With Halloween right around the corner, you’re probably preoccupied with costumes, candy and creepy movies. After all, everyone’s favorite fall holiday only comes once a year.
But while you’re busy planning the perfect costume party or getting your kids ready for trick-or-treating, something truly terrifying could be lurking in your wallet. Take a look at the tips below on avoiding the five scariest credit card fees — no garlic or sage required!
1. Late fees
You’ll get hit with a late fee if you’re (you guessed it) late in making a payment on your credit card bill. Most issuers charge a $25 to $35 fee per late payment, and while this doesn’t sound like much, it can really add up over time if you routinely pay late. And this bad habit could cost you more than a few extra bucks. Since payment history makes up 35 percent of your credit score, failing to make prompt payments could result in a serious ding.
Luckily, avoiding late fees and possible damage to your credit score is as simple as paying your bill on time. If you have a hard time remembering to do so, consider setting up calendar alerts for your billing due dates. You can also arrange for your issuer to automatically pay your bill on your behalf every month — just be sure that you keep enough in your checking account to cover it.
2. Annual fees
Some credit cards charge a yearly fee to keep your account open. Typically, this fee ranges from $50 to $150, but it can be much higher if you have a premium card.
These days, it’s pretty easy to avoid paying an annual fee. There are a lot of great credit cards on the market that don’t charge one, so simply doing a little research will help you uncover the no-annual-fee card that’s right for your lifestyle.
However, keep in mind cards that charge an annual fee usually have high rewards rates, big sign- up bonuses and a bevy of fringe benefits. All this means that, in some cases, paying an annual fee might be worth it. For instance, let’s say you’re using a co-branded airline credit card that charges a $100 annual fee. But one of its perks is that you get a free checked bag with every flight. Since checked bags usually cost $25 a pop, in two round- trip flights, that annual fee has paid for itself.
Again, you can easily avoid annual fees if you want to. But don’t automatically dismiss cards that charge this fee before you’ve considered all the facts.
3. Balance transfer fees
If you’re planning to refinance high-interest credit card debt with a 0 percent balance transfer, you’re probably excited about all the money you’ll save on finance charges. It’s true that a long interest-free period will give you the opportunity to make real progress on paying off your debt, but a lot of people forget to factor the cost of balance transfer fees into their calculations.
This fee usually amounts to 3 percent of the balance you’re transferring onto the 0 percent card. That doesn’t sound too bad, but 3 percent could be a sizable sum if you’re dealing with a lot of debt.
Paying this fee isn’t inevitable, though; you can dodge it if your credit is good enough to qualify for the right card. Otherwise, you’ll just have to do the math to figure out if forking over the fee is worthwhile compared with what you’ll save on interest payments.
4. Cash advance fees
If you need quick access to cash, you might think about using your credit card to take a cash advance from an ATM. While this is certainly a convenient option, it doesn’t come cheap. Cash advance fees usually run 2 percent to 5 percent of the amount withdrawn, plus you’ll have ATM fees and interest charges on the borrowed money. And remember, the interest assessed on a cash advance is usually higher than your purchase APR.
Because of all these expenses, it’s generally wise to avoid taking cash advances altogether. Unless you’re dealing with a serious emergency, find other ways to come up with cash. For instance, taking out a personal loan or borrowing money from a friend both require a little more legwork, but the savings are worth it.
5. Foreign transaction fees
If you’ve ever traveled abroad with your credit card, you might have noticed a slew of fees at the bottom of your statement when you returned home. This is because many credit cards charge a foreign transaction fee of 3 percent of every purchase made overseas. Again, this sounds inconsequential, but if you travel abroad frequently, you could be out hundreds of dollars in fees by year’s end.
The key to avoiding this fate is picking the right card. Many issuers offer cards that charge no foreign transaction fee. Plus, these cards often come EMV chip-enabled, so you’ll have much better acceptance overseas.
There’s no need to be frightened of credit card fees if you know how to avoid them. Keep the tips above in mind for cheaper swiping all year round!
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The 5 Scariest Credit Card Fees — And How to Avoid Them originally appeared on usnews.com
