Credit Card Fees
Credit card fees come in all sorts of shapes and sizes. Some are little and some can be quite large. The good news is that most of them can be avoided or at least reduced, if you know what to do. Here are some examples.
Balance Transfer Fees
You have probably received those offers from your credit card companies to transfer a balance. They may even offer you a special rate for a set term such as 12 months. There is a catch to this however.
Of course, the ultimate goal for these companies is to get you to carry a larger balance, even if they have to wait some time to start collecti0n interest.
There is another trick up many card company sleeves however and that is the balance transfer fee. It can be as high as 3 to 5 percent of the debt being transferred. So, you transfer over a 2000 dollar balance and they hit you with a 100 dollar fee.
If you are saving money on interest, it could be worthwhile paying the fee. If the interest fee period is short or non existent however, you may not come out ahead.
To avoid a balance transfer fee, you have a few options. First, read the fine print and make sure that you know if a fee exists. Second, if there is a fee, you can call and try to negotiate a lower fee or even an elimination of the fee. If all else fails, calculate the interest that you would save and compare it to the charges for making the transfer.
Annual Fees
The annual fee on a credit card can be anywhere from $20 to $100. Not every card will have one and the ones that do, often downplay them. You will find the information in the fine print.
Often, on a new card, the fee is waived for the first year. You might not even know that you have one until it hits on the first day of the new year.
The best way to eliminate an annual fee is to avoid them in the first place. Try to chose card that do not charge an annual fee. If this is not an option, try to contact customer service and negotiate before the fee hits. Threaten to cancel the card unless the fee is waived, but be prepared to back up this threat.
Most of the time, you will be successful in eliminating or at least reducing the fee. Sometimes however, they may not back down and you will need to cancel the card or accept the fees.
Late Fees
The fee for paying a credit card even a day late can be huge, as much as $50. If you pay your account late, this can add up to a huge amount of money.
For those who infrequently pay their bill late, late fees can often be avoided. Customer service is often more than willing to waive a late fee, you just have to ask for it.
If you made your payment a few days late, pick up the phone and give your credit card provider a call. Tell them your circumstances and ask that they reverse the fee. Chances are good that they will if you are not late often. If this is a regular thing though, don’t expect too much sympathy.
Finance Charges
This is what it is all about for credit card companies, the finance charge. The average rate for a credit card in the United States is a little over 17 percent but they can go well over 29 percent. If you are carrying 1000 dollars in debt, that is over 300 dollars a year with compound interest. Think about how much money that is.
While you will not be able to completely eliminate credit card interest, you may be able to get it reduced. Once again, you have to be proactive. Call them and let them know that they are much higher in interest than your other cards. Ask politely for a rate decrease and if that does not work, you may have to threaten to close your account. Be prepared to back it up.
Cash Advance Fees
Almost all credit card companies charge a fee for a cash advance. In addition, to add insult to injury, they also typically charge a higher interest rate on the cash that you borrow.
Cash advance fees and added interest are not going to be easy to negotiate because it is a big money maker for these companies. If you plan ahead though, you can avoid them. If you find yourself in need of added cash, simply use your card to pay for an expense that you otherwise would have used cash for. Even if the company charges a convenience fee for using a credit card, you will still probably come out ahead.
Wrapping Up
Credit cards and fees go together like peanut butter and jelly. There really is no having one without the other.
That being said, you still may be able to eliminate or reduce at least some of these fees. It never hurts to try, so when you look at your statement and notice a strange new fee, pick up the phone. It is well worth your time.
