“A Guide to Credit Card Fees and How to Avoid Them”

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Understanding Common Credit Card Fees and How to Avoid Them

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding credit card fees. For any mortgage service needs, call us at 213-732-3074.

Annual Fee

Some credit cards come with an annual fee, charged when you first receive the card and at each cardholder anniversary. This fee is common on secured and rewards cards and can range from $50 to over $500.

How to Avoid Annual Fees

Look for secured or rewards cards that don’t charge an annual fee. However, cards with an annual fee may offer better benefits and rewards. Consider the cost of the annual fee when choosing a card. You can also avoid the fee by closing your account or transferring to a card without the fee. Sometimes, calling the card issuer to request a fee waiver or extra rewards can be beneficial.

Authorized User Fee

Adding an authorized user to your credit card is usually free, but some premium rewards cards charge for this service. This fee is also sometimes found on cards for building credit.

How to Avoid Authorized User Fees

Most cards don’t charge an authorized user fee, so you can add someone to your account for free. However, you will be responsible for any charges they make.

Balance Transfer Fee

Balance transfer fees are charged when you transfer a balance to your credit card, often ranging from 3% to 5% of the amount transferred.

How to Avoid Balance Transfer Fees

Avoid using balance transfers or consider a debt consolidation loan. Some cards don’t charge balance transfer fees but may not offer promotional 0% APRs or have shorter promotional periods.

Cash Advance Fee

Using your card to withdraw cash can incur a cash advance fee, typically 3% to 5% of the amount received. Cash advances also start accruing interest immediately at a higher rate.

How to Avoid Cash Advance Fees

Consider getting an emergency loan or an advance on your paycheck instead of using your credit card for cash. You can also reduce your card’s cash advance limit to $0 to prevent these transactions.

Foreign Transaction Fee

Credit cards may charge foreign transaction fees, usually 2% to 3% of the transaction amount, on purchases made outside the U.S. or in a foreign currency.

How to Avoid Foreign Transaction Fees

Use travel cards that don’t have foreign transaction fees or use cash when abroad. Some banks reimburse international ATM fees.

Late Payment Fee

Card issuers may charge a late payment fee if you don’t make at least the minimum payment by the due date. Initial fees can be as high as $30, with subsequent fees up to $41.

How to Avoid Late Payment Fees

Set up automatic payments for at least the minimum amount. Some cards don’t charge a late fee for the first late payment or at all. If charged, you can call your card issuer to request a fee waiver.

Over-the-Limit Fee

Credit card issuers can only charge over-the-limit fees if you opt in. Most issuers no longer charge this fee.

How to Avoid Over-the-Limit Fees

Don’t opt in for over-the-limit fees to avoid them. Your card may be declined if a transaction exceeds your limit.

Returned Payment Fees

Credit card issuers may charge a fee if your payment is returned due to insufficient funds.

How to Avoid Returned Payment Fees

Check your bank account balance before making a payment. Enable alerts from your card issuer to get notified before automatic payments are processed.

Less-Common Credit Card Fees

Some less-common fees include program fees, monthly fees, premium card design fees, billing statement copy fees, telephone payment fees, and expedited shipping fees. Review a card’s terms and conditions to understand what fees might apply.

Compare Your Credit Card Offers

Understanding credit card fees is crucial, but also compare benefits and rewards before applying. Ensure there’s a good chance of approval by using tools to compare credit card offers based on your credit profile.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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