You can avoid fees by carefully managing your account. Here are common fees and tips on how to avoid them:
1. Annual or monthly fee: Common on charge cards, rewards and airline miles credit cards and on secured and sub-prime cards. Sometimes applied if you don’t use your card at least a few times during the year.
TIP : Consider the overall value when comparing fee and no-fee cards. If you are thinking about getting a rewards or airlines miles card, make sure the card’s benefits are worth the cost of an annual fee.
2. Application processing fee: Charged on many sub-prime cards and some secured cards when an account is opened.
TIP : Secured credit cards are generally much better deals than sub-prime credit cards, and you can find secured credit cards that don’t charge application fees.
3. Account reopening fee: Charged if your account is closed or cancelled by the issuer and you ask to have it reopened.
TIP : Pay your bills on time to avoid card cancellation and an account reopening fee.
4. Balance transfer fee: Charged for transferring a balance from one card to another, this fee is commonly assessed as a percentage of the balance transferred.
TIP : When you apply for a new card, ask about balance transfer fees. Most companies don’t charge these fees to new cardholders for the first month or two.
5. Bounced check or returned item fee: Charged if your check bounces.
TIP : Make sure you have sufficient funds in your bank account to cover your check.
6. Cash advance fee: Charged as a percentage of the cash advance, with minimum charges common.
TIP : Cash advances are an expensive way to get cash. Not only do you pay a fee, but interest on cash advance balances begins to accrue immediately. Instead, use your ATM or debit card to withdraw cash from your checking or savings account at ATMs.
7. Foreign currency conversion fee: Charged when you make purchases overseas and the charges have to be converted to U.S. dollars.
TIP : If you plan to use a card while traveling outside of the U.S., shop around to find a card with a currency conversion method that is favorable to you.
8. Late fee: Charged if your payment is late, sometimes even if it is received on the due date after a certain hour.
TIP : Always pay your bill on time. If you send your payment by mail, allow at least seven days for the payment to reach your issuer. Consider other payment methods, such as online bill pay, pay-by-phone or automatic payments. Ask if your issuer offers e-mail reminders.
9. Pay-by-phone or computer fees: Charged by some companies to pay your bill by phone or computer.
TIP : Avoid last minute, fee-based payment methods. Look for online bill pay, pay-by-phone or automatic payments that do not carry a fee.
10. Over-the-credit-limit fee: Charged if you go over your credit limit.
TIP : Know your credit limit. Call your card issuer in advance if you need an increase. Ask your issuer if it has free e-mail services that alert you when you are approaching your credit limit.
11. Statement copy fee: Charged for extra copies of monthly statements.
TIP : File statements for the past three years in a secure location. If you sign up for online access to your accounts, you can download your statements and keep them in your computer.
12. Stop payment fee: Charged when you stop payment on a credit card convenience check.
TIP : Be cautious about using convenience checks. If you write one and it is lost, you may no be able to avoid this fee.
13. Wire transfer fee: Charged when you use your card to transfer money or when you buy money orders, lottery tickets or casino gaming chips.
TIP : Pay for these services with a personal check or cash.
BCG Blog Editor
U.S.
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