The Harsh Reality of Credit Card Fees

Credit card fees are a fact of life, and unless you're planning on never using your cards, you'll have to accept them. But the reality of credit card fees is that they can really add up over the course of a year. Let’s start by identifying the nine (yes, nine) types of fees credit card companies can charge:

• Late fees
• Annual fee
• Over limit fees
• Cash advance fees
• Balance transfer fees
• Card replacement fees
• Returned payment fees
• Foreign transaction fees
• Finance charge (APR)

Most individuals know that their credit card companies will charge them fees. But when you see them laid out in a list like the above, it becomes even more apparent that credit card companies know how to make money from their customers. But there are ways to reduce the amount you pay each month.

Here are our top three suggestions:

1. Pay in full and on time: Whenever possible, pay off your credit card bills in full before the due date. Doing so avoids the largest fee, the annual percentage rate (APR). In addition, over time, paying more interest than the principal balance is possible if you only pay the required minimum monthly amount.
2. Understand the fees: You are likely aware that your credit card company will charge a late fee for past due payments. But other transactions may not be so obvious. Take the foreign exchange fee, for example. Not only could you be charged a flat fee, but also a percentage of the charge applied.
3. Ask for fees to be waived: This strategy can only be used sparingly. If you incur any unexpected fees, and you are deemed to be a valuable customer, it doesn't hurt to call your credit card company and ask for a waiver of fees.

Credit card fees can be a nuisance, to say the least. However, there are ways to reduce the amount of fees you pay on your credit cards and improve your credit score in the process. So stay educated and review your credit card statements. Your wallet will thank you!