We have always been told money is the key to a secure future and now that we have started earning/saving we realise how true this is. When it comes to credit cards, while they can be really helpful, they can also cost you some extra money if you’re not careful. We are going to share some tips to help you avoid common credit card fees.
Most credit card companies annually charge a particular amount on the credit cards they provide. As a customer, you are obliged to pay that amount in order to continue using the card. However, if you spend the limit that your card provides, the bank doesn’t charge the annual fees for the next year.
The key is to use a credit card for most of your purchases as you get the convenience of paying the amount later and it also consumes your limit. This will help you save some bucks on the annual fee.
A certain time period is specified for you to pay off your credit card expenses. It’s important that you pay off these dues on time. If you fail to do so, you have to pay interest on the amount which is known as finance charges.
There’s a very simple way to avoid this, always pay the due amount on time and pay it in full. If you pay partially, the interest will be carried on the remaining amount. And make sure to purchase things that can be paid for on time. Don’t overspend.
International Transaction Charges
Some credit cards charge you extra for spending in a foreign country. In case you’re on a trip to London and you’re buying some local handicrafts and you use your credit card, you may have to pay 1% to 3% extra on the transaction.
The best way to avoid this is to opt for a credit card that doesn’t charge foreign transaction fees. If you travel through countries very often, it can be really helpful to opt for a bank that waives off the extra charges. This way you can save a lot of money.
Cash advance charges
Almost all banking companies give you the option of withdrawing cash with your credit card. There’s a certain limit to it depending on which bank you’re using. However, this can be a pricey process. The charges can be fixed on every withdrawal or may have a different interest rate depending on the amount. Most credit card companies charge up to 2.5% to 3% on the cash and that can possibly make a dent in your bank balance.
You can avoid this by not using your credit card at ATMs. If you’re in the need of cash, best use a credit card or borrow from someone you know. Using a credit card to get cash can be an unwise decision for many customers.
If you’re unable to pay even the minimum amount due for a certain month on time, the bank will charge you extra for that. This is known as late fees. You must note that all banking institutions don’t do this but if your bank has this policy, you have to make sure you make the payments before the due date.
Some banks don’t clearly mention a late fee but add some interest on the unpaid amount.
So it’s your duty to make sure you avoid paying extra. Set a date on your calendar to pay your credit card expenses and religiously follow that. We understand most of us can be forgetful so it’s better to put a reminder.
Over limit charges
In case you spend more than the limit provided on your credit card, you are supposed to pay extra charges for that. Banks set their own interests and charges on this so you need to be aware of this information.
You can avoid over-limit fees by purchasing within the provided limit and in case you’re close to consuming your limit, you can use your debit card. If you have been consistently paying your dues on time, you can request the bank to increase your credit limit. This can be considered by the bank and will help you spend more through your credit card without the fear of going over the limit.
With this, we leave you wiser and we hope you’re able to save some money. So, be a smart customer now and don’t let the banks charge you extra when you can clearly avoid paying that.