7 Hidden Credit Card Fees Which Could Hurt You
Credit cards are a necessary part of life. They help us have a ready cash source on hand, pay for expensive purchases, and build our credit. However, credit card companies are in the business to make money, and there are several things a credit card user needs to watch out for. Springfield Banking Rates has compiled a list of seven hidden fees which you need to think about before applying for a credit card.
1. Balance fees. While not all companies carry this charge, some will fine you for not having a balance on your credit card. Essentially, they are charging you money for not buying something with your credit card that month. Called a minimum finance charge, this fee can be trouble if you do not use your card every month or pay the balance off in full.
2. Late payment. All credit card companies charge late payment fees, and although they cause problems with your credit score, they are not the main issue. Something called the Universal Default Clause causes the problem. Basically, if you make one late payment on one card, this clause causes not just that interest rate, but all your credit card interest rates to go up. Instead of punishing you on one card, they punish you through all of them. This is not a fee you can avoid, so just be aware of it when making your payments.
3. Annual fees. Some cards charge a yearly fee to own or use the perks of that particular credit card. Some may waive it for the first year and then begin charging it, so be careful. Rewards credit cards may not earn you enough cash back to be worth an extra $100 expense every year.
4. ATM fees. While ATMs already charge fees for taking money out, your credit card company or bank may also charge you a fee to use your card. These fees can quickly add up. Either find a card without any ATM fees or withdraw larger amounts of money to offset the withdrawal costs.
5. Exchange fees. For the foreign traveler, these fees can cause some issues. First of all, always tell your bank or credit card company before you travel abroad or your account may be blocked in order to prevent theft. However, credit cards also frequently have exchange fees to change your American dollars into British pounds or whatever the case may be. Look for a card without this fee if you plan on doing a lot of foreign travel.
6. Paying the minimum. While this is not necessarily a fee, paying the minimum can lead to you paying more money than you planned. If you only pay the minimum every month, your debt will take a long time to pay off and high credit card rates will make your debt double and even triple over time. Avoid this by choosing a card with low credit card interest rates and paying larger sums each month than the minimum.
7. Changing APRs. Another typical problem is changing APRs. If you look at a credit card offer, it may say 0% APR for a limited time period of a year or so. After that, credit card rates gravitate to the 25% APR area and get higher with late payments or balances higher than your credit limit. Make sure after your 0% APR time period you will not be stuck with a credit card which will take all your money.
Consider all of these factors and fees before choosing a credit card. If you want help finding the lowest credit card rates, let Springfield Banking Rates help you with that goal.
