around some of the other fees that are wrapped into many cards, shop around for the one that offers the best deals (and make sure they are not just temporary marketing gimmicks). If nothing else and you get hit with an unwanted fee, call the customer service line and negotiate. Credit card fees are some of the easiest to get waived.